Sounds like a good law school exam question!

What about the $5 contributions? How are political contributions in general handled by the campaigns? Is the city money not a campaign contribution?

Same questions?

Different questions?

curiouser and curiouser...

How about this one: If the candidate is already a city employee (hint), is the city required to treat the grants as "wages," and withhold tax and pay payroll taxes on them?

I looked into all this when I ran in 2006. Campaign contributions are not considered taxable income by the IRS or the state. There is a form, 1120 POL, that a campaign must file if they have taxable income, but contributions aren't included.

If say a campaign rented a building and leased out a small portion of it to a tenant, that income would be taxable. If the campaign gets any income by providing services, that income is taxable. If the campaign is only receiving contributions, it is not taxable.

So, the question becomes, is the city's money a campaign contribution?

I think a tax analysis of the city grants might come out differently from that of contributions by individuals and private businesses.

That's not to say that I agree that all campaign contributions should be treated as tax-free gifts. Many of the "donors" are definitely looking for something in return. The Clintons' private legal defense fund is a good example of money that should have been taxed, but was not.

Campaign contributions are not considered taxable income by the IRS or the state.

What happens when they're used for this?

Heck cc... if I knew you could do that I would have stayed a whole lot drunker two years ago.

I'm no tax lawyer (anybody know one?) but I'm pretty sure that political committees are tax-exempt organizations.

Presumably, the clean money funds (just like campaign contributions) go only to political committees - rather than to the candidates directly.

Maybe that takes care of it, if that is in fact what's being done by the city and this particular crop of candidates.

My recollection is that the check was payable to our committee, not to me personally. Certainly it got deposited in the committee bank account. State law requires that.

Does the candidate get a check/debit card with access to the "committee" bank account?

I think the more pertinent question is whether the "assignment of income doctrine" applies. If you earn income, you have to pay tax on it, even if it's paid to someone else. If I tell my employer, "This month, pay my kid instead of me," and the employer does that, then I, not the kid, have the income for tax purposes. That's true even if I'm behind on my child support and legally I have to spend it on the kid. Since the city rules talk extensively about the candidate rather than the committee, maybe that triggers the same doctrine.

Kari,
If the campaign generates income outside of contributions it is most certainly taxable. That's what the 1120 POL form is for, as in my earlier example. I don't think candidate committees are specifically "tax exempt organizations", but rather that contributions to those committees are tax exempt. If they raise money by providing services, that income is taxable. If, for example, one of the candidates gave a particularly rousing speech at a rally, and sold video of that speech, the proceeds from the sale of the video would be taxable income to the committee and would need to be reported on an 1120 POL.

As if the Branam campaign didn't have enough to worry about with Busse-gate and the need to turn in their second round of answers to the auditor's office by close of business today:

http://www.portlandtribune.com/news/story.php?story_id=120760522205375400

You really couldn't make this stuff up.

Noted here.

In the interest of full disclosure, Kari's firm built the websites for God, the IRS, and Blue Oregon.

"Presumably, the clean money funds (just like campaign contributions) go only to political committees - rather than to the candidates directly."

So when the committees buy drinks and movies and food for the friends of, this is still tax-exempt?

So, the question becomes, is the city's money a campaign contribution?

Actually, the question is: is it the "city's money", or do those funds rightfully belong to the taxpayers?

Perhaps a vote is in order.

Kari's firm built the websites for God, the IRS, and Blue Oregon.

But he speaks only for himself.

This has been a question I have had all along. So let's ask, if you are implementing a new program, product, channel of sales, or whatever it may be, don't you ask yourself what the tax treatment will be?

Another brilliant example of Stenography and Blackmercury poisoning.

Revenue Ruling 74-23:
"Political campaign contributions received in 1972 by a candidate, who maintained personal control of such funds and who expended them solely for campaign purposes, are not includible in gross income."

Richard Nixon's IRS, hard at work.