The Governor’s Residence Conservancy, a not-for-profit foundation that collects private funds to preserve, restore, and maintain the governor’s official residence and gardens, is being audited by the Internal Revenue Service, state officials say.
Organized in 1991 as a 501(c)3 public charity, the conservancy is exempt from income taxes under IRS rules but is required to pay excise taxes on its net investment income.
IRS officials routinely decline to either confirm or deny ongoing audits or investigations.
But Gov. M. Jodi Rell’s legal counsel, Anna Ficeto, who is listed as chairwoman of the conservancy on its latest available federal tax return, today confirmed that the IRS was auditing its operations during the fiscal year that ended June 20, 2003.
Ficeto said she didn’t know details about the federal audit, but added that it was sparked by revelations about Rell’s predecessor, former Gov. John G. Rowland.
Rowland, who resigned July 1, 2004, subsequently pleaded guilty to taking more than $100,00 in gifts from state contractors in exchange for access to his office and served a 10-month federal prison term.
Ficeto said the conservancy was “trying to close” the IRS audit, but that it had been held up by a search for a missing portrait of “Rowland, his family, and their dog.”
Ficeto said that because the conservancy had paid for the portrait, the IRS wants to know what happened to it.
At one point, she said, IRS agents accompanied a conservancy official on search of the governor’s residence that failed to turn up the painting.
“We’ve never been able to locate it,” she said.
The federal tax probe first was disclosed by the state auditors, who in a review of the conservancy reported in September that the IRS had yet to complete an audit of its operations for the fiscal 2003.
They added, however, that the conservancy’s board of directors didn’t expect an adverse determination and that no provision had been made “for a corresponding tax liability.”
The auditors also noted that the conservancy’s financial statements didn’t include the value of the personal property it had purchased or donated, primarily because the foundation “did not regard itself as the owner.”
They recommended that the conservancy consider modifying its memorandum of understanding with the Department of Public Works to clarify whether the title to that property and the responsibility to provide insurance coverage rests with the conservancy or the state.
The conservancy, they added, also should “attempt to determine reasonable values for the items to provide sufficient insurance coverage.”
