Feminist Law Professors

Over at TaxProf, Paul Caron has links  to Sarah Palin’s newly released tax returns. It appears, as Paul says, that Governor Palin did not report her per diems or the travel reimbursements for her family as income. In support of this position, an opinion from a lawyer was also released.

As Paul points out, the opinion cites no authority for the positions that the lawyer takes. Moreover, the opinion does not directly discuss whether the per diem payments were taxable, but only discusses whether Governor Palin was justified in relying upon the Form W-2 provided to her by the State of Alaska, which did not report the per diem payments as income.  

The letter is somewhat baffling to interpret. On the one hand, it is correct that, for purposes of avoiding penalties, Governor Palin might be entitled to rely upon the Form W-2 for purposes of demonstrating reasonable cause for the position that she took on her tax return. In fact, Treas. Reg. sec. 1.6664-4(b)(1) provides that “[a]  taxpayer’s reliance on erroneous information reported on a Form  W-2,  Form 1099, or other information return indicates reasonable cause and good faith, provided the taxpayer did not know or have reason to know that the information was incorrect.”

But, on the other hand, that regulation only applies for purposes of determining whether Governor Palin can escape penalties. It should not be taken to mean that Governor Palin would be further excused from paying the underlying tax on the underreported amount of income. I am not aware of any rule or regulation that says that you can escape tax because you relied on someone else to figure out your taxes for you and they made a mistake. (Indeed, the exception in the regulation mentioned above militates in favor of exactly the opposite conclusion—because the relevant penalties are determined as a percentage of the underpayment of tax. If Governor Palin were excused from paying the tax because of her employer’s mistake, then there would be no underpayment of tax and no penalty could, as a practical matter, be imposed upon her, making the sentence quoted above totally and completely superfluous.)

It would seem that Governor Palin’s return is ripe for an audit because, as I’ve blogged earlier, there is a distinct possibility that these per diem payments are taxable in her hands. I’ve done some more digging on the travel reimbursements and they also require some further scrutiny.

Others have mentioned (e.g., Francine Lipman in one of the comments to my earlier blog post) that section 274(m) contains very stringent restrictions on the deductibility of an employee’s spouse’s and family members’ travel expenses. But the pertinent rules for Governor Palin are likely those under section 132, which deals with fringe benefits, given that we are concerned her with reimbursements and not expenses that she is trying to deduct herself. Under Treas. Reg. sec. 1.132-5(t)(1), if an employer’s deduction for the travel expenses of an employee’s spouse or family member is disallowed under section 274(m), then the stringent rules of that section will not apply in determining whether the reimbursement is excludible from the employee’s gross income as a “working condition” fringe benefit. The expense still must pass muster under section 162 as an ordinary and necessary business expense, however. In this regard, the regulation goes on to state: “The amount will qualify for deduction and for exclusion as a working condition fringe benefit if it can be adequately shown that the spouse’s, dependent’s, or other accompanying individual’s presence on the employee’s business trip has a bona fide business purpose. . . .” So, Governor Palin would still have to show a business purpose for her husband’s or children’s presence on the trip. (It is worth noting that under Treas. Reg. sec. 1.132-5(t)(2), this rule applies regardless of whether the employer is exempt from tax.)

It will be interesting to see whether the IRS initiates an audit of Governor Palin’s returns to flesh out all of the facts necessary to make a more definitive determination as to whether the per diem payments and travel reimbursements should have been reported by her as gross income.

-Tony Infanti

Today I served on the resource panel (i.e., a panel of legal, social work, theological, and statistical experts) for a deliberative poll on the question of same-sex marriage in Pennsylvania. The poll was taken at four sites across the state—I was on the resource panel at the southwestern Pennsylvania site at Carnegie Mellon University. The poll was sponsored by the Southwestern Pennsylvania Program for Deliberative Democracy.

As I’ve blogged before, earlier this year the Pennsylvania legislature considered an amendment to the state constitution that would ban same-sex marriage, equivalent legal statuses, and potentially far more. The idea behind the deliberative poll is to get the informed opinion of a sample of the population on this question, rather than obtaining a snapshot view from people who may not have given much, if any, thought to the question prior to answering a pollster’s questions, as happens in a typical poll.

As part of the deliberative poll process, the participants read background materials, then participate in small group discussions of the issue. Then each of the small groups has a chance to ask questions of the resource panel. The small groups then reconvene for further discussion, and finally fill out the survey at the end of the day.

The preliminary results from the poll indicate that 70% of those participating across Pennsylvania today supported the legal recognition of same-sex relationships either through same-sex marriage or civil unions. More detailed results will be available over the next couple of weeks (so check back later at the previous link in the coming weeks, if you are interested).

Hopefully, the state legislature will take these poll results into account when it considers the proposed marriage amendment to the state constitution again—in all likelihood, next year.

Quite an interesting experiment!

-Tony Infanti

In today’s News York Times, Dorothy Samuels comments on”Sarah Palin and the Rape Kits.”    A few excerpts —

When Sarah Palin was mayor of Wasilla, Alaska, the small town began billing sexual-assault victims for the cost of rape kits and forensic exams.

Ms. Palin owes voters an explanation. What was the thinking behind cutting the measly few thousand dollars needed to cover the yearly cost of swabs, specimen containers and medical tests?  

. . . The insult to rape victims is obvious. So is the sexism inherent in singling them out to foot the bill for investigating their own case.  

 The Alaska legislature enacted a law in 2000 to stop the practice of billing rape victims.

“We would never bill the victim of a burglary for fingerprinting and photographing the crime scene, or for the cost of gathering other evidence,”said Alaska’s then-governor, Tony Knowles.”Nor should we bill rape victims just because the crime scene happens to be their bodies.”

However, Palin’s police chief complained

. . . that the state was requiring the town to spend $5,000 to $14,000 a year to cover the costs.”I just don’t want to see any more burden put on the taxpayer,”the chief explained.

Full  story and comment  here.  

– Stephanie Farrior