June 27th, 2011 9:45 am | by COREY PEIN News | Posted In: City Hall, Politics

Charlie Hales Lived in Washington State for Tax Purposes from 2004 to 2009


Portland mayoral candidate Charlie Hales has acknowledged to WW that from 2004 to 2009 he was a Washington state resident for tax purposes, and that he moved his residence to Portland only last year.

Hales confirmed his past tax status in response to questions from WW about public records that document his ties to Washington state even after he and his wife, Nancy, purchased a home in Southeast Portland in 2007.

The revelation is significant because Washington state doesn't have an income tax, and living across the Columbia River can shield other kinds of income as well, such as dividends and capital gains, from Oregon tax liability. An out-of-state resident still pays Oregon income taxes for work done in the state.

Hales was elected to the Portland City Council from 1992 until 2002. Since then, he has worked as a vice president in the Portland office of HDR Inc., a national engineering firm, and spends much of his time working outside of Oregon.

Cross-border tax avoidance last year hurt Chris Dudley, Republican nominee for governor, who established a Camas, Wash., address while playing for the Portland Trail Blazers in the 1990s. Dudley still maintained a Portland house during that time.

 Hales' email to WW follows:
From 2000 to 2003, I was a divorced single man, living in Portland. I filed federal and Oregon state tax returns as an Oregon resident. My income during this period was my City Commissioner salary until June of 2002, and my HDR salary after that.

In 2004, I married my wife Nancy. Nancy had lived in Washington since 1977, most of that time in the Gorge in Stevenson and Carson. Nancy worked in Vancouver, Washington for a non-profit foundation from 1991 - 2007, and then as a consultant managing small philanthropic foundations. She and her then-teenage children lived in her house in Stevenson, Washington.

After our marriage, Nancy and I lived in her home in Stevenson and in our condo on Hayden Island. Starting in 2004 and until 2009, we filed our joint federal and Oregon tax returns as residents of Washington. Although most of my work was carried out in other parts of the country, I paid Oregon income taxes for the portion of my time that I was working in Oregon. My income was my HDR salary. Although we acquired two rental houses during this time period, we haven’t sold anything, so I have had no capital gains.

In 2007, with the kids all gone from home, we began a transition, where we bought and remodeled our house on SE 27th Avenue and gradually started living here more. Thus the Oregon resident tax returns in 2010 and going forward.

Your questions caused us to review in detail what we have just been doing as a practice in these gradually-changing family circumstances. We have asked [our family accountant] to take another look at 2008 and 2009 to make sure we did those years correctly.
In an interview with WW last week, Hales said he had always been an Oregon resident for tax purposes, and had lived in his Southeast Portland home since purchasing it in 2007.

"I've never changed my residency for tax purposes," Hales said on Thursday.

On Monday, that story changed.

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