Sarah Palin ordered to pay over 17K dollars in back taxes

Alaska Governor and former Republican vice presidential nominee Sarah Palin has been asked by officials to pay back taxes to the Internal Revenue Service. She reportedly owes taxes on more than 17,000 dollars in per-diem expenses.

State employees who live more than 50 miles away from Alaska's capital, Juneau, are entitled to state aid in the form of per-diem payments. Juneau is approximately 600 miles from Palin's home town of Wasilla, making the governor eligible for the payments.

According to CBS News, before she accepted the vice presidential nomination, Palin charged the state for over 300 nights spent in her Wasilla home, not the governor's mansion in Juneau. Her expenses usually amounted to 60 dollars per day.

During her first 19 months in office, Palin charged the state 16,951 dollars in per diem allowances for spending 312 nights in her home. The allowances were intended to cover meals and incidental expenses while she was traveling on state business.

The state this week reversed a policy that had treated the payments as legitimate business expenses under the Internal Revenue Code, said state administrator Annette Kreitzer.

Payments to employees charging "per diem" expenses to stay in their own homes will be treated as income subject to taxes, Kreitzer said, and the state will update the employees' W-2 forms.

Palin's expenses were reported by The Washington Post last year after the Republican presidential nominee John McCain named Palin as his running mate.

The Post reviewed records from late 2006 through early August 2008, and the story prompted a review by state officials.

The governor continued to seek the payments through the end of the year, according to the Anchorage Daily News, which first reported this week that she owed taxes on the payments.

The additional income will have to be reported on Palin's 2008 tax returns, due April 15.

Reimbursement for legitimate business expenses is not considered taxable income under the Internal Revenue Code, tax lawyers said. At the time of The Post's story, some tax lawyers and liberal groups suggested that Palin's per diem expenses should be treated as income.

The governor's spokeswoman, Sharon Leighow, acknowledged that the governor had received legal guidance in a report, but she declined to comment further.

Palin's spokesman, Bill McAllister, said the governor would pay the taxes.