AP Exclusive: Living in Chicago could cost governor
Associated Press - December 16, 2007 12:14 PM ET
SPRINGFIELD, Ill. (AP) - Governor Rod Blagojevich lives in Chicago. But for tax purposes, he travels any time he leaves his main place of business -- Springfield -- until he returns.
An Associated Press analysis of nearly 1,000 flights on state aircraft by Blagojevich, his family and guests shows possible personal trips which could potentially be worth $225,000 in extra income to the governor.
A Blagojevich spokeswoman says the issue is moot because the governor's main office is in Chicago -- not the state capital. So flights to Chicago for are legitimate business.
Marianna Dyson (mayr-ee-A'-nuh DYE'-sun) is a Washington, D.C. fringe benefits lawyer. She says Blagojevich's decision to keep his family in hometown Chicago does not make it his headquarters.
Future IRS trouble for Blagojevich?
Blagojevich potentially could owe $60,000 in taxes. If he didn't pay, taxpayers could be penalized $40,000.
An IRS spokeswoman declined comment.
IRS rules for executives on personal travel
The Associated Press
An Associated Press analysis has found that Illinois Gov. Rod Blagojevich, his family and guests have taken hundreds of flights that don't appear to have clear business purposes. The value of the flights could top $225,000, based on the cost of chartering private planes, and the amount could be added to the governor's income as a taxable, non-cash fringe benefit.
The governor's past two tax returns don't indicate that he has paid taxes on the flights, which might end up being $60,000. A Blagojevich spokeswoman says the trips were for legitimate business.
There are Internal Revenue Service rules that could lighten any tax bill he may face:
- A "special valuation" discount for personal travel by executives. If it was applied to flights covered in the AP review, the governor would have had to pay taxes on an estimated $15,000 or less for the flights rather than a potential $60,000.
- A "50 percent" rule that allows executives to "hitchhike" on aircraft for personal use if the plane is already half-full of passengers declaring business.
The state aircraft were half full in about 45 percent of the Blagojevich flights the AP found may have been personal. But they were half full of the governor's employees. The rule wasn't designed to let a "control employee" such as Blagojevich fill the plane with subordinates to get around tax laws, experts said.
Labels: Rod Blagojevich