Former governor L. Douglas Wilder says federal tax officials are investigating how he handled money raised for his inaugural festivities, a source of controversy for almost a decade because of his refusal to give a full public accounting of a surplus totaling nearly $1 million.

"I am currently in discussion with federal tax authorities on matters relating to my inaugural fund," Wilder (D) said in the five-sentence statement, referring to the Internal Revenue Service. "I am cooperating fully and have instructed my accountants and anyone else who might have relevant information to do likewise."

Wilder said his attorney, Richard Cullen, a personal friend as well as a former U.S. attorney and state attorney general, has instructed him to not comment further. Cullen declined to comment today. The U.S. Treasury Department, which oversees the Internal Revenue Service, declined to comment on Wilder's announcement.

The whereabouts of the money--which Wilder could legally have declared as personal income under the campaign finance laws of the time--has been one of Virginia's enduring political mysteries since his lavish inauguration in 1990.

Wilder raised $1.8 million for the inauguration by charging lobbyists, corporations and other private donors up to $7,500 each. After the inauguration, Wilder refused to detail who the contributors were and how he intended to spend the $967,000 surplus.

Although the governor promised to use the surplus to help candidates for other offices and for "political activities," many Democrats and Republicans have long wondered how Wilder spent the money and for what.

Had the money gone to bankroll a political campaign, Wilder would have owed no taxes on the surplus, say those familiar with tax and campaign law. He would owe federal and state taxes if he used it as personal income.

He briefly ran for president in 1992 and U.S. Senate in 1994. He also donated $50,000 of the surplus to the Democratic Party of Virginia and created a political action committee.

Wilder, 68, is retired from his law practice but still teaches a course on public policy at Virginia Commonwealth University in Richmond. He is also a frequent contributor to editorial pages in Virginia. Wilder's statement about the investigation created a stir among Virginia politicians after the former governor faxed his remarks to the Richmond Times-Dispatch on Friday.

"Obviously, the federal government is interested in that portion of [the surplus] that may have been spent for personal purposes," said Sen. Joseph V. Gartlan Jr. (D-Fairfax).In the aftermath of the 1990 controversy, Gartlan wrote a bill to require full disclosure of the inaugural fund-raising and resulting spending, much as a campaign committee and political action committee must also do.

If Wilder used the surplus for personal income, "it's a breach of an implicit trust with donors," he said.

Paul Goldman, Wilder's onetime political confidant and a former party chairman, said that he had no knowledge of how the surplus was spent but that governors should raise only what they intend to spend on the event.

"There's no excuse for turning the inaugural of the governor into a profitmaking event," Goldman said.

Some in Richmond looked forward to the possibility of a final accounting of the surplus after many years of questions.

"Hopefully we'll find out answers for the first time that should have been answered long ago," said Steve Calos, executive director of Common Cause of Virginia.

Staff writer Patricia Davis contributed to this report.