County Officials Cars, Security Come Tax Free

Top Los Angeles County officials are chauffeured in government cars on personal trips--even to the barber, doctor or political dinners--and pay no taxes on the benefit.

They can drive their bulletproof cars on out-of-town vacations, something top White House officials cannot do. And they can use their car phones for personal calls without reimbursing taxpayers.

County officials pay no taxes on these benefits because several years ago they tailored their elaborate security plan to qualify for an obscure tax exemption--an action that has saved officials thousands of dollars in personal taxes each year, records and interviews show.

Under federal tax rules, personal use of company- or government-provided cars and drivers is exempt from taxation if required because of a “bona fide business-oriented security concern.”

IRS officials contacted by The Times expressed surprise that county officials have invoked the exemption, which often is used by U. S. attorneys prosecuting dangerous criminals and by corporate executives working in such dangerous places as Beirut.

Tax officials declined to say whether the county’s use of the exemption is proper or whether an inquiry is planned into their tax-free personal use of armor-plated sedans, which cost up to $74,000 each, and chauffeurs, who make $50,000 to $60,000 a year, plus overtime.

To qualify for the exemption, an official must be under “specific threat of death, bodily harm or kidnaping” or work in territory subject to terrorist activity, IRS officials said. “Maybe Los Angeles County qualifies for that,” one tax official said with a laugh.

County officials said they need the security because they have received death threats over matters ranging from controversial Medfly spraying to sale of impounded dogs for research. A Sheriff’s Department spokesman said, however, he could find no record of current threats against any top county executives.

Officials said they had planned to increase protection for top county officials before the exemption was on the books.

“We had a security plan for security purposes, which we tailored to meet the tax laws,” said County Counsel DeWitt Clinton.

Supervisors point out that they pay taxes on an $8,280-a-year car allowance received in addition to $119,000 in salary and benefits. They say they are entitled to personal use of their county cars because they pay $9,480 a year to lease the vehicles.

Under rules issued in December, 1985, the IRS provided an exemption for individuals who require protection because of the nature of their jobs. To qualify, an individual must get round-the-clock security, including a bodyguard/chauffeur trained in evasive driving and “specially equipped” cars.

A month later, the Board of Supervisors adopted an urgent ordinance requiring officials to “fully cooperate with all aspects of the (county’s) special security program,” including a “specially equipped vehicle.”

The ordinance--adopted without public discussion--also shielded officials from any additional taxes assessed against them if the tax advice of county lawyers proved erroneous.

The county soon ordered the armor-plated cars and sent chauffeurs through a Sheriff’s Department training program in evasive driving.

Supervisors Mike Antonovich, Deane Dana and Ed Edelman have armor-plated cars and drivers, as do County Chief Administrative Officer Richard B. Dixon and Clinton, the county counsel.

Supervisor Kenneth Hahn’s county car is not armor-plated but he has a chauffeur; he is unable to drive because of a stroke. Assessor Kenneth P. Hahn has a bulletproof car but drives himself. And Supervisor Gloria Molina, who has called the security measures overkill, drives herself in an ordinary car. She rejected a bulletproof car used by her predecessor, Pete Schabarum, who retired last year.

County officials are required--by rules they adopted--to use their cars for personal trips. According to their car lease, “For security reasons, the lessee requires 24-hour protection and . . . is particularly vulnerable to attack while traveling.”

Some officials keep logs of their personal use of their county cars, but none gave The Times access to the records. The drivers either declined to be interviewed or did not return calls.

Dana said he sometimes takes the county car out of the county on personal matters, and an aide said Dana takes the car to political events and to Solana Beach for weekend outings. An aide to Molina said she uses the county car full time. An aide said Hahn uses his car to go to and from the doctor, and Edelman takes his car to the barber. “We’re supposed to” use the county car for personal matters, Edelman said.

An informal Times survey of government officials elsewhere found that some pay taxes on their cars and drivers, while others do not.

Top White House officials, from the chief of staff to the national security adviser, are chauffeured between home and work in government cars. But, unlike the supervisors, they pay taxes on the benefit. Except for the leadership, members of Congress do not routinely receive cars or drivers.

Gov. Pete Wilson and Mayor Tom Bradley pay taxes for commuting in their government cars, but do not pay taxes for use of police officers as their drivers. Los Angeles City Council members do not have drivers, and they pay taxes on use of city cars for commuting.

In Los Angeles County government, top officials have their cars fueled, maintained, washed and insured at public expense. The county also provides a credit card for gas purchases on the road.

County officials are permitted to make personal calls on their car phones without reimbursing taxpayers. They refused to make available the phone bills, citing security concerns. But they said the monthly car phone bills for each supervisor ranged from $36 to $308. They could not provide a breakdown on personal calls.

County officials saw a need to increase protection “before we ever realized the tax advantage of it,” said Dixon, who is chauffeured in an armor-plated sedan by a $51,000-a-year sheriff’s deputy.

Dixon acknowledged that the security program was “more formalized once we started worrying about tax consequences.”

Without the exemption, county officials would probably have “tens of thousands of dollars” added to their taxable income, Clinton said. “People couldn’t afford to be in a security plan.”

County officials initially relied on the security exemption so they would not have to pay taxes for personal use of their cars, Clinton said. But now, he said, the security exemption is unnecessary because the supervisors are leasing cars at fair market value.

However, IRS officials said that county officials are still taking advantage of the security exemption to avoid taxes on the personal use of the cars. The lease payments, the IRS noted, do not cover the full value of the car, including armor and other security devices that cost up to $45,000 per vehicle.

And county officials acknowledge that they continue to rely on the security exemption to avoid paying taxes on personal use of their drivers.

Jerry Holmes, an IRS branch chief of employee benefits and exempt organizations in Washington, said, “The favorable tax treatment would cease to apply when the specific threat ceases to exist.”

“It would certainly be unusual to find (local officials) under a constant threat,” Holmes said.

Just how much risk the supervisors face is unclear.

Sheriff’s Department spokesman Bill Wehner said he could find no records of threats to supervisors. “I’ve called all over the place, I can’t find a thing,” Wehner said.

Pat Soll, manager of the county office of security management, said he is notified of all threats made against supervisors but said he is not authorized to release any specific information about the number or nature of threats.

He did say threats do not occur routinely and that “some are more viable than others.”

Some county officials say that the supervisors--who oversee the jails and mental health clinics--are constantly at risk, though not always under a specific threat.

The risks, they say, are underscored by the fact that a county agricultural commissioner in the mid-1980s wore a bulletproof vest because of threats he received during the controversial spraying of malathion to eradicate the Medfly.

“I have had threats on my life,” Antonovich said. One threat in 1988 resulted in the jailing of a man, he said.

Dana said that he receives threats “with some regularity.”

“It started about three days after I took office, and it hasn’t stopped since,” said Dana, who last year put 33,533 miles on his county car--about 10,000 of which was for personal business, including commuting. He refused to make available a log detailing his trips.

“I’ve had some threats,” Edelman said. “I don’t want to go into them.”

A spokesman for Molina said the supervisor has not received any death threats, but has received “crazy, adoring letters” that were forwarded to the Sheriff’s Department. She was given a Sheriff’s Department escort for several days and eventually obtained a restraining order against the admirer.

Hahn said he has never received a death threat in 40 years as a supervisor.

Some of the supervisors’ cars feature an intercom system that allows the driver and passengers to talk to outsiders while sealed safely inside. The trunks are rigged with hidden escape buttons--in case kidnapers try to store victims there.

Jim Hankla, who was chief administrative officer when the tax regulations went into effect, said there had been increasing concern about supervisors’ safety before the purchase of the bulletproof cars.

Current county officials cite a 1953 incident in which a spectator struck a supervisor, who later died. In 1986, supervisors’ homes were picketed by animal rights protesters seeking to prevent the sale of animals from county pounds to researchers. Board meetings also have been marred by noisy demonstrations with arrests.

The county also had hired an independent security consultant before the tax rules went into effect.

“Well before the tax act, three of the five supervisors had drivers who carried guns,” Dixon said.

Times research librarian Tom Lutgen contributed to this story.

(Southland Edition) Security Coverage

Here is a list of the cars provided to supervisors and senior county executives covered by the security program. The security cost includes bulletproofing and armor-plating of the cars:

SUPERVISOR MAKE/MODEL CAR COST SECURITY COST Mike Antonovich 1991 Buick Park Ave. $26,000 $45,000 Deane Dana 1991 Buick Park Ave. $26,000 $45,000 Ed Edelman 1988 Oldsmobile 98 $20,900 $14,000 Kenneth Hahn 1989 Buick Park Ave. $21,000 None* Gloria Molina 1991 Buick Century $15,000 None*

CHIEF ADMIN. OFFICER MAKE/MODEL CAR COST SECURITY COST Richard B. Dixon 1988 Buick Park Ave. $22,000 $22,000

COUNTY COUNSEL MAKE/MODEL CAR COST SECURITY COST DeWitt Clinton 1988 Buick Park Ave. $22,000 $22,000

* Hahn and Molina have declined to bulletproof their cars.

SOURCE: Los Angeles County