THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, November 20, 1995 TAG: 9511200066
SECTION: FRONT PAGE: B3 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: ROANOKE LENGTH: Short : 48 lines
Del. Richard Cranwell and two business partners have settled a lawsuit with the Internal Revenue Service over back taxes owed by businesses in which they were stockholders.
Cranwell, Barry Flora and Gary Flora had filed the lawsuit in March 1994 in an effort to avoid paying more than $90,000 in IRS penalties charged to two former companies in which they held stock.
Cranwell, D-Vinton, said he was ``extremely pleased'' with the compromise, which required that the three pay something, but less than the full amount the IRS claimed was owed. He declined to be specific, saying he wasn't sure whether a confidentiality agreement existed.
The government's attorney, who may have been sent home as part of the furlough of nonessential federal employees, could not be reached.
The lawsuit stems from an IRS investigation that revealed American Chemical Co. and American Janitorial Co. failed to pay more than $260,000 in employment taxes during six months in 1987 and 1988. American Chemical was fined $37,326, and American Janitorial was fined $56,345. The two companies went out of business in 1988.
Cranwell and the Flora brothers were advised in 1992 that they were equally responsible for the penalties. Cranwell denied responsibility, saying he was not an employee, director or officer of the corporations when the taxes were owed. The lawsuit contended that the penalty charges should be abated.
Cranwell's involvement with American Chemical became an issue in his re-election bid two years ago, when former attorney Frank Selbe filed a lawsuit one month before the election alleging that Cranwell had committed tax fraud.
The suit is dead because the court never served it. It focused on a complex reorganization of American Chemical Co. in 1984 that Cranwell used to justify a $40,000 tax break that year. An IRS inquiry of the American Chemical reorganization ended inconclusively in 1990. ILLUSTRATION: Photo
Del. Richard Cranwell sued saying he had no control over tax
payments.
KEYWORDS: LAWSUIT IRS SETTLEMENT by CNB