You're listening to The Accounting Podcast. I'm Blake Oliver.
A recent report from the Senate Finance Committee claims Supreme Court Justice Clarence Thomas failed to disclose important financial information related to a recreational vehicle purchase.
According to the report, in 1999, Thomas and his wife Virginia borrowed $267,000 from a friend, Anthony Welkers, to buy a luxury RV.
Documents indicate Welkers forgave the loan's principal in 2008 after Thomas made at least one annual interest payment of $20,000. However, Thomas did not report the forgiven loan on the required financial disclosures that apply to federal judges.
Forgiven debts are also usually considered taxable income under the Internal Revenue Code. It's unknown if Thomas reported the forgiven amount as income on his tax returns since he has not publicly disclosed them. If he did not report it, Thomas may have violated the law and failed to pay taxes owed on the forgiven loan amount.
So, could Justice Thomas get in trouble with the IRS for underreporting his income by a quarter million dollars? Probably not. The IRS generally has three years to audit returns and six years for significant omissions of income.
It's unlikely Thomas would owe penalties to the IRS now due to the time that has passed. However, not correctly reporting forgiven debt raises ethics concerns about the justice's financial practices.
Thomas' lawyer disputes the claim that the loan was forgiven, stating that the Thomases made all payments until the terms were satisfied in full.
The findings from Ron Wyden's report add more scrutiny to Thomas's financial dealings. This adds to recent criticism Thomas has faced over accepting free trips and financial assistance from wealthy figures. Disclosures about Thomas's conduct have increased public concerns over the Supreme Court's current ethics rules.
This has been a news update from The Accounting Podcast. I'm Blake Oliver. Thanks for listening.