Westly Joined Backer's Tax Fight
SACRAMENTO — Controller Steve Westly aided retailer Barnes & Noble's fight to avoid a multimillion-dollar California tax bill at the same time he was arranging a fundraiser at the chain's East Coast headquarters.
Using his position on a state tax board, Westly joined Barnes & Noble's push in 2004 to be forgiven as much as $22.8 million in sales taxes, interest and penalties -- money owed for years of not collecting sales tax on goods sold online. Westly, a Democrat, has been campaigning for governor as an opponent of corporate tax loopholes.
Barnes & Noble has more than 100 stores in California. But it has contended that because its online operation is based elsewhere, its Internet sales are not subject to California taxes. State auditors have rejected that argument, and the company took the case to court.
Westly began lobbying the tax board to overrule the auditors and settle the case at a time when the state was already extracting back sales taxes from other businesses with far more tenuous connections to California. His effort ultimately failed; the case remains in court.
In a March 14, 2004, e-mail obtained by The Times, Westly informed one of his fundraisers that barnesandnoble.com President Marie J. Toulantis was pleased by his efforts at the tax board, making it a good time to ask for her help in raising campaign cash.
"We have followed up with Marie, the president of Barnes & Noble -- and she is reportedly happy
In his message to Rosen, the controller attached a string of e-mails written by state employees on state e-mail accounts documenting steps his office had taken on Barnes & Noble's behalf, mostly lobbying to get the company's case on the tax board's agenda.
Westly, who made a fortune as an early executive with the online auction phenomenon EBay, left for the East Coast on April 27, 2004. He collected tens of thousands of dollars from an array of donors, including many who attended a luncheon at Barnes & Noble's New York City offices.
His largest check from that event -- $5,000 -- came from Laura Riggio, wife of Stephen Riggio, chief executive officer of Barnes & Noble, the nation's largest bookseller.
Westly had been pushing California to let barnesandnoble.com off the hook for back taxes if the company agreed to collect and pay sales taxes to the state in the future.
