Judge to Let Helmsley Try to Prove Tax Overpayment

The judge in Leona Helmsley’s tax evasion trial said today that he will allow the defense to present evidence that the hotel monarch and her husband, Harry, actually overpaid their income taxes.

“I am convinced at this point to allow the evidence,” Judge John M. Walker said in U.S. District Court in Manhattan.

The judge said he made the decision despite his feeling that the government had made persuasive factual arguments that the couple cheated on their taxes.

Walker dismissed the jury until 9:30 a.m. Monday, when he said he will allow the defense one hour to present the evidence and the government one hour to rebut it.

Leona Helmsley, 69, is accused of billing $4 million worth of renovations at her 26-acre Greenwich, Conn., estate to the Helmsley hotel business and failing to pay millions of dollars in taxes. Her 80-year-old husband was severed from the trial after several strokes impaired his memory.

During the trial, now in its seventh week, the prosecution presented many witnesses who described how the Helmsleys charged numerous personal items to their hotel business.

Last weekend, her attorneys offered evidence that the Helmsleys actually are owed $681,000 in refunds for the three years covered by the 47-count indictment, 1983-85.

According to the defense evidence offered, two accounting firms recently went over the Helmsleys’ individual tax forms and discovered that some partnerships were not properly depreciated.