The Tax Man Cometh – for Members of Congress
After being disregarded by Congress last year regarding our request that it move to address rampant congressional travel abuses — including free trips all over the globe with family members, paid for by special interest groups seeking legislative favors — Public Citizen pursued another tack.
Last fall, we filed a complaint with the IRS regarding probable travel abuses by many members of Congress who are joined by relatives on travel junkets paid for by special interests, but fail to declare the amount of money paid for the relatives’ travel as income subject to tax. Public Citizen asked the IRS to investigate, collect back taxes where appropriate, and provide Congress with guidance on the tax implications of future travel benefits and gifts.
Congressional ethics rules permit members and congressional staff to accept free travel paid for by special interest groups so long as it is for “officially-connected purposes.” The ethics rules were amended by the House this year to reduce many of the excesses that Public Citizen has been highlighting.
But one issue still remains unaddressed: the tax implications when members of Congress accepting the "gift" of travel expenses for family members.
According to the tax code, travel expenses that are paid for by a third party is not taxable income to any person, so long as the travel serves a bona fide business purpose. But payment for a family member to tag along, where they serve no bona fide business purpose, IS income and is therefore subject to tax. An investigation by the Detroit News last fall indicated that members of Congress and their staff are not paying taxes on free family travel.
Public Citizen’s complaint, filed last October, appeared to have been largely ignored by Congress and the IRS — until yesterday. According to the article in The Detroit News, IRS Commissioner Mark Everson was peppered during a National Press Club speech about what the IRS has done with Public Citizen’s complaint. After repeated queries, the Commissioner agreed to look into the matter "as soon as I get back to the office."
Tax day is just around the corner. I would advise the congressional ethics committees to advise Congress that their free travel junkets may not have been so free after all.