Legislator Files for Bankruptcy to Forestall IRS Auction of Plane : Taxes: Federal officials say state Sen. Don Rogers owes $140,000. He maintains that the assessments are unfair because they were applied retroactively.

Federal authorities have seized state Sen. Don Rogers’ private plane for non-payment of about $140,000 in back taxes and penalties, but the legislator filed for bankruptcy Wednesday to forestall today’s auction of the plane by the Internal Revenue Service.

IRS officials said that they may go after other assets belonging to Rogers, who is seeking reelection in a newly created district, because of his repeated refusal to pay the money owed, but that his bankruptcy filing has indefinitely put off all proceedings.

“This stops everything dead in the water,” said IRS spokesman Rick Fleer in San Jose. “The whole thing now goes to a bankruptcy judge, who’ll look at the assets available and the debts, to see how he can pay those debts.”

Authorities were planning to auction off Rogers’ 1963 Mooney single-engine propeller plane at 11 a.m. today in Sacramento, saying he has exhausted all his legal options in fighting the taxes, fines and late penalties. The plane was seized July 7.

Rogers (R-Bakersfield) said he filed for Chapter 13 bankruptcy protection to keep his ownership of the plane through a trust he has set up, and to protect his other assets while he figures out how to pay the IRS.

“It’s kind of a timeout that allows me to restructure and solve my problems,” Rogers said. “I’m still going to pay, but it gives me the ability to set the time frame, liquidate some assets and raise money.”

Rogers said he used the plane to travel between Sacramento, his home district and his residence in Tehachapi. He moved to Tehachapi recently so he could run for an open seat in the predominantly Republican 17th Senate District, which includes the Antelope and Santa Clarita valleys.

Rogers, who has fought tax increases since becoming a state senator in 1986, said he contested the tax assessments because he thought they were unfair. He said that when Congress changed the federal tax code in 1986 to disallow some commonly used tax shelters, the IRS decided to tax and penalize him retroactively for investments he made starting in the late 1970s.

“The IRS in 1986 said they’d go back and penalize me and everyone else for what was legal and lawful and encouraged at the time. Do you think that’s fair?” asked Rogers, 64. “There’s hundreds of thousands of people in the same boat as me.”

Rogers said he and other investors were encouraged in the early 1980s to put money into entrepreneurial businesses and claim investment tax credits, “and I invested in some of those attractive ventures.”

Rogers’ biggest investment, he said, was in a company that built produce containers in which fruits and vegetables could be shipped in an oxygen-free environment to preserve their freshness. He said he invested a small amount in the company and claimed tax credits and depreciation on the containers.

Rogers said he has written protest letters over the years and has gone through audits and appeals.

Fleer said privacy laws prohibited him from commenting on Rogers’ case. But he said Congress changed the tax code under the 1986 Tax Reform Act to address “abusive tax shelters.” The IRS spokesman said some parts of the 1986 tax law were applied retroactively because they dealt with investments and tax deductions that “weren’t really legal to begin with.”

Gil Greene, an independent tax expert and partner in the accounting firm Arthur Andersen & Co., said the IRS was very aggressive in seeking out tax shelters and closing loopholes following passage of the new law. But he said the IRS rarely applies tax laws retroactively unless it has good reason.

Rogers owes about $115,000 in taxes, fines and penalties stemming from 1979, 1980, 1981, 1983 and 1986, Fleer said. The remaining $25,000 comes from underpayment on Rogers’ 1984 and 1985 taxes, Fleer said.

Rogers stressed that he has filed all his personal income taxes on time, and said that his troubles with the IRS could even help him in his reelection bid in the new district.

“Literally thousands of people are being harassed by this unfair retroactive situation,” Rogers said. “They’ll admire me for standing up and pointing out the unfairness of this. At least I hope they do.”

Rogers’ opponents are Bill Olenick, a Democrat and former high school district trustee, and Libertarian Fred Heiser.