Saturday, January 13, 2024

Report: Thomas May Also Be Dodging Tax Bill With Failure to Report Gifts

The likely millions of dollars worth of gifts Thomas has received may count as taxable income, a recent report found.
By

Sharon Zhang ,
TRUTHOUT
Published
January 3, 2024
The deluge of undisclosed gifts that conservative donors have showered Clarence Thomas with over the past decades may not just raise questions over corruption on the Supreme Court — they may also put the justice at risk for tax fraud conviction, a new report finds.
According to recent reporting by The Lever, experts say that revelations that Thomas may have received the gifts as a de facto supplemental salary may mean that they could be classified not as gifts, but as income, which is subject to different taxes. This means that Thomas, who has failed to disclose likely millions of dollars’ worth of gifts over the past decades, may owe a huge unpaid tax bill that he could be prosecuted over.

“If there are in fact people saying more or less, ‘We’re offering these goodies to the justice so that he will stay in his role’ … it sounds like it would be taxable income for him,” Georgetown Law professor and tax expert Brian Galle told The Lever.
The latest bombshell ProPublica report on Thomas, published last month, revealed that Thomas from the Supreme Court in his early days on the bench, privately and publicly complaining about the salary of $173,600, or over $300,000 in today’s dollars. This salary, he claimed, didn’t afford him the luxury lifestyle that some of the other justices could afford; Thomas spoke to conservative donors of his troubles, urging them to push for reforms to raise the salary and allow justices to collect payment for speaking arrangements.

These changes didn’t come to be, the report details, but Thomas would soon begin receiving a steady and unparalleled stream of luxury gifts from conservative donors. These included a $267,000 RV that was mostly underwritten by a wealthy friend, opulent trips and private school tuition for his grandnephew paid for by right-wing megadonor Harlan Crow, and at least high-end gifts from a coterie of right-wing benefactors.

If these gifts were given in an effort for the right wing to retain Thomas — one of the most conservative, if not the most conservative, justices on the Supreme Court — in his position, then this could be considered taxable income in a similar way that bonuses or other “perks” that may influence one’s decision to keep another job could be subject to taxes.
One defender of Thomas even tacitly admitted that gifts were supplemental income; Yale Law Professor George Priest, who has vacationed with Crow and Thomas, told ProPublica that Crow “views Thomas as a Supreme Court justice as having a limited salary. So he provides benefits for him.”

Nearly all of these gifts have never been disclosed by Thomas to federal regulators, which experts have said is likely illegal in itself. Maintaining that they are gifts, meanwhile, has allowed Thomas to avoid paying taxes on them under gift tax laws. But, as The Lever writes, money orother perks given to public officials to aid them in their jobs are often not qualified as gifts, according to Internal Revenue Service (IRS) determinations from the 1970s.
“What Clarence Thomas has done would result in not only any judges in America being removed from the bench, but there is a good chance it would result in criminal prosecution for income tax fraud and for false filings in his mandatory financial ethics disclosure statements,” Syracuse University visiting lecturer David Cay Johnston, who specializes in high-level tax law manipulation, told The Lever.
Others have also noted that Thomas has likely committed some form of tax evasion, particularly honing in on his RV. Thomas had purchased the RV through a loan he borrowed from a friend in 1999 — the vast majority of which was ultimately forgiven, Senate Finance Committee Democrats recently found. The lawmakers have raised questions about the seeming unpaid tax bill, as forgiven debts often count as taxable income.

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