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Lawmakers May Be Reaping Travel Income, Skirting Taxes When Family Members Join Junkets

Oct. 13, 2006

Lawmakers May Be Reaping Travel Income, Skirting Taxes When Family Members Join Junkets  

Public Citizen Asks IRS to Investigate Alleged Congressional Travel Abuses

WASHINGTON, D.C. – Public Citizen today sent a complaint to the Internal Revenue Service (IRS) regarding possible tax non-compliance by many members of Congress whose family relatives join them on travel junkets free of charge but fail to declare the free travel as income subject to federal tax. Public Citizen is asking the IRS to investigate this matter, collect back taxes where appropriate and provide Congress with guidance on the tax implications of future travel benefits. 

Congressional travel paid for by corporations, unions and other special interests with business pending before Congress has been a contentious political issue over the past year, although congressional ethics rules permit such travel for “officially connected purposes.”

“The problem is – unlike America’s business executives who pay taxes on this additional income – members and staff may be taking their spouses or siblings along on all-expense paid trips when they don’t have an official purpose and failing to declare the cost as taxable income,” said Joan Claybrook, president of Public Citizen. “Americans pay their fair share of taxes; Congress should too.” 

Congressional ethics rules allow members and congressional staff to bring one family relative along on a trip, paid for by the corporation or special interest group sponsoring the junket. According to the tax code, travel expenses paid for by a third party are not taxable income if the travel serves a bona fide business purpose. Payments on behalf of any person conducting business are not taxable income for that person. Payment for a family member who tags along on the trip is income subject to tax, unless the family member’s travel serves a bona fide business purpose. An investigation by the Detroit News strongly suggests that members of Congress and their staff are not paying taxes on this income for free family travel.

Neither the House nor Senate ethics committee offers members and staff a formal written policy or guidance on the tax implications of free travel for family members. According to the Detroit News, the general counsel for the House Ways and Means Committee issued a hastily written statement after being questioned about the issue. The statement says that the basis for the congressional ethics rules permitting reimbursement for spousal travel is “that it is related to the official duties of the office, essentially the same standard used in determining taxability.” However, in many cases involving congressional travel, the spouse or other family members do not have an official role, and in those cases, their costs apparently should be taxed.

“A child of a member of Congress serving the same official function as the First Lady?” asked Craig Holman, legislative representative for Public Citizen. “That is patently absurd. Family relatives of a member of Congress are not employed by the federal government, have no ceremonial title and are not presumed to represent the Congress. In such cases, the member may be liable for payment of income tax on the value of the trip.”

According to the Center for Public Integrity, members and staff since 1998 have brought along relatives on about 2,900 trips paid for by a private source, at an estimated value of $4.8 million.

A copy of the complaint is available here.

A summary of congressional travel rules is available here.