I was walking my dog this weekend when a neighbor stopped me for one of those “hey, you’re a lawyer” conversations that always seems to involve an area of law about which I know nothing. Except this time, the question was about criminal law. The specific question was this: John Edwards claims that the money that he used to hide his affair was a gift, not a campaign contribution. So why isn’t he charged with failing to pay taxes on the gift? (Gifts are generally taxable, with some exceptions, as described in this IRS publication.) There are lots of possible answers, and I don’t know enough about the case even to speculate about which ones might have factored into the government’s decision not to charge a tax crime. Maybe Edwards did pay taxes on the money, or maybe the money was paid directly to someone else, so the taxes weren’t his responsibility, or maybe there’s some applicable exception to the gift tax rules. Or perhaps the government is simply quite confident that its characterization of the money as a campaign contribution is correct. Again, I don’t know, and I don’t want to dwell too much on this particular case. [Update: A helpful correspondent emailed me to point out that gift taxes are normally the responsibility of the donor, not the donee, and it appears that at least one of Edwards' donors paid the gift tax, according to this report.] Instead, I want to address the general issue of whether it is [...]
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