In a move that would make Saul Goodman proud, a National Park Service employee was recently caught laundering money to help an artist avoid paying federal taxes.
A new report released this week from the Department of Interior Inspector General’s office (OIG) found that a National Park Service (NPS) employee, working in his official capacity, aided an artist in avoiding tax garnishment. Further, to acquire the painting at issue, the NPS ignored federal procurement laws to bypass the competitive bidding process.
According to the OIG, an official at the Southern Campaign Parks Group (SOCA), a group of national parks located in South Carolina, desired a 4 ft x 8 ft original painting for the visitor center at the Kings Mountain National Military Park (KIMO). The artist, however, did not want to sell to NPS because he owed back taxes and some of the proceeds would have been garnished by the federal government. Forty percent of a prior sale he made in 2014 resulted was garnished.
As a solution, the NPS official worked out a deal where a friends’ group associated with the park would buy the painting from the artist and then the NPS would purchase the painting from the group, thus avoiding a direct transaction with the federal government and the garnishment. The arrangement gave $30,000 to the artist, $5000 to pay off the debt the artist owed to a member of the friends’ group, and a $4000 fee to the friends’ group $4,000 for acting as the middleman.
In the IG interview with the NPS official, the official claimed his motivation for creating the unconventional purchase chain wasn’t to assist the artist in avoiding paying back taxes, but to help the NPS. He stressed that had he not created the cut-out, the NPS wouldn’t have been able to procure THAT specific painting.
Even if the official had not created the shady laundering arrangement, the purchase still was out-of-line because the value of the purchase exceed $25,000, a threshold that requires competitive bidding.
The NPS has $11.5 billion in deferred maintenance. What does that mean? According to the NPS, “repairs or maintenance on roads, buildings, utility systems, and other structures and facilities across the National Park System [have] been postponed for more than a year due to budget constraints.” But we’re not just talking about parking lots, and hiking trails. Repairs to vital park services such as wastewater systems, water systems, and dams, and other vital infrastructure. have been delayed for years. Yet the resources are available to launder $39,000 to acquire a painting?
Not only does the inappropriate procurement of the artwork sap the NPS of resources needed to address these problems, it also highlights another massive problem facing the federal government – which is the tax gap.
The tax gap is the difference between what the government expects to take in, and what they actually receive. As Alex Muresianu noted recently on this site, “Between 2008 and 2010, the IRS, on average, took in $458 billion less in tax revenue than they were owed… annually, the IRS faced an average net tax gap of $406 billion.”
That’s a lot of people who aren’t paying their fair share. That fact would be bad enough, but the IG report shows the SOCA NPS official personally aided in fleecing the American taxpayer by concocting this tax avoidance scheme.
The visitor center may have gotten their painting but the episode doesn’t paint a pretty picture when it comes to government and its ability to be competent stewards of taxpayers’ dollars.
