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Texas Sen. Ted Cruz involved in ‘unlawful payments scheme’, tax experts suggest he might face problems

Texas Senator Ted Cruz is currently in the lead for the Senate race in Texas. Holding the seat since 2013, Cruz is comfortably ahead of his Democratic opponent Colin Allred, who is aiming for a victory in November. Despite receiving direct support from President Joe Biden and substantial campaign funding, Allred faces an uphill battle against Cruz in a state that has long been a Republican stronghold. The ongoing migrant crisis in Texas further complicates Allred’s campaign, as many Texans are dissatisfied with the federal government’s efforts to secure the border.

The numbers

In February, Ted Cruz won the primary race with ease, promptly urging Republicans to unite against what he terms the radical left. Recognizing the significant financial backing and support Allred has from the Democratic Party, Ted Cruz called his supporters to fight against the radical left who threaten to change what makes this state great. A poll conducted by Cygnal from April 4 to April 6, surveying 1,000 likely voters in Texas, shows Cruz leading with 45 percent of the vote, nine points ahead of Allred’s 36 percent.

Unexpected problem for Cruz

A recent accusation of potential tax fraud linked to Cruz could provide Allred with some leverage. A Newsweek report suggests that Cruz might come under scrutiny by the Internal Revenue Service (IRS) concerning financial transactions related to his podcast. There have been prior inquiries into a $630,000 donation by iHeartMedia, the broadcaster of Cruz’s podcast ‘Verdict With Ted Cruz,’ to the Truth and Courage Super PAC, which supports Cruz’s reelection campaign.

No direct payments have been made

Both Cruz’s office and iHeartMedia have stated that the funds in question do not constitute a direct payment to Senator Cruz, as he does not get paid for hosting his podcast and there have been no breaches of legal or ethical standards. A spokesperson for Cruz’s campaign clarified to Newsweek: “Senator Cruz does not receive any income in connection with the podcast, nor did he direct revenues to be paid to anyone.” However, tax experts have noted that even if Cruz did not receive direct payments from iHeartMedia, he might still need to report it as income to avoid issues with the IRS.

Read also: Texas cracks down on illegal immigration: Gov. Abbott celebrates the indictment of nearly 150 migrants

Tax experts noted that even if Ted Cruz did not receive direct payments, he might still need to report it as income to avoid issues
Credit: Ted Cruz X official

Former federal prosecutor it’s still Cruz’s income

“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. “You can’t tell the government it’s not my money if you’re the one who earned it,” he said. “It doesn’t matter where the money goes.”

The complex network of relations

A spokesman for Cruz’s campaign said the senator “does not receive any income in connection with the podcast, nor did he direct revenues to be paid to anyone.” Additionally, a spokesperson for the Truth and Courage PAC, which legally cannot coordinate with Cruz or his campaign, stated that the PAC owns the podcast and handles all its tax obligations. However, he did not comment on questions regarding the PAC’s ownership of the show, which has seen millions of dollars invested in its production over several years.

Tax experts noted that even if Ted Cruz did not receive direct payments, he might still need to report it as income to avoid issues
Credit: Unsplash

More information needed

Andy Grewal, a professor of income tax law at the University of Iowa, expressed doubts about any tax liability for Cruz related to the podcast. He mentioned that there would only be a tax issue if Cruz had a right to payment from the podcast and instructed iHeartMedia to pay the super PAC instead. “If he’s just showing up, I don’t see it,” Grewal said.

Read also: Legal analyst on Trump New York trial: “Influencing an election is not a crime”

Grewal also noted that without access to the specific contracts and financial reporting related to the podcasting arrangement, it’s difficult to determine if there have been any legal violations.

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