Mihos falls short on tax lien explanation

Cape Cod home latest IRS target

Christy Mihos is a Republican candidate for governor. Christy Mihos is a Republican candidate for governor.
By Michele Richinick
Globe Correspondent / September 29, 2009

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The Internal Revenue Service placed a lien on the Cape Cod home of Republican gubernatorial candidate Christy Mihos last year and forced him to pay a nearly $22,000 penalty after Mihos failed to pay $143,704 in federal taxes on time for the 2006 tax year.

Two weeks ago, the Globe sought an explanation from Mihos after a reporter discovered the IRS had placed the lien, filed at the Barnstable Registry of Deeds, on his home in West Yarmouth. Mihos said the money in question was part of an “eight-figure’’ capital gains tax he owed from the sale of 44 properties in 2006.

Mihos refused to quantify the gain or the amount of the tax. He produced a letter of apology from the IRS, stating that the lien was placed in error shortly after the delinquent taxes had been paid.

In a subsequent statement, Mihos insisted that the money he owed did not include any penalties for late payment. However, in an interview last Thursday, Mihos acknowledged that he had incurred a late payment penalty of $21,776.40.

“I should have been more diligent back then,’’ said Mihos, who is challenging former health care executive Charles D. Baker for the GOP nomination in next year’s governor’s race.

Mihos said he did not pay the taxes on time because he did not have the cash; he said he set up a payment plan. He said he would call back with more documentation, but he did not do so.

This is not the first time Mihos has had tax trouble.

When he ran for governor in 2006, the Globe reported that Mihos avoided $23,000 in sales taxes when he bought a 38-foot luxury yacht in Rhode Island, where boat sales are exempt from the sales tax, unlike in Massachusetts. He had created a Rhode Island corporation, of which he is the sole officer, to buy the $475,000 boat and used the address of his Newport lawyer to register it with the Coast Guard. He has kept the boat at his Cape Cod home in the summer.

The Massachusetts Department of Revenue reviewed the case, with Mihos arguing that he kept the boat long enough in Rhode Island to qualify for the exemption. State tax officials disagreed. But, according to Mihos, he ended up paying $40,000 to settle the matter, including the original tax and penalties.

Frank Phillips of the Globe staff contributed to this report.