Schwarzenegger hit with $80,000 tax lien

Gov. Arnold Schwarzenegger was having a feel-good Thanksgiving week, passing out turkeys in Los Angeles and giving thanks for "the blessings of freedom and democracy."

But then came the heartburn.

A gossip Web site on Friday morning revealed that the IRS filed a federal tax lien against the governor last spring seeking $79,000 _ a discovery Schwarzenegger's office blames on "a minor paperwork tracking discrepancy."

A copy of the tax lien, submitted in Los Angeles County, was first posted by TMZ.com. A search of public records databases shows the lien was filed May 11 and that it lists the governor's home address.

The governor's office at first questioned the authenticity of the document and insisted that Schwarzenegger had paid his taxes "in full and on time." Later, after officials spoke with the IRS, they explained there had been a mix-up.

"The issue is completely unrelated to the payment of taxes," Schwarzenegger spokesman Aaron McLear said in a statement. "The matter will be resolved and the lien expunged without any penalty assessed upon the governor."

McLear _ who said the governor learned of the matter only Friday _ wouldn't comment further on the nature of the mix-up or on what kind of taxes the lien involved.

But an IRS primer on the collection process explains that the agency sends out several warnings to anyone who's been billed for overdue taxes, penalties or interest before it files a lien. Liens give the government a legal claim to property as security against a tax-related debt.

The IRS said it doesn't comment on individual cases.

"Whatever document people are seeing" in the Schwarzenegger case, said IRS spokesman Victor Omelczenko, "that document will have to speak for itself."

According to a code on the lien _ 6721 _ there were problems with so-called "information returns" submitted by the governor. Businesses and individuals are required to file such returns, including W-2s and 1099s, to document any payments made to employees or vendors over a calendar year.

Jeffrey Kahn, a Bay Area tax attorney consulted by the Mercury News, said liens filed under that code often involve insufficient reporting of payroll taxes, which are withheld from employees' paychecks to fund Social Security, MediCare and unemployment insurance.

The document posted by TMZ shows a liability of $39,047 from 2004 and $40,016 from 2005.

Kahn said the governor may have been listed as a "responsible person" by a business in which he is involved, possibly with a group of partners, and that the IRS might file liens against all of the business's designated agents.

Kahn suggested such a circumstance might explain why Schwarzenegger may not have been aware a lien had been filed.

"It's not as much a smoking gun as somebody would think," he said of the lien. "This is a lot more abstract and obscure" than something involving the governor's income tax returns, for example.

Schwarzenegger is listed as an agent or officer for more than a dozen businesses and nonprofit entities, some of them now defunct. They range from a production company to a publishing concern, according to state records.

Two of those entities, records indicate, have had state or county tax liens filed against them over the years. But those liens, seeking far smaller sums than the federal lien, have long been resolved.

Friday's disclosure was only the latest jab at the governor from TMZ _ a popular gossip site that's earned scorn from some but has also broken major news stories, most notably the death of singer Michael Jackson.

The Web site has made hay in recent weeks with photos showing the governor's wife, first lady Maria Shriver, driving with a cell phone to her ear and parking illegally.

And just this week, the site posted photos of a cigar-chomping Schwarzenegger driving off in a silver Porsche that had been camped in a no-parking zone.