Bren Drops His Fight Against $120,000 Tax Penalty

Orange County billionaire Donald Bren, who stands at No. 57 on Forbes magazine’s listing of the 400 richest Americans, has decided to stop fighting a $120,830 penalty for failing to pay taxes on out-of-state art purchases.

Bren, the publicity-shy Irvine Co. board chairman whose tax problems were publicly debated at a recent Board of Equalization hearing, said Monday that he paid the penalty last Friday in hopes that it would “put this matter fully to rest.”

Bren had initially asked the tax administration board to “forgive” the penalties, saying he did not know he had to pay California sales tax when paintings he purchased at a New York auction were brought into the state.

He said he only became aware of the tax liability when state auditors asked him for an accounting. After he disclosed art purchases of $20 million during the mid-1980s, they billed him for $1.2 million in back taxes, plus $671,872 in interest and a $120,830 penalty.

In a written statement, Bren said he paid the back taxes and interest but decided to challenge the penalties after he was told the Board of Equalization had waived them in similar cases “as a routine matter on (the board’s) consent agenda.”

When the case came before the five-member elected board, however, it was not handled as a routine matter. Insisting on a full-blown public discussion, members argued heatedly over whether rich and poor should be treated alike when it came to tax penalties.

Two Republicans on the board urged their colleagues to forgive the penalties, noting they had done the same in the past for taxpayers who weren’t billionaires. Two Democrats, however, contended that anyone who could afford $20 million in art purchases could easily afford a tax lawyer’s advice. The fifth member, Controller Gray Davis, abstained.

Until Bren’s statement, the board had intended to try to break the deadlock this week.