Spitzer Eyed Putting IRS on Bruno

After Governor Spitzer's staff's plan to use the state police against the Senate Republican leader, Joseph Bruno, backfired in a scandal, the governor's office tried unleashing a different authority against Mr. Bruno — the Internal Revenue Service.

The plan was that, guided by Mr. Spitzer's office, Democrats in the state Senate would get federal agents to go after Mr. Bruno for taxes they say might be due on the value of several trips on state aircraft that he took to New York City where he conducted mostly political business.

A draft of the letter to the IRS, which was signed by three Democratic state senators, was mistakenly e-mailed to the wrong recipient, landing in the hands of Senate Republicans and the New York Post, which published an article about it yesterday.

A source said the letter was e-mailed to state Senator Carl Kruger's office, when it was supposed to go to Senator Liz Krueger.
On Wednesday night, after Mr. Bruno got word of the letter, the Senate minority leader, Malcolm Smith, decided to quash it. That evening, he called Mr. Bruno to notify him that he was stopping it and told him he had discussed alerting the IRS with the Spitzer administration.

Yesterday, Mr. Smith said he decided against notifying the IRS because he thought it would "distract us" from state business.
A spokesman for Senate Republicans, John McArdle, said the governor was once again caught "red-handed" trying to get Mr. Bruno in trouble. "No one gives him credit for being an able dirty-trickster," Mr. McArdle said.

A spokeswoman for Mr. Spitzer, Christine Anderson, said in a statement that the executive chamber and Senate Democrats had "discussed" whether Mr. Bruno's possible tax violations "should be formally referred to the relevant authorities."

She said, "Senator Bruno is simply trying to divert attention by claiming that it was somehow improper for government employees to consider asking enforcement agencies to look into this matter. It is not. To the contrary, it is appropriate for relevant authorities to determine whether it warrants investigation."

The Spitzer administration claims Mr. Bruno ought to have reported as income at least 11 trips on state aircraft during which he conducted political business, such as meeting with donors and hosting fund-raisers.

Mr. Bruno contends that he did not have to pay taxes because state ethics policies at the time allowed him to take "mixed-use" trips — in which he conducted public and political business — that didn't require any reimbursement. A state official said the ethics policy appears to conflict with federal regulations, which consider political portions of the trip to be the equivalent of in-kind donations.

Despite their concerns, the Spitzer administration has decided not to alert any authorities, Ms. Anderson said.

In many ways the latest squabbling between the governor's office and Senate Republicans is a replay of back-and-forth accusations in July when a report in the Times Union about Mr. Bruno's use of state aircraft prompted Mr. Spitzer to call for an investigation into whether Mr. Bruno's political fund-raising trips to New York City violated state laws.

Mr. Bruno alleged that he was a victim of a dirty trick, claiming that he had obeyed state policies and that the Spitzer administration had improperly used state police to track his movements in the city. The attorney general's office later concluded that two Spitzer aides, including the governor's communications director, had improperly politicized the police and abused Freedom of Information Laws.

Last month, the district attorney of Albany, David Soares, cleared the administration of any wrongdoing and disputed claims that the governor's aides had acted inappropriately.

In the weeks following Mr. Soares's report, Mr. Spitzer has resumed an aggressive posture toward Mr. Bruno.

After Attorney General Cuomo released his critical report in late July, Mr. Spitzer wrote an op-ed in the New York Times in which he apologized for allowing the executive chamber to "get bogged down in partisan politics that serve only to distract us from the business at hand."

Mr. Spitzer's apology did little to assuage Mr. Bruno, who has kept up a steady drumbeat of criticism of the governor, accusing him of stonewalling investigators, covering up evidence, and abusing his office.

Albany sources said Mr. Spitzer has concluded that the Soares report has given the governor the freedom to directly confront Mr. Bruno and resume the same strategy they used before the state police controversy erupted.

The draft letter to the IRS was sparked by recent reports in the Village Voice and the Times Union detailing Mr. Bruno's use of state helicopters during the Pataki administration and raising questions about possible tax obligations.

Months earlier, the tax issue had been a topic of conversation among Spitzer officials.

The Cuomo report quoted a June 3 e-mail from Mr. Spitzer's former liaison to police, William Howard, to Mr. Spitzer's chief of staff, Richard Baum, saying: "The impending travel stuff implies more problems — especially in the tax area I think."