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Alabama Lawmakers Targeted for Tax Review by Administration

July 13, 1995

BIRMINGHAM, Ala. _ Fob James has become the third straight Alabama governor to have his administration investigated, this time for a review of every state legislator’s personal income taxes.

The Revenue Department’s attempt to audit the state income tax returns of 24 lawmakers led to the suspension of the tax division chief.

James, who took office in January, is a white Republican, and most legislators who have acknowledged being contacted for audits are black Democrats. Two GOP lawmakers who criticized the governor’s school funding plan also say they have received notices.

``The situation has the potential to spread and perhaps engulf Governor James’ entire administration,″ said Democratic state Sen. Hank Sanders, one of the audit targets. ``I don’t think Governor James had anything to do with this, but I hope he realizes it is more serious than it appears.″

James denies any improprieties. ``We have a duty to uphold the law. I know of not one single incident where we have acted outside the law,″ he said.

The governor’s press secretary, Donald Claxton, said he was unsure if James knew about the inquiries.

State Attorney General Jeff Sessions, a Republican, and the U.S. Attorney’s office began an investigation after requests from legislators.

Revenue Secretary Lewis Easterly said Tuesday that the affair began when he and his boss, Revenue Commissioner Ralph Eagerton, sat in front of a computer terminal to show each other they had filed their own state tax returns.

Easterly said Eagerton suggested the check to make sure they were morally entitled to enforce tax laws.

``How could we ask other people to file tax returns if we hadn’t?″ said Easterly. ``It was one of the first things (Eagerton) did when he came into office.″

From there, Easterly said workers were instructed to make sure Cabinet members and Revenue Department employees had filed. About 40 Revenue Department workers had not done so and were instructed to file immediately, Easterly said.

The next to be checked were the lawmakers. In early February, Eagerton sent a list of legislators who did not appear to have filed to the head of the income tax division. ``It was with the instructions to get them to file a return or provide documentation that they had,″ Easterly said.

Eagerton’s list was the basis for an April 5 memo that ordered audits on 24 lawmakers, according to a revenue official who spoke on condition of anonymity.

Easterly confirmed that legislators named in the memo were the same ones identified in the earlier review. Their names have not been released.

Eagerton did not return telephone calls seeking comment. He issued a statement last week denying knowledge of the memo.

The memo was sent to auditors by field activities manager Roy A. Winborne Jr., who retired this month after three decades with the department.

Winborne has said he was instructed to send the memo by the head of the state income tax division, Dwight Pridgen. Pridgen was relieved of his duties last week, pending a review of the case. He contends he is being made a scapegoat for higher-ranking officials.

Pridgen said he was harshly questioned about the memo by two members of a secretive intelligence unit that reports only to the governor’s public safety director. His comments raised more questions from legislators who said they did not know the unit existed.

Officials eventually checked 48,000 current and former state employees to see if they had filed, Easterly said. The check found about 4,000 people who were paid by the state in 1993 but did not file tax returns, he said.

``As long as everyone is being checked, that’s fine,″ said Mark Williams, executive director of the Alabama State Employees Association. ``If it’s just one group that is being looked at, I have a problem.″

James defeated Gov. Jim Folsom in November amid allegations concerning Folsom’s personal finances and handling of state business. Federal prosecutors are presenting evidence on Folsom to a grand jury.

Folsom, a former lieutenant governor, assumed office upon the April 1993 ouster of Republican Gov. Guy Hunt, who was automatically removed from office upon being convicted of skimming $200,000 from a 1987 inaugural account.

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