Are Law Makers Tax Law Breakers?

Last Updated Aug 31, 2010 4:03 PM EDT

Congressional ethics investigators are interviewing at least a half-dozen legislative leaders, who have pocketed travel allowances in an effort to determine whether they have violated ethical guidelines, according to a continuing series of investigative reports in the Wall Street Journal. But the practice of keeping travel allowance payments raises tax questions as well, experts noted Tuesday. Business travel "per diem" allowances must be tracked or taxed -- and it appears that legislators may have done neither.

Members of Congress, who have spent some 5,200 days visiting 130 foreign countries over the past two years, are given as much as $250 a day to handle their travel costs while overseas. However, the lodging, transportation and meals that these "per diem" allowances are aimed to defray are often picked up by local hosts. When lawmakers don't need to spend the per diem allowances, they're supposed to return the cash. But often they don't.

In a March story called Lawmakers Keep the Change, the Wall Street Journal found that lawmakers almost universally pocketed unspent per diem allowances or used them to pay personal expenses, such as the cost of a spouse's travel. When questioned for the story, Rep. Solomon Ortiz (D.-TX) told the Journal that if legislators had to return the per diem cash, they wouldn't travel as much.

The WSJ estimates that House lawmakers have received between $375,000 and $625,000 over the past two years in per diem payments, but no one keeps records of how the money was spent and whether unspent allowances were returned to the Treasury as is required. In fact, the Journal investigation found only four lawmakers who gave unspent money back.

Now the Office of Congressional Ethics is looking into the matter. But an ethics investigation may be the least of these lawmakers worries. Thomas Fitton, president of Judicial Watch, says he's asked for a full accounting of State Department "per diem" funds given to members of Congress. If Congressional leaders did not spend this cash on business -- and track those expenses, returning any excess -- they're legally required to report that money as income on their tax returns.

Given that Former Rep. Mark Souder (R., Ind.) told the Journal that he has no records "because you didn't have to keep them," it seems likely that at least some law makers could be tax law breakers.

"Is this money of such a nature that the budget is being busted if they didn't pay tax on it?" Fitton asks rhetorically. "No. But it shows that Congressmen are abusing their offices."

The IRS cannot discuss individual taxpayers. But refers anyone wanting to know the tax rules related to per diem expenses to its Publication 462.

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