D.C. Attorney General Irvin Nathan and V. David Zvenyach, general counsel for the D.C. Council, have each concluded that the Tax Clarity Act of 2000, as written, requires Chief Financial Officer Natwar Gandhi to collect taxes on refinanced loans for commercial property, if the existing debt had not been previously taxed.
“A plain reading of the Act, particularly compared with its former language, suggests that the recordation tax should be assessed on the full amount of indebtedness,” Nathan wrote in an analysis. Zvenyach used nearly the same language.
Those legal opinions, requested by Councilman David Catania, I-at large, come after two lawyers — Jeffrey Mitchell of Oldaker Law Group and James Stanton — claimed Gandhi had failed to implement the Tax Clarity Act as written, denying the city more than $100 million in revenue during the past decade. Despite two internal memoranda from his office alerting the public and the real estate industry about the law, Gandhi had asserted the statute was ambiguous.
Interestingly, the AG said the Office of Tax and Revenue, supervised by Gandhi, collected the tax between 2001 and 2007. CFO spokesman David Umansky said OTR stopped in 2007 following a legal opinion from its lawyer.
An independent audit should be conducted to certify Gandhi collected the recordation tax as outlined in the Tax Clarity Act. It’s certain, however, that if OTR stopped collecting the tax four years ago, the city has lost millions of dollars.
Mitchell and Stanton have been partially vindicated. But the AG and the council’s lawyer said a sparse legislative record could have been the reason the waters were muddied.
“When the statute is plain and unambiguous, deference is given to the statute,” said Catania, arguing that the legislative record is irrelevant.
Nathan made the same point, which probably was lost in his labyrinthian analysis. Multiple times he said the Tax Clarity Act was clear; that’s underscored by the CFO’s two memoranda. But then Nathan seemed to contradict himself, latching on to legislative history and seemingly endorsing Gandhi’s view that the law was ambiguous — which was only after it was unambiguous. Finally, the AG circled back, arguing that his reading “differs from the assertion by [the Office of Tax and Revenue] that the language of the statute is ambiguous.”
Still. Gandhi hasn’t resumed collecting the tax.
“When there is no ambiguity, there is no license to frolic and detour,” said Catania, adding that Nathan should force Gandhi to “do his job. Collect the tax.”
Citing the city’s “severe budgetary constraints,” Nathan has recommended that action. But first, he urged the council to amend the Tax Clarity Act to “make clear and final” its intention.
The AG has become lost in a maze of his own creation.
But Gandhi isn’t confused. He has introduced legislation that, if approved, would prevent him from collecting the recordation tax as required by the Tax Clarity Act.
That’s right. Even as the District faces severe budget woes, the tax man doesn’t want to collect a tax. Help him. He’s fallen down the rabbit hole.
Jonetta Rose Barras’ column appears on Monday and Wednesday. She can be reached at [email protected].
