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Indian Wells council member accrued over $1 million in unpaid taxes

Incoming Indian Wells City Council member Ty Peabody, who campaigned in part on a message of fiscal responsibility, has a record of more than $1 million in unpaid taxes, records reviewed by The Desert Sun show. Peabody said he has settled his debts with the IRS and one state agency but declined to provide detailed proof and would not discuss his debts to another state agency.

Peabody, who served on the council from 2012 to 2020, including stints as mayor, accrued roughly $1.1 million in federal and state tax debt dating back to the early 2000s, according to public records reviewed by The Desert Sun.

Such debts are, in general, a matter of public record and details about many of Peabody's liabilities are on file with the Riverside County Assessor-Clerk-Recorder's office. When such debts are paid, government agencies are supposed to file a record that the lien has been lifted. While Peabody says the issues have been resolved, no record of any of the tax liens being lifted has been filed with the Riverside County Assessor-Clerk-Recorder's Office.

In last month's election, certified results show Peabody won a city council spot that lasts two years, filling the remainder of Kimberly Muzik’s term. She resigned in May. Peabody defeated Ted Mertens, also a former council member, with 54% of the vote.

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Peabody has said he doesn't plan to seek another term beyond the stopgap.

Two other seats on the council were also up for election on Nov. 8. Current Mayor Dana Reed and attorney Bruce Whitman won those full, four-year terms, according to certified results.

The Desert Sun received a tip about Peabody’s tax issues days before the Nov. 8 election. Seeking verification and details about the debts from county, state and federal agencies required several weeks.

The tax issues for Peabody, a businessman and longtime co-owner of Don Diego’s restaurant with his wife, date to the early 2000s. The largest share of the debt — roughly $615,000 — came from the Internal Revenue Service, according to 2016 tax liens filed with the county recorder.

Peabody, 80, says the liens are the result of a 2005 corporate bankruptcy case in Los Angeles County, which court records show closed the next year. Another company that was planning to take over the restaurant business reneged on its plans, Peabody said, thus leaving him as CEO with the tax obligations.

“I've had a successful 60 years in the retail hospitality industry running various large and medium-sized businesses,” Peabody said. “A lot of successful entrepreneurs take a risk and have gone through bankruptcy. It is not fun, and it is painful.”

Peabody told The Desert Sun he resolved the issue with the IRS in March 2017. He declined to provide documentation of the settlement, describing the matter as personal and confidential. Peabody later provided a one-page document with an IRS letterhead, dated March 3, 2017, that says "Case Closed" but does not offer details on any settlements. He said the document, which also contains no case number, is a cover sheet.

Peabody described the matter as “over in my life.”

The records also show Peabody owing roughly $46,500 in tax liens to California’s Employment Development Department as of 2018. Peabody says he paid down the balance owed to the state over the eight years he was on the council, from 2012 to 2020.

Public records show the amount Peabody owed to the EDD grew smaller between 2005 and 2018. Peabody said the payments ended two years ago. The federal and state tax agencies declined to release any records related to the cases, citing confidentiality laws.

“Any and all discussions with these agencies is privileged between myself and the agency,” Peabody said.

Melissa Garcia, the county's chief deputy assessor-clerk-recorder, said a "release of lien" — which is a public record — is supposed to be filed when someone pays off a debt entirely. Garcia said government tax collectors either send that release to the recorder's office or send it to the taxpayer, who must file it with the recorder themselves.

No such record has been filed with the county for any of Peabody's debts, according to public records reviewed by the Desert Sun.

Garcia said the recorder could not confirm the current status of any of Peabody's debts to tax agencies, adding, “We can only speak to the records that are filed in our office.”

Other tax liens against Peabody came from California’s Board of Equalization, which oversees certain tax collections and county tax assessments, as well as the California Department of Tax and Fee Administration, totaling roughly $466,000, according to the most recent public filings from 2017.

Peabody declined to comment on those state liens, adding he’s never had a personal or property tax issue in his life.

“You either get up and keep on going or you don't,” Peabody said of the corporate bankruptcy. “I chose to get up and keep going … I did everything I was supposed to do.”

The topic has arisen in past Indian Wells council races. In 2012, Peabody was one of several candidates who were targeted in anonymous mailer advertisements that criticized him for the 2005 bankruptcy.

Two years later, the state’s Fair Political Practices Commission issued a $3,500 fine to former council candidate Haddon Libby for not properly disclosing that he was behind those mailers.

Peabody is a businessman and restaurateur who has campaigned his experience in restaurants, concept development, strategic planning and analysis. His resume lists work for several companies, including as president of Paradise Bakery Inc., a chain of 52 bakery-cafes that was ultimately sold to Panera Bread.

Desert Sun news editor Eric Hartley contributed to this report.

Tom Coulter covers the cities of Palm Desert, La Quinta, Rancho Mirage and Indian Wells. Reach him at thomas.coulter@desertsun.com or on Twitter @tomcoulter_.

This article originally appeared on Palm Springs Desert Sun: Indian Wells councilman Ty Peabody accrued $1 million in unpaid taxes