I’m not sure if I totally understand this. Is this really possible? Will it really avoid taxes? Is it legal?
I saw that and was shocked, but not surprised.
(And kinda wished I had bought one of those Colbert “SuperPac Kits” back when he offered them for $99.00.)
Wasn’t it a tax lawyer that he was talking with? I’m horrified but not surprised.
He was talking truth, It was a lawyer, it can be done. Now I understand how terrorists get their money. This did open my eyes. And Rove is well where he needs to be.
Jesus fucking H Christ.
Now, one thing I’m unclear on. The whole process makes it secret so people can’t see what the SuperPAC spent the money on, but wouldn’t Stephen still have to file it as income on his tax return? So it’s not necessarily tax free.
That being said, is anyone really surprised? Do you really think people would start up these giant SuperPACs if there wasn’t money to be made?
That’s what I don’t get. How does he derive income from the final PAC without having to pay taxes on it?
Because he doesn’t have to tell the IRS that he got the money from the final pac.
He just puts in a personal account in the Cayman Islands or something like that.
I don’t know, but it might be considered something other than taxable income. For instance, if you win a judgement in a lawsuit, your settlement is not taxable because it is considered reparation for damage you suffered – even if you get an extra few million thrown in punitive damages awarded.
Not to say the two are the same, but still it is possible to get money in your packed without it being taxed.
Is grant money taxable? Or maybe he has to funnel it through some corporation which “expends money on his behalf.”
Colbert apparently created his PAC to mock the SCOTUS decision and show just easy it is to now buy the electoral process.
As I understand, he never actually gets the money himself. Rather, his PAC gets the money, with the stipulation that he decides exactly how it gets spent. And deciding how money gets spent is, after all, the important part of having money.
Even if you give the money to yourself personally, you can illegally and successfully avoid taxes by putting in a Swiss Bank account. It’s the lack of reporting by the giver (the secret Super PAC) and lack of using US Bank Accounts (which have to report transactions over a certain amount) that would allow the receiver to get away with it.
I get it now. I think this is the correct answer, but I still don’t get how Colbert could take possession of whatever is purchased with that money. If, for example, the stipulation is that the money gets spent on a huge mansion for Stephen Colbert, isn’t that mansion a gift that he has to pay some sort of income tax on?
Does whatever is purchased have to remain in the name of the super pac?
If anyone understands the laws on this stuff, it’d be Trevor Potter. For the record I think the money is eventually going to wind up in the hands of one of the charities Colbert supports.
I think people are missing the point of exercise. It wasn’t Colbert trying to avoid taxes on himself, it was him trying to send money to himself from the PAC without creating a public record that he sent the money to himself, and without having to pay taxes for any intermediate transfer.
In the end, he’d still need to pay income tax on the money.
If Karl Rove wants to siphon off 100 million dollars from his PAC to buy a new house, he could just cut a (taxable) check to Karl Rove from the PAC for “consulting” or whatever, but then when the PAC filed the required forms, people who donated to the PAC could see where their money was going and might be a little pissed.
So instead, he can do what Colbert did, and transfer the money to some innocuous sounding corporation and have the corporation pay him. The donors won’t get to see what the corporation did with the money, and using the device described by the lawyer, the dummy corporation won’t have to pay taxes.
Colbert will still need to pay taxes to get the cash out of the corporation, but since its essentially money he’s stealing from donors anyways, that’s not such a big deal.
Well you jumped over the fact that people donated the money, gave it to the PAC. Not stealing.
In my (completely fictional) example, they gave it to the PAC to help GOP candidates, not to Rove* to build a new house. I’d say that’s stealing.
It’s confusing stuff, but I think you are right. Colbert had his Colbert Super PAC and his 501(c)(4), Colbert Super PAC SHH. He wanted to close the PAC without giving up the money or having to disclose anything, so Potter told him he could transfer the $773K in the Super PAC to the 501(c)(4) and then to a new “unnamed” 501(c)(4) which they’re now calling the Colbert Super PAC SHH Institute. The movement of the money is not taxed and the Institute doesn’t have to disclose its activities. The transfer of the money is untaxed. If he gave the money to himself, he would have to pay taxes.
They just added the second 501(c)(4) to show the games people can play with these organizations. He could have just transferred the money from the Super PAC to original 501(c)(4) (SHH) and all the same rules would have applied. The point here was that he could also move the money to an organization nobody knew about and which didn’t engage in any activities related to the election.
Possession is not the same as ownership. Does it matter if Colbert “owns” the suit he can wear whenever he wants? Or drives the car “owned” by a corporation which only owns things that he directs it to buy and then lets him use all the things as he pleases?
This does bring up an interesting question, though. Does the corporation have to keep track of all its property? Let’s say it bought Stephen some socks and he wears a hole in one – does he have to submit some kind of property loss/destruction report, or can he just throw it away?
I can’t see the link (“not available in your area”) but it reminds me of what some of my colleagues have done. They have no research grant but they arrange to set up a special research fund and then made a charitable donation to it and use the money to pay their “costs of research”. This usually amounts to a PC, but it is perfectly legitimate to use it to travel to a conference, for example. The one restriction is that they cannot be the signing authority, usually delegated to the dept. chair.