The Problem Isn’t So Much that She’s a Tax Cheat…

The problem is that Sarah Palin improperly billed the state of Alaska so she could cart her children around to events.

Both the NYT and the WSJ confirm what tax bloggers have already concluded. The Palins did not declare the $43,490 the state reimbursed them for travel costs for Todd and the kids to accompany Sarah on official trips. And they should have–certainly for the funds reimbursing travel for the kids. Here’s the WSJ:

While several tax experts have raised serious questions about whether the payments to Gov. Palin are taxable income, they said the case was clearer cut for treating the reimbursements for the children’s expenses as taxable income. "The kids are a slam dunk problem," said Robert Spierer, a partner with the accounting firm Perelson Weiner LLP in New York City. "The husband you could make an argument that he had to be there because it was required for spouses to be there."

But not the children, he said. "I don’t think I would ever claim that on my clients’ returns. I can’t think of a real strong argument for it."

[snip]

Bryan Camp, a tax professor at Texas Tech University School of Law and a former Internal Revenue Service lawyer in Washington, said the IRS would ask several questions to determine whether the travel reimbursements were reported properly.

Those questions include whether Mr. Palin and the children were employees of the state of Alaska, whether they traveling for bona fide business purposes, and whether they would have been able to deduct those travel expenses on their own tax returns for business purposes.

Because the answer to at least one and possibly more of those questions is no, "The Palins should have reported the $43,000 in family travel allowances received in 2007 as income," Mr. Camp wrote in an analysis.

See, the Palins almost certainly owe taxes on these funds (the NYT says they owe $6000). Asssuming they pay their back taxes, they can just say, "aw shucks, we didn’ know." They do that, and we’ll stop calling them tax cheats.

(Though, given that the Palins filed their taxes on September 3 this year, after Sarah was already the GOP VP nominee, I think it fair to ask how the Palins managed to make this mistake while under the watchful eye of all those GOP handlers.)

So, fine, the Palins pay their back taxes and I’ll stop calling them tax cheats.

But that doesn’t address the underlying scam here: Sarah Palin is carting her kids (and her husband) around to official events. The state of Alaska clearly doesn’t see them as part of that official business–if it did, it would have documented it properly and the Palins probably would have paid their taxes. Yet Sarah is still scamming the state for reimbursement.

That’s the story here, it seems: that Sarah has scammed Alaskans into paying for Bristol’s $6000 boondoggle to Manhattan. 

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  1. Ishmael says:

    I’m sure that Sarah will just wink at the IRS and everything will just be a goshdarn misunderstandin’, and that the IRS will see it her way once she doesn’t have to talk to the IRS through the “filter” of the professional auditors and stuff. But I’m sure Jeff Gerth will start Whitewater Rafting any day now, and the Alaska Project will soon be underway. /s

  2. Neil says:

    Palin, the champion of watching every taxpayer dollar, is something her minions are tasked with but her? …not so much. It’s just a campaign promise – frugal government – for all the little people. Hockey rink anyone?

  3. BoxTurtle says:

    Let he who has never made a tax mistake throw the first stone. If they pay up, no harm and no foul.

    Makes McBush’s “vetting team” look even more incompetant then they did before, and that’s saying something. Did they think the tax returns wouldn’t be released or did they think the DFH bloggers would ignore them? Why, I might start to suspect that being Blessed by the religious wing was all the vetting required.

    Boxturtle (If you’re not going to let me pick Joe, just pick whoever the #%&^ you want. Let me know who when I’m done with my nap)

    • FrankProbst says:

      Let he who has never made a tax mistake throw the first stone. If they pay up, no harm and no foul.

      I’m with you on this, but I think that’s EW’s point–the taxes weren’t really the big issue. The big issue is that she’s billing her husband’s and children’s expenses to the state of Alaska. Anyone who’s ever travelled on business will raise their eyebrows at this. There’s a little bit of wiggle room, but not much. For example, if the company is already paying for, say, your hotel room, I don’t think that anyone really cares if your spouse and kids are also in the room. Ditto with things like taxi rides. (By “anyone”, I mean the public. I’m well aware that some companies are NOT okay with this.) But “non-sharable” things, like airfare or food? No way.

  4. TobyWollin says:

    This doesn’t include any ‘gifts’ she may have been receiving. As I recall, even non-cash gifts are considered by the IRS as ‘imputed income’ and you have to pay tax on that. But when you have someone used to throwing their weight around to government entities(as in the case where she got a zoning variance so that she could sell her $327,000 lakeside house – see: http://www.adn.com/sarah-palin…..40128.html ), then dragging Todd and the kiddies along wherever you go and expecting to get paid for it is pretty much par for the course.

  5. scribe says:

    EW – it would have helped had you included a link to some of the tax bloggers – like the Professors of Tax Law over here.

    They all come to the same conclusion, and all express no lack of shock at the opinion letter Palin got from some DC lawyer saying it was OK. He seems to have come from the Yoo-Gonzo School of Opinions, the one that tells the client “Yeah, sure. Go ahead. No Problem. Whatever you want.”

    On the squash court, of course.

    • TobyWollin says:

      Sorry, I’m not a tax lawyer; I’m just a reformed accountant(step away from that calculator and no one gets hurt)…and even I can tell you that Sarah Palin was NOT going to get away with not putting Todd and the kids’ travel reimbursements on the family taxes as income.

      • TobyWollin says:

        The same thing would go, for example, if she submitted receipts for things like – gas or repairs on the family car; fuel bills or maintenance bills on their home(s); cell phone charges on a non-state issued phone; groceries(don’t laugh; I had to audit an account for a company where one of the executives tried to slip a receipt from a grocery store in with some restaurant receipts that were all labeled “company entertaining”). All of this, unless there is detailed and credible documentation, is personal expenses and if she’s getting reimbursed for stuff like this, it has to be listed as income.

      • scribe says:

        Well, when the professors of tax law come out and say “No. Can’t get away with it.” I’m inclined to say that’s conclusive. That’s my point – the great weight of authority is against the Palins.

        I’m neither an accountant nor a tax lawyer – but I knew what you’re saying to be accurate, too.

  6. pretzel says:

    Couple of things bother me about this,

    First off, I seriously doubt that the Palins prepared their own returns. If they did, good for them, but I would venture to say that they have someone who does this. My problem then would be that they failed to provide accurate information which may (and I don’t know for sure) have caused their accountant to file a false return.

    More importantly, if this money represents unreimbursed expenses, her 1099 would show that. Also, if money was paid directly to Todd or the kids then again 1099’s are issued. If those monies aren’t on their 1099’s something even more fishy is up.

    • DBaker says:

      More importantly, if this money represents unreimbursed expenses, her 1099 would show that. Also, if money was paid directly to Todd or the kids then again 1099’s are issued. If those monies aren’t on their 1099’s something even more fishy is up.

      Of note is that certain 1099s were attached to the Form 1040 (Todd’s $50 Steelworker payment, for example), but not others. Also Sarah’s W-2 does not contain any item that I can see that shows reimbursed expenses in the amount of $43,000. I think it should be noted somewhere under the “letter” items of the W-2.

  7. dipper says:

    Has anyone ever checked if she is paying social security to her nannies? Bill Clinton was willing to drop people who didn’t because the Repubs made such a big deal of it, remember?

  8. JThomason says:

    Does Palin’s claim that she was responding to the NYT’s mentioning of Ayers in bringing his name to the stump mean that she is holding the Times out as the source to go to for things political?

    I think I can live with that this cycle.

  9. BayStateLibrul says:

    OT, but fuck you L.A. Lackey

    “And it must have felt like déjà vu to some of the Angels, who were swept by Boston a year ago in the first round. But Lackey wanted none of it.
    “It’s way different than last year,” said Lackey, who was 0-1 with a 2.63 ERA in two starts this postseason. “We are way better than they are. We lost to a team not as good as us.”

  10. DoubleD says:

    So, who’s going to complain formally (whatever that entails) to the IRS? Can any citizen do so?

  11. perris says:

    and I don’t think the government would look too kindly to her carting around someone who doesn’t even want to be an American

    • skdadl says:

      Amazing decision. Good Judge Urbina. (I haven’t found much more yet, but there is good background, pre-decision, at the WaPo. )

      This could mean something to other detainees.

  12. drational says:

    You should also point out that they hired a Reagan admin Tax Lawyer who wrote a 4 page opinion on 9/30/08 that the tax blogs say is bunk. He is on the hook for bogus advice.

    • FrankProbst says:

      Filed their taxes on September 3rd? An extended extension?

      I’m hoping that gets some traction, too. Joe Sixpack does not get to file his taxes late. I don’t see why Jane Sixpack should have that privilege.

      • DBaker says:

        In all honesty, lots of people file taxes late, and, according to the return, they did file for an extension and paid enough estimated taxes (about $2,000) in April in order to get below the 10 percent or less owed not be charged penalty. Nowadays, a 6 month extension is granted “automatically” upon filing.

        There are other things that I noted in reviewing the tax return which I found interesting upon which I will comment separately.

      • BargainCountertenor says:

        Actually, Joe Sixpack can file late. The August 15 extension is automatic, although you do have to pay estimated taxes owed, or you’re subject to interest (and possibly penalties) on the unpaid taxes.

        A second 90 day extension requires justification, but I’m told (never experienced it myself) that the IRS accepts almost any reasonable justification. I think that “John McCain named me his VP nominee and I need to get my s*** in order” would probably qualify.

        BC

  13. foothillsmike says:

    Have not been following the tax things but what is the status of the per diem she received for being at home?

    • damagedone says:

      The WSJ article indicates that several tax experts thinks she has more income there. States do make mistakes but that should not excuse completely the underpayment of due taxes. Someone could call up the State of Alaska – Human Resources office and the payroll dept. to find out whether Alaska has some special rule for elected officials. If not, she has to follow the same rules as everybody else – meaning she very likely has more gross income and tax for the at home expense reimbursements. Since the US treasury is running short – it is the only patriotic thing to do. Please pay now, Sarah. Hurry, your country needs the cash.

      • DBaker says:

        States do make mistakes but that should not excuse completely the underpayment of due taxes.

        In fact, with regular companies, the burden lies on the employer to properly withhold the taxes. That’s why lots of company love “independent contractors” since they don’t have they have to worry about those nasty withholding taxes.

        In a previous thread about this matter, I asked the same question, that is “Do State Governments face the same liability for so-called “940″ and “941″ taxes that corporate employers do?” In other words, is the State of Alaska liable for not following the withholding tax laws? I am not completely sure, but I read somewhere that 90 percent of the IRS Compliance Division cases involve the improper withholding of FICA taxes – this is my experience as well.

        • damagedone says:

          If the State of Alaska made a mistake and failed to correct it, then it could probably be ultimately liable. More significantly, since Sarah Palin is CEO of the State of Alaska she has duty in my opinion to see that the laws are properly followed. Has she asked for a report on the situation? If not, why not? She has the authority to do so. The possible error appears to directly benefit her. Why is the McCain camp talking (criminal tax lawyer) about just following what the State of Alaska did? If there is ruling allowing her to exclude the payments from income – produce the ruling. If every CEO could just blame errors on the Payroll department and never pay the tax related to the income, it would be a pretty easy tax dodge for those running companies. Most of of the time when companies run into problems with FICA it is because they have misclassified workers as independent contractors rather than employees and thus have failed to withhold. Here, the State of Alaska may not have understood Federal income tax law for another different tax issue?

  14. Mary says:

    OT – follow up link for 23
    http://www.usatoday.com/news/w…..namo_N.htm

    This has all been set up to now be a big problem for the Dems – and that’s fine with me. They sat back and created the mess, never doing one damn thing they should have, so let them deal with the November issue of “will Obama follow the law and the Court’s orders and release “terrorists” into the US” or not and the pot stirring that will go with them having to either condemn the court or go along with the court and “endanger the American people”

    If Congress had been worth two damns they wouldn’t have ever set us up to end up here.

  15. Redshift says:

    This bit in the Post article made me chuckle:

    Associates of Murkowski said the former governor was moose hunting and could not be reached to comment.

  16. bonkers says:

    With two recent MURDERS of people because they were perceived to be Liberal, this shit is not funny:
    http://tpmelectioncentral.talk…..ter_to.php

    Paylin and McInsane are stoking the flames of hatred that led to the recent deaths of innocents in TN and AR. They are doing this on purpose and aware of the potential results. Isn’t there are law that can be used to stop this incitement? Sorta like yelling “Fire!!” in a crowded theater?

    • dosido says:

      Yes, this is truly disturbing that our politicians are whipping it up.

      BTW, I would like to say that the first revolution was begun due to Taxation without Representation…

    • TwinpeaksnikkiSF says:

      Plain wasn’t ionciting to riot but a case could be made that the person how shouted “Kill him!” was. Why wasn’t that person at least taken in for questioning? People who protest are taken out of the event but it’s oK to yell “Kill him!” as long as one is talking about an opponent.

    • LangostinoHues says:

      Sorta like yelling “Fire!!” in a crowded theater?

      No, sorta more like having a Wingnuttian Anal Probe, and then farting fire in a crowded theater/rally.

    • foothillsmike says:

      When McShame says he would impose a spending freeze does this mean that Social Security, military pay, civil servants etc. would not receive cost of living increases. Inflation has been running at what 7%

  17. dosido says:

    I don’t know about you guys but I hear the perks in government work are outstanding! Free travel, redecorating, and did I mention the barbeques?

  18. TobyWollin says:

    Woops, Sarah….
    “When Gov. Sarah Palin said during the vice presidential debate Thursday that her family has gone through periods where they’ve been uninsured and she understands what it’s like for Americans “to sit around the kitchen table and try to figure out how are they going to pay out-of-pocket for health care,” she forgot to mention something.
    Unlike the vast majority of Americans, her husband and children had a good chance of qualifying for free, federally funded, comprehensive health care under a program of the Dept. of Health and Human Services’ Indian Health Service.”
    http://washingtonindependent.c…..ealth-care

  19. rwcole says:

    Let’s hope that the Old Man and the She spend 09 explainin how it was jest too dadgummed hard to beat Obama AND the liberal media.

  20. DBaker says:

    In reviewing the tax returns, I find the charitable contributions to be extremely low, actually way below the national average based on percentage of income. Usually Christian folk pride themselves in “tithing” in which they give away 10 percent of their income – I have seen it myself on numerous tax returns I have reviewed and/or prepared in my line of employment.

    The absence of child care expenses is very interesting, but I venture to guess that, since they were already receiving $ from the State for travel expenses, plus the fact that she got a “per diem” for working at home, there just weren’t any nanny expenses in the first place. Todd Palin has also stated on several occasions that he has such a job that he can be “Mr. Mom.”

    Finally, I don’t think there is anything wrong with using H & R Block, per se; I would say, however, that shows another serious defect in judgment to use a run of the mill retail tax outlet to prepare your taxes after you place yourself on the ticket as Vice President of the United States.

    It obviously never entered their heads that their tax returns would be scrutinized to such a level as they have been and surely will be. Another indication, among many, that the McCain campaign is run by 16-year old interns.

    • wavpeac says:

      I don’t know if this is common practice for evangelicals but I have several friends who tell me that they don’t give to “organized” charities. Instead they will just hand you, or someone they see in need a 100$ bill. I don’t know how they put that in terms of charitable contributions. The two families that I know say that they don’t like organized charities because they want to make sure that there money is not given to anyone evil, or bad. They want to control exactly who gets their contributions.

      That’s just one interpretation and angle, but I wonder if that “idea” is more prevalent than we have seen publically discussed.

      Certainly you would think they could donate to the church…but is it possible that they do this “hand out” thing?

      • DBaker says:

        I don’t know how they put that in terms of charitable contributions.

        That’s what the blanket “$2,500″ is for. If I am not mistaken, you don’t have to itemize anything under $2,500 in cash contributions.

        Most churches have an envelope system, where the church treasurer keeps track of who gives what and hands out a receipt at the end of the year.

  21. cinnamonape says:

    The lack of child care is very odd, given that Palin’s daughter was at home most of last year for mononucleosis (before the revelation of her pregnancy). I suppose that Todd could have been involved in supervising Bristol, but didn’t he also have two jobs (three if you count in his gallivanting around on State biz). Maybe that’s why she got preggers…a latchkey kid.

  22. cinnamonape says:

    Even college kids know that they have to declare their financial aid as “income”. It’s crazy that the Palin’s think that they don’t need to include this in their taxes.

    BTW I can only wonder what sort of stuff actually lies within the Cindy Lou Helmsley McCain tax records.

  23. maryo2 says:

    From Democratic Underground citing Jack Bog’s Blog –

    “There is more to brood about on the Palins’ returns, to be sure. Last year Todd Palin claimed losses from his snowmobile racing “business” as a tax shelter against his fishing income. He also claimed deductions for use of a portion of the Palins’ residence in his fishing business — deductions that are difficult to claim legitimately, and which may be further complicated if, as reported, the state reimbursed the Palins for use of that home as a travel allowance. … And if somebody at the IRS took a good, hard look at the payments for Sarah and Todd, we would bet that there would be some additional tax due there as well.
    Now that the tax returns have been released, Bogdanski’s not alone anymore. The Washington Post, ABC News, and Wall Street Journal are on the story. So is the TaxProf Blog.”

    • DBaker says:

      Yes – and this is where using H & R Block instead of a proper accountant will seriously come to bite them in the ass.

  24. Dianed says:

    She bragged about firing the chef?
    How much more money did she ”use” of ALaskans and not tell the poor people?

    What a sleaze she is. She is can lie with the best of them