Texas Senator Ted Cruz may face scrutiny from the Internal Revenue Service (IRS) over payments linked to his podcast, according to tax experts.
Questions have previously been raised about a $630,000 donation that iHeartMedia, the broadcaster of the Verdict With Ted Cruz podcast, made to the Truth and Courage Super PAC, which supports the Republican's reelection campaign.
Cruz's office and iHeartMedia have denied that the money amounts to direct payment for Cruz, as the senator is not paid to host the show, and denied any legal or ethical violations.
A Cruz campaign spokesperson told Newsweek: "Senator Cruz does not receive any income in connection with the podcast, nor did he direct revenues to be paid to anyone."
Tax experts have suggested that even if Cruz was not paid directly by iHeartMedia, he may still need to declare it as income to prevent the IRS from flagging it.
"It's still going to be his income, because he's the one who 'earned it,'" Brian Galle, a tax law professor at Georgetown University and former federal prosecutor in the Department of Justice's tax division, told The Houston Chronicle.
"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."
"You can't tell the government it's not my money if you're the one who earned it," Galle added. "It doesn't matter where the money goes."
Calvin Johnson, a tax professor at the University of Texas at Austin, agreed that Cruz may still need to declare this money as income, despite not being personally compensated over it, as the money is still supporting him via ads paid for by the Super PAC to help his re-election campaign.
"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 told The Chronicle.
However, Andy Grewal, an income tax law professor at the University of Iowa, suggested Cruz would only be in the wrong if the senator was entitled to payment for the podcast, but told iHeartMedia to pay the super PAC instead to avoid having to declare it in tax forms.
"If he's just showing up, I don't see it," Grewal told the outlet.
A spokesperson for Cruz's 2024 campaign previously told Newsweek that the senator appears on Verdict "three times a week for free" and that any suggestion of wrongdoings regarding the $630,000 figure to the Super PAC was merely "mainstream media and the Democrats coordinating lazy attacks during an election year."
Rachel Nelson, iHeartMedia's vice president of public relations, previously said that the company's payments to Truth and Courage PAC are "associated with those advertising sales" for the podcast and that Cruz "volunteers his time to host this podcast and isn't compensated for it."
Cruz will face off against Democrat Colin Allred for the Texas Senate seat in November's election.
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Ewan Palmer is a Newsweek News Reporter based in London, U.K. His focus is reporting on US politics, domestic policy ... Read more
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