Records released today show that Charles O'Byrne, Gov. David Paterson's top adviser, did not fully pay his delinquent tax bills until just this week.The records also show O'Byrne paid a total of $293,000 in back taxes, penalties and interest to the state and federal tax agencies -- far more than the administration had earlier revealed.
A payment of $3,641.85 was recorded to the state tax department just on Wednesday, according to documents released this afternoon by his Manhattan lawyers during a briefing with reporters.
O'Byrne, who wields great authority over state agencies, including the tax department, failed to file his state and federal tax returns for 2001 to 2005. He did not file his 2002 to 2005 returns until December 28, 2006 -- just three days before his boss became lieutenant governor.
O'Byrne blamed clinical depression for his failure to file taxes. His lawyer, Richard Kestenbaum, blamed what he called "non-filer syndrome" that he said affects some otherwise functioning taxpayers.
Paterson administration officials over the weekend said all of O'Byrne's past tax obligations had been paid. His lawyer today said the $3,641.85 payment this week was made to be "100 percent cautious" because a check O'Byrne sent to the tax department in September that he thought would end the matter had not cleared. They provided no proof of the September payment.
The records show it took several years before the state tax department issued a tax warrant for O'Byrne. His lawyers speculated that may be because O'Byrne had previously been self-employed and the lapse in returns might have been taken by the taxing agencies as years in which he made no income.
"Without him coming forward voluntarily, I don't know if this would have been discovered by them," Kestenbaum said.
O'Byrne's lawyers confirmed that the Paterson aide tapped into his friendship with the Kennedy family for help paying his tax bills. He received between $5,000 to $20,000 apiece from his two sisters, and up to $100,000 from a law school friend.
Jean Kennedy Smith, the youngest sister of President John F. Kennedy, loaned him between $60,000 to $100,000. O'Byrne has been close with Kennedy family members for years and has served on several Kennedy trusts and foundations.
The administration had led reporters to believe O'Byrne had to pay about $200,000 in back taxes, penalties and interest. The figures released today show he paid the federal government a total of $211,860 in back taxes, penalties and interest, and paid the state $80,920.
The episode has complicated matters for the Paterson administration at a key time.
Republicans running for their political lives in the Senate have used the O'Byrne episode to help their campaigns. Meanwhile, the governor, who relies on O'Byrne to a greater extent than recent previous governors have with their chiefs of staff, is about to enter into sensitive negotiations with the Legislature to find ways to cut possibly $2 billion from the current state budget.