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Churchill County District Attorney Arthur Mallory claims his financial troubles are behind him after he paid off more than $200,000 in tax liens placed on his property by the Internal Revenue Service, but the liens remain active on public records.
Although Mallory and his wife, Linda White, claim they paid the IRS $227,563 in March to satisfy liens placed on their Sunset Drive home in Fallon and a rental property on Ridge Street in Reno, they could not produce a receipt for the payment.
The Lahontan Valley News recently learned the total represents unpaid taxes, interest and penalties. Despite Mallory and White's claims that the IRS debt has been paid, liens on both houses remain active on property records in Churchill and Washoe counties as of Wednesday. Mallory says the IRS now owes him a refund of more than $22,000 that will be applied to his 2005 tax return, which has not been filed yet.
The IRS filed the liens in 2001 claiming Mallory and White owed $204,812 in unpaid income taxes for seven years between 1991 and 1998.
Mallory said he has been negotiating with the IRS since the liens were filed because he disputed the amount the government claimed he owed. He makes $110,552 a year as district attorney and is responsible for managing a $1.5 million annual budget.
Mallory is running unopposed in the November election. His wife is a candidate for district attorney in Esmeralda County, which is considered a part-time job that pays $65,314 a year. Esmeralda County budgets $140,000 annually for its district attorney's office.
"They determined we owed more taxes. We disagreed," he said about the long dispute with the IRS. "In the middle of the negotiation process, they decided to put liens on our property."
At one point, Mallory said, the government claimed he and White owed $275,000.
Tax debt from White's earnings
Although Mallory and his wife, Linda White, claim they paid the IRS $227,563 in March to satisfy liens placed on their Sunset Drive home in Fallon and a rental property on Ridge Street in Reno, they could not produce a receipt for the payment.
The Lahontan Valley News recently learned the total represents unpaid taxes, interest and penalties. Despite Mallory and White's claims that the IRS debt has been paid, liens on both houses remain active on property records in Churchill and Washoe counties as of Wednesday. Mallory says the IRS now owes him a refund of more than $22,000 that will be applied to his 2005 tax return, which has not been filed yet.
The IRS filed the liens in 2001 claiming Mallory and White owed $204,812 in unpaid income taxes for seven years between 1991 and 1998.
Mallory said he has been negotiating with the IRS since the liens were filed because he disputed the amount the government claimed he owed. He makes $110,552 a year as district attorney and is responsible for managing a $1.5 million annual budget.
Mallory is running unopposed in the November election. His wife is a candidate for district attorney in Esmeralda County, which is considered a part-time job that pays $65,314 a year. Esmeralda County budgets $140,000 annually for its district attorney's office.
"They determined we owed more taxes. We disagreed," he said about the long dispute with the IRS. "In the middle of the negotiation process, they decided to put liens on our property."
At one point, Mallory said, the government claimed he and White owed $275,000.
Tax debt from White's earnings
The debt stemmed from White's income while she was in private practice in Reno, the couple said.
White said she became ill in 1991, filed an extension on her tax return and paid what she estimated her tax liability would be. She followed that procedure for the following two years as well, she said.
White cited a serious of incidents - a flooded basement in 1993 that destroyed tax records, a flooded storage unit that damaged documents when the Truckee River breached its banks in 1997 and becoming disabled for four years beginning in 1996 - as reasons she could not pay her taxes.
"I had been negotiating with the IRS, and in 1998 I made an offer of compromise. I had no income coming in and my credit was screwed up," White said.
The income tax debt was linked to White's law office, she said, and not Mallory's job as district attorney for Churchill County. The couple filed joint tax returns during the seven years, which is why both are listed on lien documents.
White said several years went by before she heard from the IRS again. She believes the property liens were filed because it was getting near a 10-year deadline for the IRS to collect taxes for 1991. The situation got further complicated, said White.
"They lost my payments. I had been making payments in 1991, 1992 and 1993. They were never credited to my account," she said. "I had an original compromise out there. The IRS said since it was so old we would have to start compromising again."
She refinanced the Reno house in March, taking out a $445,000 loan through Wells Fargo Bank. White and Mallory said the IRS debt was paid off at that time.
They produced numerous copies of "Certificate of Release of Lien" the couple says they received from the IRS but couldn't explain why liens remain on both houses.
"I don't know," White said about why the liens remain on county property records. "When I refinanced the house, if the lien was not removed, there's $200,000 some odd dollars missing."
Mallory said he recently talked to a Realtor in Las Vegas who told him it sometimes takes years for the IRS to remove a tax lien.
White said she became ill in 1991, filed an extension on her tax return and paid what she estimated her tax liability would be. She followed that procedure for the following two years as well, she said.
White cited a serious of incidents - a flooded basement in 1993 that destroyed tax records, a flooded storage unit that damaged documents when the Truckee River breached its banks in 1997 and becoming disabled for four years beginning in 1996 - as reasons she could not pay her taxes.
"I had been negotiating with the IRS, and in 1998 I made an offer of compromise. I had no income coming in and my credit was screwed up," White said.
The income tax debt was linked to White's law office, she said, and not Mallory's job as district attorney for Churchill County. The couple filed joint tax returns during the seven years, which is why both are listed on lien documents.
White said several years went by before she heard from the IRS again. She believes the property liens were filed because it was getting near a 10-year deadline for the IRS to collect taxes for 1991. The situation got further complicated, said White.
"They lost my payments. I had been making payments in 1991, 1992 and 1993. They were never credited to my account," she said. "I had an original compromise out there. The IRS said since it was so old we would have to start compromising again."
She refinanced the Reno house in March, taking out a $445,000 loan through Wells Fargo Bank. White and Mallory said the IRS debt was paid off at that time.
They produced numerous copies of "Certificate of Release of Lien" the couple says they received from the IRS but couldn't explain why liens remain on both houses.
"I don't know," White said about why the liens remain on county property records. "When I refinanced the house, if the lien was not removed, there's $200,000 some odd dollars missing."
Mallory said he recently talked to a Realtor in Las Vegas who told him it sometimes takes years for the IRS to remove a tax lien.
But an IRS publication about federal tax liens states the lien will be removed within 30 days of payment or the taxpayer can sue the federal government.
Both White and Mallory said they have not checked to see why liens still appears on their property seven months after they paid the IRS in full. White said she can't find paperwork to show the liens should have been removed as part of refinancing the Reno house.
Financial troubles go back a decade
When the IRS placed a liens on Mallory and White's property, it was not the first time the couple's homes were placed in jeopardy.
A default notice was filed against Mallory's Fallon home in 1998 for $4,740 in unpaid house payments. That's the year Mallory first ran for district attorney of Churchill County.
"At the end of my campaign, I was putting all my resources into the campaign and couldn't make the payments," he said.
Churchill County election records show Mallory spent $9,011 in his campaign bid in 1998.
Troubles also plagued the Reno home where two liens - one for a $349 sewer bill and the other a $239 Reno trash bill - were filed in 1998 and 2001, respectively.
A default judgment was recorded on the Reno property for unpaid house payments, interest and penalties in 2001.
Both White and Mallory said they have not checked to see why liens still appears on their property seven months after they paid the IRS in full. White said she can't find paperwork to show the liens should have been removed as part of refinancing the Reno house.
Financial troubles go back a decade
When the IRS placed a liens on Mallory and White's property, it was not the first time the couple's homes were placed in jeopardy.
A default notice was filed against Mallory's Fallon home in 1998 for $4,740 in unpaid house payments. That's the year Mallory first ran for district attorney of Churchill County.
"At the end of my campaign, I was putting all my resources into the campaign and couldn't make the payments," he said.
Churchill County election records show Mallory spent $9,011 in his campaign bid in 1998.
Troubles also plagued the Reno home where two liens - one for a $349 sewer bill and the other a $239 Reno trash bill - were filed in 1998 and 2001, respectively.
A default judgment was recorded on the Reno property for unpaid house payments, interest and penalties in 2001.
Liens also appeared on a condominium the couple bought in 1988. Both liens were for unpaid homeowner's association dues, public documents show.
Money problems worth it
Mallory stressed all his financial troubles occurred before he took office in 1998. Once elected, he said, he took measures to instill checks and balances for all financial transactions in the district attorney's office, turning in all credit cards and county vehicles.
"I risked everything to run for D.A. and Linda took that risk with me," he said. "All people go through times that are good and times that are not good. How you deal with it is how people judge you. I didn't file bankruptcy, and there was no foreclosure. All of it was taken care of before I took office, except the IRS lien."
Mallory said even though he suffered financially in his bid to be district attorney, he doesn't regret his decision to become an elected official. Since taking office, he said, he has put his duties as district attorney above his personal business.
"We made a conscious decision that Fallon and Churchill County is where we wanted to be. We risked our lives and our finances to be here," said Mallory. "When you take a job like D.A., that comes first. That's why I spend 10 to 12 hours a day here. If my personal business comes first, then maybe I wouldn't be a good D.A.
"I'm very proud of what I've accomplished here and I think we've accomplished a lot. If you look at the last eight years, we have probably one of the best, if not the best, rural D.A. offices in Nevada."
Marlene Garcia can be contacted at mgarcia@lahontanvalleynews.com
Money problems worth it
Mallory stressed all his financial troubles occurred before he took office in 1998. Once elected, he said, he took measures to instill checks and balances for all financial transactions in the district attorney's office, turning in all credit cards and county vehicles.
"I risked everything to run for D.A. and Linda took that risk with me," he said. "All people go through times that are good and times that are not good. How you deal with it is how people judge you. I didn't file bankruptcy, and there was no foreclosure. All of it was taken care of before I took office, except the IRS lien."
Mallory said even though he suffered financially in his bid to be district attorney, he doesn't regret his decision to become an elected official. Since taking office, he said, he has put his duties as district attorney above his personal business.
"We made a conscious decision that Fallon and Churchill County is where we wanted to be. We risked our lives and our finances to be here," said Mallory. "When you take a job like D.A., that comes first. That's why I spend 10 to 12 hours a day here. If my personal business comes first, then maybe I wouldn't be a good D.A.
"I'm very proud of what I've accomplished here and I think we've accomplished a lot. If you look at the last eight years, we have probably one of the best, if not the best, rural D.A. offices in Nevada."
Marlene Garcia can be contacted at mgarcia@lahontanvalleynews.com
