Sarah Palin May Have a Tax Problem

Bumped - this got buried earlier - Todd

Sarah Palin may be going to great lengths to great lengths to sling Barack Obama today, but such tactics aren't likely to deflect attention from the apparent situation that Palin may have underreported her income for the purposes of paying federal taxes. Here are some of the numbers, put together by ABC News:

Of particular interest: roughly $17,000 in state-issued per diems for evenings spent in her own home in Wasilla.  The Washington Post recently reported that the per diems and associated travel costs from the state capital in Juneau for Palin's family could mean a tax liability of more than $60,000 for Palin's first year and a half as governor.

The address listed on the 1040's is Palin's family home in Wasilla, which would seem to suggest Palin considers that, not the governor's mansion in Juneau, her "tax home."  However the McCain-Palin campaign maintains that her "tax home" is technically the governor's mansion in Juneau.

The point is potentially significant because any per diems and travel reimbursements received in connection with someone's "tax home" would likely be taxable as income.  According to IRS regulations: "If you (and your family) do not live at your tax home (defined earlier), you cannot deduct the cost of traveling between your tax home and your family home. You also cannot deduct the cost of meals and lodging while at your tax home."

The IRS also strictly forbids deductions for expenses incurred bringing a spouse and kids along on a business trip.  Tax authorities say any reimbursement for travel costs for family members would likely incur income taxes.

But Palin's tax returns indicate she paid no taxes on the disputed per diems and travel expenses.

Paul Caron of the TaxProf Blog, who knows a whole lot more about the tax code than I do, takes a look at the excuses pushed by the McCain campaign for the Alaska Governor having paid less in taxes than some in the business believe she should have and comes away unimpressed.

Both conclusions [that an employee can rely on the W-2 from the employer and that the travel benefits enjoyed by a spouse are not taxed] seem problematic.  If an employer mistakingly fails to include an item of income from an employee's W-2, does that really relieve en employee of her obligation to report the income on her tax return? How does Mr. Olsen's conclusion regarding the reimbursement for expenses of the Governor's spouse and children square with § 274(m)(3)?  Undoubtedly the most amazing (brazen?) aspect of Mr. Olsen's opinion letter is that he cites absolutely no law in the four pages to support his conclusions -- no code or regulation sections, cases, or rulings.

Another discrepancy is the $196,531.50 income as Governor reported on her financial disclosure form (with the notation "[a]s reported to filer by State of Alaska"), compared to the $107,987 wages, tips, other compensation and $122,401.43 Medicare wages and tips reported by the state of Alaska on the W-2 attached to her tax return.

At this juncture, this is a bunch of jargon -- and not a lot of hard conclusions. But it seems to me that there does lie within these tax returns, which were dumped (unsurprisingly) late Friday so as not to give reporters a great deal of time to look them over before having to file their stories, some real potential headaches for Palin, and thus for the McCain campaign. Many will recall how Al Franken's Senate campaign was derailed for a time earlier this year in dealing with a tax issue. But while Franken was able to recover -- he now leads, in fact -- he had significantly longer to do so than Palin would just one month from election day, were the implications of underpaid taxes to pan out.

This story may still go the way of the pet rock and the pog, without having made an indelible impression on the country. But if it lingers, even for the next few days, there could be some real problems for the Republican ticket.



Display:


This is important.. (2.00 / 1)

The GOP wants to make medical benefits taxable, causing millions of people to lose health insurance, so "dangit" this is fair game.

Millions of people obey the law of face the consequences. She is not above the law just because she's a governor/politician/religious extremist!


public option=not affordable for middle. It cant cover all affordably, google adverse selection for why
by architek on Sat Oct 04, 2008 at 08:11:22 PM EST

Re: Sarah Palin May Have a Tax Problem (none / 0)

I'm guessin' this is a pet rock issue (see, I can drop my G's too!).

I doubt someone is going to choose to vote against Palin (umm, I mean McCain) cuz she followed bad tax advice.  If this were a Wesley Snipes kinda thing, then yeah, but not what seems like a pretty esoteric issue.

In wacko anti-tax world, this could actually turn into a positive.


If yer after gettin the honey, then you don't go killing all the bees.
by Fluffy Puff Marshmallow on Sat Oct 04, 2008 at 08:20:44 PM EST

Re: Sarah Palin May Have a Tax Problem (none / 0)

I agree this will help solidify the base even more, but I think it is also going to turn of more independents.  


by gavoter on Sun Oct 05, 2008 at 01:03:01 AM EST
[ Parent ]

A wiff of smoke.... (none / 0)

But no fire here.

Besides, her stalwart supporters HATE the IRS.

She probably is their hero EVEN MORE FOR THIS, they probably think she is being framed or too bad she didn't get away with it without being noticed....


Support the separation of Church and State: Vote YES on WA R-71!
by WashStateBlue on Sat Oct 04, 2008 at 09:27:22 PM EST

Re: A wiff of smoke.... (none / 0)

Maybe.

But if there is enough truth to it, it can be the finial nail in the coffin to her "reformer" cred.

Can you imagine an ad on McCain's houses and her tax dodge?

I can.


by gil44 on Sat Oct 04, 2008 at 10:33:49 PM EST
[ Parent ]

Re: Sarah Palin May Have a Tax Problem (none / 0)

i like pogs.


Being Normal is for the Mediocre.
by Doug Tuttle on Sat Oct 04, 2008 at 09:29:08 PM EST

Re: Sarah Palin May Have a Tax Problem (none / 0)

Maybe that is why Palin scoffed at the notion that Biden said paying taxes could be seen as patriotic in the sense that those companies that go off shore to avoid paying taxes, when our taxes are suppose to support out troops and our military, build our roads, pay for schools and to not pay taxes or try to get out of paying a fair share while at the same time reaping the benefits of the spending of those funds could be considered a lack of moral responsibility.

This is a moral issue.  It is also a moral issue when you have a woman, such as Ann Coulter, who in my opinion, going around saying the most disgusting things, or that low class trash talker Rush Limpball, those people are seeking the lowest common denominator, but to have a vice presidential nominee saying such low class things, like the trash talk she said today concerning the nominee of the other party, claiming that he is palling around with terrorists, is just such a show of classless lack of morals as to make the woman not only unqualified, but morally bankrupt.   The McCain campaign continues to lie about the positions of Obama, claiming things that have been proven over and over again to be false.  That makes them liars.  so here we have a candidate that cheats on their taxes, tried with the most low class kind of aw shucks, and the fake pretense of the common woman, which is really an  insult to the middle class in this country.  Her fakery of the common person by such transparent device, so this woman is a proven liar and faker and now the evidence is that she is a moralistic, but not moral person saying such demeaning things, does  not bring into question Obama's character but hers instead.

The claim that paying taxes is a redistribution of wealth is the old lie that republicans have told for years.  Since the abolishment of welfare that they successfully got rid of, the spending of the republican administration and republican congress has resulted in the ballooning of the federal budget.  spending included paying for the military that republicans support, driving on roads they and the products they buy use these roads to deliver them to their local stores, their children go to schools that are paid for with tax payer dollars, the courts that they want more and more of and incarceration of the "criminals" that they want so much, all take money to do.  You might call republicans the borrow and spend party.  Democrats wish to pay for these things with tax payer dollars, and they want the wealthy to pay a fair share of their income, which the republicans have so successfully managed to keep the wealthy from paying.  They have built up tax shelters, they have put tax exemptions for big corporations, they have rewarded companies for taking their jobs overseas, and they think that they are patriotic?  While they continue to claim that Obama wants to raise taxes when in fact Obama has proposed middle class tax cuts.  it seems to me that republicans are not moral at all.  Our tax code used to reward work in this country but now it only rewards wealth.  As Warren Buffet said there is something wrong with a tax code that makes his secretary pay more in taxes as a share of her income than he pays as a share of his income.


democrat voter
by democrat voter on Sat Oct 04, 2008 at 10:22:31 PM EST

Re: Sarah Palin May Have a Tax Problem (none / 0)

I actually don't think she's breaking the law:

Here is some information:

An employer can reimburse employees under an accountable plan based on travel days, miles or some other fixed allowance.  (This sounds like what your employer is doing.) If the allowance for an employee is less than or equal to the appropriate federal rate, the allowance is treated as reimbursed under an accountable plan and is not included in the employee's taxable income.  If the allowance is greater than the federal rate, the amount up to the federal rate is excluded from employee wages under an accountable plan but reported to the employee in box 12 (code L) on Form W2.  The excess amount is reported in box 1, Form W2 as taxable wages under a nonaccountable plan.
http://en.allexperts.com/q/Tax-Law-Quest ions-932/diem-1.htm

'07 BASIC ALLOWANCE FOR HOUSING RATES
ZIP CODE: 99652

MONTHLY ALLOWANCE:
O-7 + with DEPENDENTS:    O-7 + without DEPENDENTS:
$ 2346.00    $ 1873.00

http://perdiem.hqda.pentagon.mil/cgi-bin /bah/bahsrch.pl

I am assuming that as governor she is the highest job classification. So the annual amount for Palin is $28152.00.  That means she doesn't have to file her per diem on her federal tax form.

There are plenty of issues with Palin, let's stick with the stuff that's easily proven.


by SF Bay on Sat Oct 04, 2008 at 11:09:18 PM EST

Sarah Palin May not Have a Tax Problem (none / 0)

Look, The fact that the Palins are getting away with ignoring a Court authorized Supeana should tell us something about how the media will handle this Tax issue. Unless Obama and Biden decide to take it to the Voters themselves and I doubt it, it will be ignored! IOKIYAR is not a thing of our collective imagination.


by eddieb on Sun Oct 05, 2008 at 09:27:12 AM EST

Re: Sarah Palin May Have a Tax Problem (none / 0)

Can we skip the stuff that won't stick and concentrate on stuff that will?  Like reducing the cost of health care and drugs, saving social security, getting the economy back on stable ground, and reducing annual deficits caused by out of control war spending?  Parsing tax returns and investigations that are going nowhere is a dead end.


by markt on Sun Oct 05, 2008 at 11:16:05 AM EST

"There's no debate: Palins owe..." (none / 0)

Jack Bogdanski is one of the most popular bloggers in the Oregon blogosphere.  He almost never blogs about his day job, but when he does, it's a doozy.

You see, Jack is a tax law professor at Lewis & Clark College and the author of some pretty serious tomes on tax law.

Nearly a month ago, Jack was the first person to raise questions about the Palin's taxes.

And now that he's seen 'em, he writes:

There's no debate: Palins owe thousands in back taxes

On Friday afternoon, just at the time of the week when people unveil unhappy news releases in order to minimize media coverage, the McCain-Palin campaign released Sarah and Todd Palin's federal income tax returns for 2006 and 2007. The returns do not include as taxable income any of the per diem allowances or travel expense reimbursements that the State of Alaska paid for travel by Sarah or Todd Palin, or by three of their children (Bristol, Willow, and Piper Palin), in 2007. At roughly the same time as it released the returns, the campaign also handed out an opinion from a Washington, D.C. tax lawyer that purports to address at least some aspects of the propriety of the omission of the travel money from the 2007 tax return.

Since then, one commentator has reported that there is now a "wonky debate" as to the correctness of their omitting the travel money from their tax returns. We disagree. There is no serious debate (at least, none that has been brought to our attention) about the fact that at least the amounts paid for the children's travel -- $24,728.83 in 2007, according to the Washington Post -- are taxable. The campaign's tax lawyer has got at least that much of the law, and perhaps more, wrong.

Jack goes on for several thousand more words, including footnotes.  It's worth a read.


by karichisholm on Sun Oct 05, 2008 at 02:54:41 PM EST


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