Donations for S.F. Mayor’s Parties Not Deductible, IRS Says

A company that financed lavish parties for Mayor Willie Brown with donations it said were tax-deductible does not have tax-exempt status, the Internal Revenue Service said.

The IRS, in a letter to the San Francisco Examiner, said the Third Street Economic Development Corp., in the economically depressed Hunters Point area, is not legally able to solicit tax-exempt donations.

Because the contributions are not tax deductible, anyone who claimed a donation for income tax purposes would be liable for penalties and interest, the IRS said.

The company, headed by trucking contractor and ex-convict Charlie Walker, has received about $100,000 in city-administered economic development grants.

Walker, a longtime friend and political backer of Brown, served three years in prison in the 1980s for problems with a city minority contracting program and is under investigation in an FBI probe of bribes connected to city contracts.

Late Wednesday, Brown rejected the description of Walker as an associate.

“They are not investigating any of my associates,” the mayor said.

The development operation Walker heads has on several occasions described itself as a nonprofit corporation for charitable purposes. Earlier this year, in an Internet ad solicitation for a glossy guide to be handed out at a Brown party, Walker promised that the cost would be tax deductible.

“Our records don’t identify that organization as a tax-exempt organization,” said IRS communications manager Keith Kimball. “They have not gone through the process of applying for exempt status and haven’t been granted exempt status.”

Furthermore, while state law requires that nonprofit organizations file portions of their tax returns with the state, Third Street has never done so, according to the state attorney general’s office.