It’s only Tuesday, but the traditional media is starting to catch on to what we knew last week: that Sarah Palin cheated Alaskans and America on her taxes. Why should this matter now? Because if you can’t trust Palin on her taxes, you can’t trust Palin on her attacks on Barack Obama.
On Friday, I posted a short diary about Sarah Palin’s taxes, just after those tax returns were released:
Friday’s Diary
The McCain/Palin campaign released the Palins’ tax returns for 2006 and 2007 late Friday afternoon. And as any tax lawyer or CPA could quickly spot, there were LOTS of red flags. She didn’t report her per diems as income, the hubby’s hobby was treated as a business, and they used the hobby to shield a bunch of personal expenses, like plane fuel and maintenance.
That diary yielded a few comments, with trifecta, sandrad23, mathGuyNTulsa and others pointing the way forward on these issues.
It didn’t take long for some experts to see chime in, and show how the Palins cheated America; here’s Prof. Bryan Camp, tax professor at Texas Tech:
Prof. Camp takes apart the argument that the Palins could have avoided paying tax on the $43,000 Alaskan taxpayers shelled out to pay for the travel of the "First Dude" and the rest of the Palins, to various matters within and without Alaska:
Assuming that the theoretical expenses Palin incurred were reasonable and were incurred "away from home," were they expenses incurred "pursuit to business"? Here is where there is a big difference between the $17,000 and the $43,000. Remember, we are talking about the "trade or business" of Governor Palin here, not the trade or business of the first dude. ...... (The IRS Code) prohibits the deduction of any travel expenses for the SPOUSE or DEPENDENT of a taxpayer unless (a) they are ALSO employees of the employer paying for the trip, (b) are traveling for a bona fide business purpose, and (c) could deduct the travel expenses on their own tax returns (presumably under section 162). There is no suggestion that either Todd or the kids are employed by the State of Alaska. Maybe they should be. .....As it stands now, however, the Palins should have reported the $43,000 in family travel allowances received in 2007 as income. They did not.
Prof. Camp concludes that the Palins owe $6,000 in back taxes, plus penalties.
Here’s a link to Prof. Camp’s paper on the topic:
http://papers.ssrn.com/...
Prof. Camp comes with some serious chops: graduate of Haverford College and UVA law school, former IRS attorney, and now a respected professor.
This is being picked up in various spots:
Wall Street Journal
NBC News
New York Times
It is clear that the Palins were playing some games with their taxes; the 2007 tax returns, like the 2006 tax returns, were prepared by H&R Block. I’m guessing that the Palins went to H&R Block in 2006 because they always had. I’m also guessing that the Palins went back to H&R Block for the 2007 return, because, well she’s Joe Six Pack. The return was filed on September 3, 2007, long after she had picked to be on the ticket. You can bet that somebody helped them put together the return BEFORE the Palins went to H&R Block.
The Palins probably didn’t report the per diems in 2007 because (1) they hadn’t in 2006 and (2) they would have owed a boat load in taxes and penalties. To the Palins, it is far better to argue that what they did was right, than to do the right thing. To that end, the Palins immediately trotted out a tax attorney; not any tax attorney, but Roger Olsen, a criminal defense tax attorney, to absolve them of any guilt:
Such payments for family members traveling on state business would not properly be included as taxable income on Government Palin's federal tax returns.
Here’s the link to the letter itself:
Criminal Lawyer Says Cheating IRS OK, pdf warning!
But let’s turn to Prof. Camp again, on the merits of this advice:
[This letter is] just a bald assertion that the payments for husband and kids were excludable. So who died and made Mr. Olsen King? We are a nation of laws and you would think a lawyer would analyze the actual law, kinda like I’ve done in this paper. It might be my analysis is wrong. But that is the point of making an analysis --- transparency.
Prof. Camp concludes that not only did the Palins do wrong in filing their tax returns, but Mr. Olsen probably violated IRS standards in writing this letter.
Why is this so important at this juncture?
- It’s another anvil to be tossing Caribou Barbie.
- Is this how McPalin would reform Washington? Haven’t we had enough with financial cheats?
- Most importantly, it is your 15 second spiel on the elevator with anyone about Sarah Palin: she took thousands of dollars in travel expenses for living at home in Wasilla, and didn’t pay taxes on them. If you can’t trust her to be honest with her taxes, how can you trust her to be honest with yours?