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Hampton Didn't Disclose Payment From Ensign's Parents As Gift
More bad news for John Ensign -- and perhaps his former buddy Doug Hampton too?
The Las Vegas Sun has taken a look at the Senate disclosure form that Hampton filed when he left Ensign's office -- he says he and his wife Cindy were terminated -- in spring 2008.
The form is signed April 30, 2008, and gives Hampton's termination date as May 1, 2008. It asks: "Did you, your spouse or dependent child receive any reportable gift in the reporting period (i.e. aggregating more than $335 and not otherwise exempt)?"
Hampton has checked "no."
Ensign, through his lawyer, has said that in April 2008, his parents made gifts to the Hamptons totaling $96,000. If these were indeed gifts, why didn't Hampton disclose them as such?
The danger for Ensign here, as the Sun makes clear, is that Hampton's failure to disclose the payments could mean they'll be seen as severance paid by Ensign, not as gifts. And if they're severance, then Ensign could have criminally violated campaign-finance law by not having himself reimbursed by the political committee for which Cindy Hampton worked.
With calls for investigations by the Senate Ethics committee, the FEC, and even the Justice Department, this could get even more interesting...
Josh
Zachary
Let the games begin!
July 16, 2009 12:49 PM | Reply | Permalink
Senate Ethics is a contradiction in terms and the FEC is a joke. Remember; everything inside The Beltway is either legal or not enforced if illegal.
July 16, 2009 1:09 PM | Reply | Permalink
Where is the line on the 1040 for 'Bribe to keep my mistress and her husband quiet?' And can you take a deduction if it didn't work?
July 16, 2009 1:24 PM | Reply | Permalink
Yeah how exactly would you report such income? Does it fall under Doug Hampton's emasculating column or the getting paid to have sex with a senator (call girl) column?
July 16, 2009 3:04 PM | Reply | Permalink
Gifts of $12,000 (or is it $13,000?) aren't reportable as income to the IRS, but disclosure to the Senate Ethics Committee may be another story. As I understand it, each of Ensign's parents gave $12,000 to each of the Hamptons, including their two kids. That adds up to $96,000. This does not have to be reported as income by any of the Hamptons for tax purposes, although I believe that the Ensigns have to report it and charge it against their lifetime limit for gifts, which used to be in the neighborhood of $1 million, but is probably more now.
July 16, 2009 1:41 PM | Reply | Permalink
Actually, Arleeda, the Hamptons have THREE kids.
One was left out of the "gift" process.
Poor kid's gonna need years of therapy to get over the pain of being overlooked.
Which also means that Ensign and the Hamptons had no ethical quarrel with making CHILDREN party to what looks like tax avoidance and/or hush money payments.
Consider Mom Hampton is more or less a prostitute, I guess this is hardly surprising.
Keeping classy in the time-honored GOP way.
July 16, 2009 6:09 PM | Reply | Permalink
This could be bad news for Hampton. He was required to certify the accuracy of the disclosure form under penalty of perjury. Thus, the only way he could justify not listing it on the disclosure form is if he treated it as income. In that case, he was required to disclose it on his tax return and pay tax on it.
As for those who wonder where it would go on the tax return, it would go under "other income." Even if it were income received as a result of blackmail, the tax code still would require him to disclose it and pay tax on it. However, he could decline to state the source of the income by invoking his Fifth Amendment privilege.
July 16, 2009 5:09 PM | Reply | Permalink
It depends when his family got the $96k. If they received the funds after both ended their work with Ensign, then the Hamptons don't have to report it. If they gotten it before they both ended their work with Ensign, then it is more of a gray area.
Even they received it before they left Ensign's service. They are probably in the clear, given it is the limit of money given without paying income tax, it was only a once in the year gifts, etc.
It kind of boils down to intent. If the intent was to evade disclosure, than the Hamptons are more in misdemeanor trouble, Ensign is more in multiple misdemeanors to crossing the line into felony trouble. Especially if he paid back his parents for example. That is a money laundering charge.
It kind of a gray area, because the money is deemed as gifts, and when they received it. Hamptons will probably get a fine as their worse punishment.
July 16, 2009 7:49 PM | Reply | Permalink
If the IRS looks into the circumstances of these "gifts", there's no way that they will be considered nontaxable. As the Supremes spelled out in Commissioner v. Duberstein back in 1960, you can't simply call something a gift in order for the recipient to avoid the tax. The IRS will have to look at the intent of the elder Ensigns and determine whether the gifts were made with "detached and disinterested generosity". No way. The Hamptons will have to pay the tax on the $96000 as if it were regular income.
July 17, 2009 12:12 PM | Reply | Permalink
it the "gifts" were itemized, especially on the Ensigns (the Senator's parents) tax returns, then they should be fine. It this was an annual occurrence, then the IRS may have some questions. As long as the $24k each was not pooled together.
Right now, the person who is in the biggest legal conundrum is Senator Ensign. He was having an affair with an employee, tried to suppress disclosure about this, and could be in very big trouble, if he paid his parents $96k.
July 17, 2009 1:25 PM | Reply | Permalink