Houston Chronicle: Ted Cruz could be liable for taxes on payments from his iHeartMedia podcast, experts say

AUSTIN, Texas – Yesterday the Houston Chronicle reported that “the peculiar payment scheme behind” Ted Cruz’s podcast could “raise red flags for the IRS.”

One tax expert said “this isn't like a charity that auctions off one hour of free accountant time or something… This was a payment for a series of appearances by Ted Cruz and not by anybody else.”

Cruz’s ethical scandals are – still – only getting worse.

Houston Chronicle: Ted Cruz could be liable for taxes on payments from his iHeartMedia podcast, experts say

By Benjamin Wermund

• The peculiar payment scheme behind U.S. Sen. Ted Cruz's popular podcast has raised ethical questions and drawn complaints about election law violations.

• Now tax experts say the deal involving a massive radio network that picked up the “Verdict with Ted Cruz” podcast in 2022 and a super PAC supporting the Texas Republican’s reelection effort could also raise red flags for the IRS.

• The exact terms of the [podcast] arrangement are unclear, and no parties involved have been willing to disclose them.

• But tax experts say Cruz may still need to report income on his tax forms, even if he isn't pocketing any cash. That's because the law requires income to be taxed to the person who does the work. In this case, they say, that would be Cruz serving as the host of his podcast.

• "It's still going to be his income, because he's the one who 'earned it,'" said Brian Galle, a tax law professor at Georgetown University. "This isn't like a charity that auctions off one hour of free accountant time or something ... This was a payment for a series of appearances by Ted Cruz and not by anybody else."

• A spokesman for the Truth and Courage PAC, which is barred under federal law from coordinating with Cruz or his campaign, said it owns the podcast and pays all associated taxes for it. He did not respond to questions about the PAC's ownership of the show, which the PAC has spent millions of dollars producing over the past several years.

• Calvin Johnson, a tax professor at the University of Texas at Austin, said the arrangement appears to allow Cruz to shift payments "from one pocket to another pocket."

• "The tax statute is perfectly clear that transfers in connection with performance of services — and that’s what this is — get taxed to the services," Johnson said, meaning Cruz.

###