The Hill: Lawmakers skip taxes on family travel

The Hill
Lawmakers skip taxes on family travel
By Mike Soraghan
February 9, 2009

Many members of Congress may have a Tom Daschle problem.

A week after the former senator withdrew his nomination for Health and Human Services secretary because of reports he didn’t pay taxes on a car and driver, lawmakers are facing their own tax questions.

Some of the same lawmakers who criticized Daschle also neglected to pay taxes when they brought family members on trips paid for by outside groups, according to tax experts and a watchdog group.

Most Americans pay taxes when they bring a spouse or family members on a business trip on the company’s tab. But many members of Congress have been ignoring that section of the tax code since they wrote it in 1993.

It’s hypocritical for some members to criticize Daschle’s tax problems while ignoring their own, said Craig Holman of Public Citizen, a consumer advocacy group that filed a complaint with the IRS on this issue in 2006.

“It is identical,” Holman said. “It’s such an obvious issue, but the IRS looks the other way.”

But most members of Congress don’t see it that way. They don’t agree that the money for spouse trips is taxable, and they don’t see any comparison with Daschle’s failure to pay more than $100,000 in taxes on a car and driver.

“There is a clear difference between members of Congress being accompanied by a spouse in the course of official duties and a private citizen failing to pay taxes after being given a limousine and driver,” said Michael Steel, spokesman for House Minority Leader John Boehner (R-Ohio). “This isn’t comparing apples and oranges, it’s like comparing apple juice to Dom Perignon.”

Boehner is one of many lawmakers who have taken their spouses on trips paid for by outside groups. Another is former Rep. Ray LaHood (R-Ill.), who has been confirmed as President Obama’s secretary of Transportation.

Since 2000, outside groups spent more than $15,000 for LaHood’s wife to accompany him on trips.

LaHood issued a statement to The Hill saying the trips are not taxable income, citing the House Ethics Manual.

“My wife and I have always paid our taxes in accordance with the law,” LaHood said in the statement. “[T]here is no requirement that they be reported as taxable income.”

Tax experts, however, say there is. Ted Seto, a tax law professor at Loyola University, said the law is clear that the trips are tax-free only if the spouse or family member is an employee.

When Congress changed the law in 1993, Seto said, it was aiming at businesspeople who it felt were straining tax interpretations.

“That’s precisely what they were going after,” Seto said. “The rules are quite clear.”

Sen. Lindsey Graham (R-S.C.) has proposed a bill that would repeal that change and allow people to bring spouses and family members tax-free.

If the IRS determined that lawmakers should have been paying taxes on such travel, the tax bill could be substantial for some members. Tax experts say that on a $1,000 trip, a family member could wind up owing around $250, plus state tax.

Since early 2000, groups that paid to take Rep. James Clyburn (D-S.C.), now the House majority whip, on trips paid more than $42,000 on expenses for his wife, according to The Hill’s analysis of House travel records made available by Legistorm.

During a similar timeframe, groups paid more than $39,000 so that Boehner could bring his wife along on trips.

Seto noted that it is the lawmaker, not the family member, who is responsible for paying the taxes.

So if a lawmaker brought his or her adult child, it’s still the lawmaker who would pay the taxes.

That could present problems for someone like Rep. Lynn Westmoreland (R-Ga.), who was one of Daschle’s most outspoken critics. The American Israel Education Foundation spent more than $10,000 for Westmoreland’s adult son to accompany the lawmaker on an August 2007 trip to Israel.

The other most vocal critic of Daschle, Sen. Jim DeMint (R-S.C.), brought his wife on a trip to a 2006 “Awakening Conference” at Sea Island, Ga., at a cost of $225 for meals.

Sen. Chuck Grassley (Iowa), the top Republican on the Senate Finance Committee, which was in charge of reviewing Daschle’s nomination, took his wife along on a 2005 trip to Key Biscayne, Fla., paid for by the Ripon Society at a cost of $4,314.

Those are merely examples of lawmakers who have brought family members. There is no comprehensive list of who has taken family members on the most travel. Compiling such data would be difficult, because Senate forms do not require senators to list when they bring a family member, and self-reporting is spotty.

The Hill asked spokesmen for each of those members whether they paid taxes on the travel. Not all responded, but none indicated that they paid taxes on the trips.

Spouses and family members accompanied lawmakers on about 9 percent of sponsored trips, according to a 2006 study of congressional travel by the Center for Public Integrity.

House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) told The Hill in 2007 that he had never looked at the matter. In 2006, the committee issued a statement to The Detroit News, which first raised the question of taxing spousal travel.

“Congressional spouses have an official and public role quite different from the spouses of normal business executives,” the committee wrote. “The travel is permitted under the ethics rules on the grounds that it is related to the official duties of the office.”

That has never been backed up by the IRS, which never responded to Holman’s complaint.

“I think the IRS might feel a little intimidated,” Holman said.

Pressed on the issue at a March 2007 appearance at the National Press Club, then-IRS Commissioner Mark Everson said he would “make sure to take a look at it.”

“We do hold politicians and others to the same standards of the law,” said Everson, who made waves when he declared the swag bags at the Oscars to be taxable.

An IRS spokesman said no comment would be available for this story.