Hello and welcome to our show, I'm Leslie Brokaw,
sitting in for Alan Shartalk.
Well, for a holiday week, this wasn't a slow week in Albany.
Major General Vito Castellano announced his retirement from his post as Commander of
New York's National Guard, and the State Court of Appeals issued a precedent-setting
decision regarding divorce settlements.
But our first story for today deals with revenue enhancement by the State Government.
The New York's Department of Taxation and Finance has developed a think tank to look
for ways to get more tax money into the coffers.
What they basically have done is find lists of professionals in the State and check them
to see if they've ever paid taxes.
In one list, they got the names of all the physicians in the State who had applied for
Medicare and Medicaid reimbursements.
And when they checked that list, they found 90 doctors who had never filed taxes.
Now they're looking into lawyers, taking their list and checking it twice as it were.
Dr. Alan Shartalk spoke about the lawyers audit with Carl Felsen, a spokesperson for
the tax department.
Carl, why is the tax department singling out lawyers in its newest revenue enhancement
activities?
Well, it's not so much a matter of singling out lawyers as it is a matter of number one.
We can get the information, a computer tape, on attorneys easier than we can get certain
other things.
And also, as they're in a profession where for the most part, they do not have withholding.
So that's the type of check that we're doing now.
There isn't an employer withholding so that there's more opportunity to either hide
money or not report this sort of thing.
Well, give me an example of some of those opportunities, Carl.
Well, I mean, it's a sort of thing.
Whenever you're either in a cash economy or where you're in a situation where you are
self-employed, there's more a chance to hide from both the IRS and from the state.
For example, in working for the state, the state takes money out of my paycheck.
So I don't have that opportunity to hide that.
But if you were working mowing people's lawns on the weekends, that would be a good opportunity.
Exactly.
Whenever you deal totally in cash, we have a large problem with bars, restaurants, flea markets.
In any amount of cash, we're self-employed where there isn't kind of an automatic record of
earnings.
So we're looking at an awful lot of professions where that is the case.
We've already done a check on doctors and made to additional check.
Tell me what you found with the doctors.
With the doctors, we took 1982 Medicare and Medicaid payments and some third-party insurance
reimbursement.
This is what the government and the insurance companies gives to the doctors.
Correct.
We checked it against our Master Income Tax File.
Now, first of all, we found 91 doctors who hadn't filed a total of 356 years where at the
Income Tax Retro.
Well, that's incredible.
How could anybody in this year not file an Income Tax Retro?
There's a lot happening about half of those also hadn't filed with the IRS.
Wait a second.
You mean more people didn't file with the state than didn't file with the IRS?
How could they be so dumb considering the fact that we share information?
Well, I'll tell you, some of them got away with it as long as 11 years that didn't file
with either.
But it's truly dumb to file with the feds and not with us because we do a yearly check.
And every year we catch a few thousand people that way.
So, I don't know, people don't learn from that one.
And it's going to get increasingly hard, both in the sorts of things we're sharing with
the IRS, but these various matches that we're doing against other databases we've never
used before.
Let me go back to the doctors for a second.
With the doctors you found these people, and then you found 95 doctors who had never filed
Income Tax Retro.
What else did you find?
We found about another 900 who had seriously underreported their income from those sources.
At least by, we're figuring about $35 million worth.
And right now we have a lot of audits going on.
We have a number of prosecutions that we are pursuing in state courts and the IRS is
prosecuting a number of these doctors.
Okay, let me stop you right there.
Rod, tell us what Rod, besides being the commissioner's first name, what is Rod's name?
Rod stands for the Revenue Opportunity Division, and the commissioner named it after himself to kind of
put his personal imprint on it and let everyone know he really had a lot of faith in this sort of idea.
And what it is, it's our ran corporation, our think tank, or research and development unit.
He took 12 positions and said you don't have data, data line responsibilities.
Your job is to think like tax cheats.
Your job is to come up with creative uses of computers, to find new databases, and they've gone from agency to agency through the state.
Looking at what we already have in our computer banks, and for example we just got a tape of all the lottery winners in the earnings of lottery vendors over a number of years.
We're going to run those.
Okay, so now this is absolutely fascinating because doesn't it smack of big brotherism.
Everybody's been yelling for a long time, everything's in the computer, you can't lose.
And that's what your think tank is doing.
You're coming up with computer files, with lists that you can match against.
Isn't there something un-American about that?
Well not really, for two reasons. First of all, we're not creating any new files.
We're using stuff that's already been gathered.
And secondly, for the average deal on the street, 99% of what you make is already uniformly recorded with the IRS for it.
The IRS for the science you're withholding from your employer, the IRS gets reports from banks on your interests, from companies on your dividend, from unemployment, social security, state income tax refunds.
So 95% of the sources of information that the average person who's walking down the street has is already reported to the IRS.
Now all we're really looking to do is to even adopt for everybody else, for the people that are self-employed, for the people that try not to pay any share at all.
So it's really just kind of evening the score and that's real American.
I see, because otherwise why should I pay for the guy who's not reporting?
Exactly, I'm getting sick of carrying someone else's burden.
Okay, now let's go to the lawyers. Now, if doctors are somewhat marginally unpopular, think about the lawyers. Are you sure you guys aren't picking on the lawyers just because everybody hates them?
No, that's not the case at all. It's just that it's a large body of mostly either self-employed or partnership groups where you don't have withholding.
Quite frankly, too, I guess on the surface of it, if we did the doctors, we better do the lawyers or we'd never hear the end of it. But we're going to go through a whole lot of other professions.
After a lawyer may be even more unpopular than the IRS.
Well, I don't know.
And this they revenue people.
Okay, now let me talk to you about this business of the lawyers. One of the ways that they allegedly have shielded some of their income comes in these massive awards that their clients get in things like a malpractice case where they get a third.
A lot of those are confidential, aren't they, Carl?
Right. There will probably be somewhere in the neighborhood of a billion dollars in tort settlements in New York State this year, which you figured there's going to be somewhere in the neighborhood of $330 million.
Since they get about a third of those.
And fees, exactly. And some people think unconscionably.
Now, an awful lot of awards are not taxable to the individual that receives them. So there's no record on that end from the IRS or the state.
And also, so many of them are confidential. There's no kind of surface evidence or tracks in the snow that we can follow.
So the only evidence in in tort cases really is maintained by the various judicial districts in the state, the Office of Court Administration, has a system to track that to make sure there are no abuses in the attorney's fees.
And I know the IRS has done a pilot project of checking those figures against income tax returns. And we want to go pursue the same thing on a statewide basis.
How much cooperation, Carl, is there between you and Uncle Sam?
Quite a bit. And I think there's going to be a whole lot more in the future. As you saw just in the last two weeks, some of the indictments that have come down from the US Attorney for the Eastern District, particularly involving organized crime figures, has really involved a very close working of tax and finance, IRS, US Attorney FBI, the state's Attorney General, in local law enforcement.
And quite frankly, we had the work that closely together to build the cases and to get something done. And then two, just in the general kind of one of the mill auditing and this sort of thing, obviously the more we share the wider coverage we have.
So if the IRS audits someone and finds a major problem, we don't have to go find that person. We just get the revenue agent report and can follow up on it, and vice versa.
So I think you're going to see a lot more cooperation with the Fed, but even more so with other states.
A reporter I was speaking with said, so why should we give them all this credit, Commissioner Chu and the rest of them for doing the job that they're just supposed to be doing and we're just supposed to have been doing all along?
Well, I think the tax department historically has done an incredible job on just the shoe string budget. They really haven't had the resources. I think what you've got to give Commissioner Chu credit for is the leadership to take the tax department into a new computer age and to go to the division of the budget and the legislature and really make the case for the tax department.
So you need it, the infusion of funds and computers and enforcement staff and really give it the image and the profile that it needed or the job would never get done.
Isn't it political, though? I mean, here's Mario Cuomo fighting with the legislature every year. He says that there's less revenue coming in. They say there's going to be more revenue coming in. He's able to point to the past.
And then he needs as much money as he can to be governor to run the state well. And he unleashes his secret weapon, Rodney Chu goes out there and finds money where it's never been found before and that allows him to have more resources to work with.
Certainly the governor is happy with whatever we can find. But if you can find one legislator that isn't happy with the next $3.00 we come up with too.
Whether it's going to be an attack cut or a service that's going to be provided, they certainly love the tax department coming up with more money.
So on that end, you know, it's been very good relations with the entire legislature and with the budget division. On the other hand, I think it goes more than just revenue.
It's also that perception of fairness. In other words, if the tax cheat has been out there getting away with it, you and I are paying for it.
And to that extent, we sour on our tax system. We might start cheating ourselves. We feel less good about New York state and state government.
So there's a payoff far beyond any extra revenue in the image of our tax system, how good it is to do business in New York state and just kind of how fairly the state treats you.
So I think the governor really puts a great deal of stock in creating that kind of better feeling about state government and about doing business in the state.
And I think that's one of the main things he's asked Commissioner Chu to pursue.
Okay. Let me just say this to you. Good luck. Go get those lawyers and stay the heck away from professors.
Okay. Well, there's a little campaign enough that we really did. It's all W2.
Alan Shartock spoke with Carl Felsen, spokesperson for New York's Department of Taxation and Finance.
New York's Court of Appeals issued a ruling on Thursday, which says that a medical license earned during the course of a marriage is to be considered marital property.
The ruling means that in the event of a divorce, a physician will be required to give an equitable portion of future earnings to his or her expouse.
At issue was a former Westchester County couple. LaRetta O'Brien had worked and provided financial support for her self and her husband who was in medical school for much of their marriage.
Two months after he received a certificate to practice, he filed for divorce.
The court's decision upheld a lower court ruling and said that Ms. O'Brien is entitled to 40% of the worth of that degree are about $189,000.
The suit stems from New York's Equal Distribution Law, which says that both husband and wife can claim a right to the fruits of a marriage if they get divorced.
Lawyers for Dr. O'Brien had argued that the medical license isn't marital property because it doesn't fit within the traditional view of property,
as something that can be sold or transferred. But in the opinion written by Judge Richard Simons, the court said that Ms. O'Brien's contribution to the nine-year marriage constituted an investment in the economic partnership of the marriage and that the license was the product of the property's joint efforts.
That decision was one of the final ones issued this year, as this is the last weekend of the year.
And being that it's the last legislative gazette of 1985, regular host Dr. Alan Shartok wanted to do some sort of wrap-up story.
So we spoke to Fred Dicker, the Albany Bureau Chief of the New York Post, about the state of reporting here in the capital.
Fred Dicker, here's an end of the year roundup. I've been asking people what they think about the year gone by. Let me start with a personal question.
How has the press performed in Albany this year? And I say that, I want to give you a little background, Fred.
I myself have seen a tremendous, disbanding of the press corps. We have a young press corps they come in and out, the governor hires after them away or it seems like after them away.
You have often said no institutional memory because everybody's around for such a short time. What's going on?
Is that branch of government, if you will, that branch of the power, the way we balance power here, decimated?
It's not decimated, but it's barely we can, badly we can now. And I think you put your finger on a real problem around here.
And that is, that it's a truism, that the more you know about, something you can better handle it. And right now the press corps in general does not know nearly as much about what's happening here as the press corps a few years did.
Now there are a variety of reasons for it, though conspiracy and it's no, I don't think, across the board policy decision that's been made by news organizations to downplay the significance of the capital of New York and the activities here.
I think it has to do with the fact that UPI is in the United Press International for those who don't know, has been in really bad economic difficulties, almost went bankrupt.
So they lost some of their most skilled people in there, an important force down here. The New York Times has shifted some people around, others have other reporters here, found jobs and a new jobs.
And as you noted some of them have gone to work either directly or indirectly for the governor, either in a governor's press officer or in state agencies.
So right now I think the press corps is kind of weakened, but there are a few stalwarts around like myself, been here for quite a while. And I think try to keep the politicians honest, instead of doing a pretty good job.
Well, let me be fair about this Fred. I see you at...
Alan, I think you're always trying to be fair about things.
Yeah, I see you at a press conference and it's really no contest. You sit down and you don't say much and the reporters try to get a few questions out.
And I'm not only talking about the governor, I'm talking about it so when with Senator Andersen the other day. And all of a sudden Fred Dicker stands up and starts the question and gives a lesson in how it should be done.
Now, I don't want to flatter you, but it not only talks about how good you are, but it also talks about how weak the press corps can be.
Well, I appreciate the kind words, but I think what weakness you're detecting is principally a weakness that results from an experience.
Now, are there some people around here that may not be as confident as they should be to cover the capital? Absolutely.
Has that been so for a while? That's absolutely true also.
So I don't think it's a failure of the individuals involved. I think there are just a couple of circumstances. The newness of many people.
And that's the principle. When the newness of a lot of the new people and some people around who just aren't that good, that give you the impression that you now have.
Well, but assuming that for whatever reason, in confidence which I agree with you really isn't there, but newness, how dangerous is this for state government?
Well, I don't think it's dangerous at all, Alan. Unless there are things going on in state government that are in and of themselves dangerous and aren't getting out.
I don't think there's any indication of that. There are some bad things that go on and we've seen some things just recently.
But I don't think it's dangerous. If this phenomenon continues, if editors keep rotating their reporters from the capital in a very rapid manner, then potentially we won't have in this area at the capital, covering state government.
People with enough experience to keep the politicians on us. But I don't think that's happened yet, and I don't think it's likely to happen.
Is there an arrogance in the press corridor, Alfred? Well, I think you'd have to be specific in the front.
Let me give you a specific comment. I was just recently reading an excellent piece that Jonathan Salant wrote about, the governor, his use of electronic media.
Yeah, and he was looking at the one that mentions you to a great degree.
It did mention me. Okay, but I wasn't really interested in my own comments. I was interested in something that Peg Breene of Inside Albany had said.
She said in this that, and I want to just paraphrase her, she said that she said after talking about the capital connection and where she thought it was too lighthearted, light in terms of it.
Lighthearted, maybe. Yeah, lighthearted. She said she felt that might lead to a diminishing of being gubernatorial on Cuomo's part of his status.
I wonder. She also said perhaps, she said he knows, but then again, he said perhaps he knows more about being governor than I do.
Yeah, and I was wondering whether most of the people in the press corridor feel they could be governor too.
Well, look, I think you would agree with me, Alan, that Peg Breene is extraordinarily talented and a very bright lady and does a great job on public television inside Albany show.
I don't get to see it enough to be perfectly honest with you. Okay, well take it from me. Okay, sure.
But I would tell you this that unless I knew the full context of it, I wouldn't know for sure what she meant by that.
That's the comment could be viewed as arrogant, but in a more general sense, I think, could the press, while maybe having arrogant tendencies at times, is not arrogant, basically.
But I would defend those arrogant tendencies because let me tell you, as I think you know, in order for the members of the press, like myself and others to stand up to politicians to be able to confront a governor, to be able to confront an attorney general, take some guts.
It's not easy to do. And sometimes with you with the members of the public and others close to the press corps, see as arrogance isn't the fact that sort of personality development that is necessary or an orientation that's necessary to have the stomach together.
And if you have the stomach to go and do what you have to do in this job. So I think it can be misinterpreted at times and isn't necessarily arrogance.
That by the way is a very good point and I respect you for making it. But I want to bring you back to just a few sentences ago, Fred, when you said that you would have to view the full context of a peck-breeding statement.
We're not really talking about peck-breeding here. But one of the major things that has been suggested that the press corps does that's basically evil is the quote out of context.
And now you're saying, I would, and you're talking about an article which your own colleague Jonathan Salant wrote in a, you know, in the Capitol magazine, in which you'd say I have to see the full context of the statement.
Does that mean you suspect even you, Fred Dicker, suspect that the press sometimes quotes out of context?
Well, I don't suspect it. I know it. But I don't think it that occurs that often. And I'm not suggesting in this article that's what occurred. I haven't read the whole article.
I would just want to get a sense of the flavor of what was going on there where this was said. But there's no question at a time. We're guilty of that. But more often than not, the politicians use that claim in order to try to get out from under these statements that were made clearly in the context that they appear.
It's a convenient rationalization for them oftentimes to get out from under embarrassing statements.
What's the worst thing that you've seen the press do?
Well, I've seen some, just on rare occasions, some packed journalism where some reporters will get together and talk with each other about how a story should be covered.
Now, I don't think that's necessarily bad, but it is if the agreement, if there's some sort of an agreement that comes out of it, not to stress one thing or to stress something else.
I'm not sure that's happened. And as I said, I've only seen it a couple of times. Now, I've also seen reporters play shills for politicians. And that's not that common either.
But I know of some isolated cases where reporters had conflicts of interest that weren't revealed. And their writings clearly were designed, in my opinion, to either feather a nest or to advance someone or to ingratiate themselves with a politician.
Well, now Fred, that's interesting. I could go two ways in the questioning at this point. But I prefer to ask you whether or not this business of politicians hiring express people so that people are always aware who work for the press and at much higher salaries once the politicians hire them.
Yeah. Well, this is a dangerous sort of thing.
I don't think so. I mean, I haven't seen it had a danger, have a dangerous effect yet. I mean, there may be a couple of cases where there are working reporters who were privately negotiating with the governor's people or some other politicians people for a different kind of conversation.
I think it's potentially troubling, or it is troubling and potentially dangerous. But it hasn't been a serious problem. Most reporters, as I think you know well, love their jobs. And it's a job that they've had most of their lives and they couldn't see themselves doing anything else.
These people who drop away and become PR people or work for the governor, as you say, I think are far more the exception than the rules. So I don't think it's a major problem.
Governor Cuomo often says that one of the problems with reporters is that they see themselves as always having to be adversarial and that that colors their journalism.
No question, but one of the problems with Governor Cuomo is that he always comes up with verbal rationalizations to deflect attention away from what reporters are writing about him when those writings tend to be negative.
So I wouldn't put too much stock on what he's saying there. I don't think it's correct.
What's the worst thing that politicians do to reporters?
Well, generally I think they treat reporters pretty well. The worst thing they can do to me or to other reporters might be to hide, to not respond to what you're doing at all.
But when you're working for a major newspaper as I am, that becomes kind of makes it kind of difficult for politicians to hide because they know stories which appear about their activities are going to say that governor's so-and-so or attorney general's so-and-so.
Couldn't be reached in spite of 40 phone calls to his or her office. So that's one way another good you know outright nastiness, hostility.
I had some real problems with governor Kerry when he was governor. We were personally insulting and he in my judgment slandered me on several occasions.
You can get rough at times, which generally there's a core general relationship.
All Beneath Christmas, a good time to think about what has happened in an exciting year.
One thing is for sure was Mario, Mario, Mario that dominated things. No matter what happened it was Cuomo the outsider who dominated the stage.
When everyone else is running from the press it was Cuomo who cultivated it. Cuomo on public television, Cuomo on public radio, Cuomo on the mutual broadcasting system all over the United States.
Cuomo saying he wasn't running for president. Cuomo tantalizing, leaving a ray of hope for all of those who want to see him run.
Will he run? Is a question I am asked all over the country. And why is Mario Cuomo so incredibly popular at a time in his first term when other governors were traditionally low in the polls?
Well, a number of reasons. He's high in the polls because he remembers the cardinal rule that you use your office to help you get reelected.
He tries to figure out what the voters want and he tries to give it to them. On Long Island he fights the Long Island Lighting Company tooth and nail.
No matter what powers are brought to bear on him to allow the sure nuclear plant, he says no. And sends his trusted operative Fabian Palomino out there to stop them at every turn.
Then he investigates the oil companies for what appears to be extraordinary price rises. He never stops. He's in Buffalo, Rochester, Kingston, New York. He works his staff into the ground.
Those with wives and children are confronted with the kinds of personal realities that working with and for a work of holic can bring on.
And because of the sheer volume of work that he puts out no one can lay a hand on him even when he makes a mistake.
He made a mistake in his critique of the press for using the word mafia. But he's smart. Smart enough to turn around and make the case that he was misinterpreted, quoted out of context, vilified.
If I was the governor I'd do the same thing but because he has done so much his mistakes mean less. He's established a relationship one to one with his listeners, his watchers, his voters. That's paramount.
He never denies his human, his mistakes, his foibles. And because he risks all the governors tend to see him as one of them. He's just like us, only smarter I keep hearing.
And then comes the killer. With some people being considered for president or higher office over their present office it's the kiss of death.
Look at Mayor Koch. He went to the whaling wall and promised he'd remain mayor. Then he runs for governor and he gets real hard by the voters.
Some think he lost his gubernatorial bid to governor Cuomo because he broke his word. But in my opinion the Cuomo for president phenomena is different.
I think that one of the reasons Mario Cuomo is so popular is that he is running for president and people are proud and delighted with that prospect.
That's why the 80% approval rating even with his lack of major programs to boast about. And that in my opinion is why Mario Cuomo did so well in 1985.
And that's our show for this last weekend of 1985. Dr. Alan Shartalk is the executive director of the legislative Gazette and he'll be back next week.
I'm Leslie Rokock wishing you a fun and safe New Year's from everybody here at WAMC.
The legislative Gazette is a production of WAMC news. Alan Shartalk is executive producer.
This program is made possible with funds provided by the state University of New York College at Newport.
