Capone and Palin - Brought down by tax problems?

It would be ironic if it turned out Sarah Palin shared with Al Capone the ignominy of being brought down because of her tax returns. But there is some indication that could be a big issue - and perhaps why McCain is stonewalling on releasing Sarah's returns.

Apparently, the per diem payments have to be listed as income unless she could deduct them as legitimate business expenses. According to one blog

It does not appear that such deductions would have been allowable for any amounts attributable to travel by her husband and children. Section 274(m)(3) of the Internal Revenue Code strictly forbids deductions for bringing spouses and dependents along on business travel unless the spouses and dependents (a) are employees of the taxpayer (here, the taxpayer is the governor), (b) are travelling for a bona fide business purpose, and (c) would otherwise be entitled to deduct the travel on their own tax returns.

Sarah collected $17,000 for herself. Todd collected $19,000 and her children $25,000.

Unless Palin's spouse and kids are also her employees and she can show that they were away on their own businesses, their expenses would not be deductible by the governor. And therefore she cannot exclude from income any per diems attributable to any of them. (By the way, since she's the employee, the income would be required to be reported on her own return, not her kids'.)

And Sarah may have trouble with her own travel expenses.

Only travel "away from home" qualifies for tax exclusion (or deduction), and for this purpose, one's "home" is generally the principal place of one's business. In this case, the governor reportedly works out of offices in both Anchorage and Juneau, but since she has only one state job, she can declare only one of those as her tax "home." If Juneau is her tax "home" (which would seem to be the case, since that's the capital), she cannot exclude or deduct meals and lodging expenses incurred in Juneau, and if Anchorage is her tax "home," she cannot exclude or deduct such expenses incurred in Anchorage or Wasilla.

You can find this and more at the TaxProfBlog
http://taxprof.typepad.com/taxprof_blog/2008/09/sarah-palins-ta.html

This is the type of thing Obama - and people like us - have to keep pressuring the media to cover.