Friday, November 22, 2024

The Same, But Different. And, By “Different,” I Mean “Worse.”

When I wrote the last post about Lt. Gov. Mark Darr and his questionable[foot]Read: illegal[/foot] mileage reimbursements, I focused only on mileage in 2012 and 2013. This was not because 2011 did not have the same improper reimbursements, however. Far from it — Darr spent 2011 racking up thousands of dollars in reimbursed commuting mileage, in violation of either IRS regulations or Amendment 70 (or both).  

So, why keep these separate instead of rolling them into the last post?  Because, unlike the mileage reimbursements in that post, many of the reimbursements in 2011 have the added wrinkle that Darr let the taxpayers (via his state-issued credit card) or his campaign pay for his gas.  As any CPA worth his salt will tell you, that ain’t good.[foot]”Ain’t good” is standard CPA jargon, at least in NE Arkansas.[/foot]

Let me back up and give some concrete examples.

On February 14, 2011, Darr drove from Little Rock to Van Buren and back and was reimbursed for the 305.54 miles (@ 42 cents/mile, $128.33) in that trip.[foot]We’ll assume that Darr left from his office in the Capitol that day and not from an apartment in LR, which would have made the mileage reimbursement improper.[/foot]  However, en route back from Van Buren, at 7:41pm, Darr purchased gas on the state Exxon Mobil card for $94.78 in Russellville.

On February 18, 2011, Darr drove from Little Rock to Texarkana and back for a mileage reimbursement of 296.63 miles ($124.58).  However, on the way to Texarkana, at 8:21am on 2/18, he purchased gas on that same credit card for $58.22 in Arkadelphia.

Somewhat confusingly, Darr was reimbursed for 396.99 miles ($155.40) based on a February 24, 2011, trip to and from Springdale, which his records suggest he made all in the same day.  Yet, on February 23, he purchased $88.71 in gas at 2402 Cantrell Rd. in Little Rock at 4:33 in the afternoon, meaning it sure seems like Darr was driving home the night before the chamber event, which would have made half of those miles unreimbursable.

It also seems unlikely that Darr drove back to LR on 2/24, as his records suggest, since 2/24 was a Thursday and the next use of his gas card is at the same Cantrell Rd. Doublebee’s on Tuesday, March 1, at 9:59am.  Long weekends are the best, y’all.

On April 21, 2011, Darr drove from Little Rock to Rogers and back and was reimbursed for the 424 miles ($178.08), but he also stopped for gas at the same station in Russellville twice that day, getting $121.22 at 9:59am and $65.26 at 9:13pm.

Why does it matter who paid for Darr’s gas?  Because, like so many things dealing with money, the IRS says it matters.  Basically, it boils down to what we all sort of assume: you can get gas money or you can take mileage, but you really can’t take both without documenting the hell out of it and accounting for every penny.[foot]On some level, I think Darr probably realized that he couldn’t take gas and mileage; there are stops at a gas station on Markham in Little Rock on March 7 at 5:33pm and at the same Cantrell Rd. Doublebee’s on March 16 and April 6, both around 5:30pm.[/foot]

You see, if a person claims mileage and his company pays for his gas, he has to subtract the value of the gas from the amount of the reimbursement or otherwise pay back the excess reimbursement.  If he does not, then the IRS treats the reimbursement scheme as a non-accountable plan, and ALL of his reimbursements — gas, mileage, food, expenses — have to be treated as personal income, which he can then itemize and document his expenses against on his taxes.[foot]To quote an accountant friend, “A most undesirable tax predicament.”[/foot]

Unwittingly, I might have actually done Darr a favor and saved him from having an even bigger problem with state gas cards.  You see, on May 12, I wrote a post detailing Sec. of State Mark Martin’s abuse of his state-issued gas card.  In what is either a gigantic coincidence or a sign that someone in Darr’s office was paying attention to BHR back in May of 2011, Darr did not use his state-issued gas card after the date of my post.  He then turned around and, on June 1, 2011, refunded the state for $623.47 worth of fuel already purchased and paid the outstanding $719.45 Exxon bill from his personal checking account.

While he might have repaid the fuel after the fact, that’s not necessarily enough to save him from having to treat the reimbursement plan as non-accountable.  It is arguable whether Darr’s actions would qualify as adequately accounting for his actual expenses within 60 days of incurring them, and, more importantly, the cost of gas purchased on 1/28/11 and 1/31/11 was not returned within 120 days when Darr wrote a check on 6/1/11.  And the IRS has made it clear that you can’t pick and choose, treating some expenses as having come from an accountable plan and other from a non-accountable plan.

“[All] reimbursements for business-travel meals and incidental expenses [are] deemed paid under a NON-accountable plan if an employer routinely doesn’t track expenses and doesn’t require employees to either substantiate actual expenses or pay back amounts exceeding the deemed substantiated amount.” See 2013 RIA federal tax handbook, pg 156 sec. 1574.

Even if you ignore that most of the mileage Darr was being reimbursed for was improper and should have never been paid, if indeed Darr’s mileage/gas-card use requires that his reimbursements be treated as a non-accountable plan, he is looking at a WHOLE lot of money that should have been reported as income on his W-2. The IRS tends to frown on people omitting roughly 20% of their yearly income from their tax returns.

If we know anything about Mark Darr and his 2011 at this point — and I like to think we do — it’s that he got into office and treated his campaign-finance account like some sort of magical ATM, able to pay for things in excess of the amount of money the campaign actually owed him.  One of the ways he did so?

You guessed it: have the campaign pay for gas while taking the mileage reimbursement from the state.

On May 16 and 17, 2011, Darr traveled from Little Rock to Fort Smith and back and was reimbursed for the 320 miles ($134.40) on the trip.  On the way, there was a “fundraiser” for $132.12 at the 7-Up Kwik Stop in Ola, AR, that his campaign paid for.

On June 7, 2011, Darr claimed 426 miles ($178.92) for reimbursement based on a trip from Little Rock to Rogers and back.  On June 7, 2011, there was a “fundraiser” at Love’s Country Store in Ozark, AR, for $120.06.

On June 17, 2011, Darr claimed 219 miles ($91.98) for reimbursement for a trip from Little Rock to Rogers, plus an 8-mile reimbursement ($3.36) for driving from Rogers to Springdale on that trip.  That same day, a “fundraiser” was held at Pilot in Russellville, AR, for $109.21.

July 24-26, 2011, trip to Austin, TX, to meet with Rick Perry?  Darr drove that and claimed 1,030 in mileage ($432.60) and had the state pay for his hotel.  Along the way, his campaign paid $155.31 for food at Vince Young’s Steakhouse[foot]Note: Generally, only 50% of food/drink is deductible, so the rest of this would have been income.[/foot] and $100.98 for “supplies” at Prime Mart in Austin.

July 28, 2011, trip from Little Rock to Blytheville and back?  Darr claimed 380 miles of reimbursement ($159.60), while his campaign picked up the tab for $123.86 in “supplies” at Walmart along the way.

After filling up the truck with “supplies” on 8/29/11 at the Kum & Go in Springdale, AR, for $111.97, courtesy of the campaign, Darr drove to Little Rock (miraculously, we were not billed for this drive).  On August 31, he drove from Little Rock to Benton and back, clocking 48 reimbursable miles ($20.16).

Despite claiming that he drove from Little Rock to Fayetteville on September 1, for 188 reimbursed miles ($78.96) plus another 15 ($6.30) from Fayetteville to home in Springdale, Darr’s campaign somehow had an expense for $111.08 worth of “supplies” at the Pilot in Russellville on 8/31.  I feel safe chalking one of those dates up to sloppy records.

On September 13, 2011, Darr drove from Springdale to Fayetteville and back, making sure to note the 19 miles ($7.98) for reimbursement.  His campaign paid $123.84 for “supplies” at the Kum & Go in Lowell, AR, that same day.

Darr drove from Springdale to Little Rock and back on September 14, 2011, for a meeting (not reimbursable, but you know he claimed the 400 miles ($168.00)), and his campaign notes “supplies” for $105.00 at the Fastrip in Springdale on 9/16.  Chalk this up to record the transaction posting date instead of the real date?  Yeah.

In one of my favorite things of this whole project, Darr attended the 125th Anniversary of his alma mater, Ouachita Baptist University, on September 20, 2011.  The day before, he went to Walker Bros., a clothing store in Fayetteville, so he could be the freshest, cleanest Lt. Gov. he could be, letting his campaign pay for $119.62 in “supplies,” and hitting up the campaign for $105.86 more in “supplies” at the Love’s in Ozark, AR, on his way back to Little Rock.  He then billed the state for the 138 round-trip miles ($57.96) between Little Rock and Arkadelphia on September 20.

October 25, 2011, Darr drove from Springdale to Ozark and back, reimbursing himself for 160 miles ($67.20).  The campaign paid for $105.59 in “supplies” at the Kum & Go in Springdale.

Darr drove from Springdale to Hot Springs and back, for 396 miles in reimbursement ($166.32), on November 22, 2011.  The campaign picked up the check for $105.28 in “supplies” at the Kum & Go in Springdale.

Again, these are just the glaring highlights, where it is patently obvious that the campaign footed the bill for the gas while the state covered the miles.  Which kind of puts Darr in a Catch-22: if he does not treat the campaign expenditure as personal funds, then he is comingling campaign functions with state functions.  If he does treat them as personal funds, then he had to report them on his taxes, and he’s just admitted to something that the Ethics Commission frowns upon.

Besides, even ignoring gas costs for a second, the 2011 mileage reimbursements are chock full of the same improper reimbursements for commutes to and from home, all of which must be treated as income.[foot]Amendment 70 alert![/foot]

There are some other interesting coincidences between campaign spending and where Darr was or what he was doing as well.  Planning a trip to the Hot Springs School of Math & Science on October 6, 2011?  Better swing by the Apple Store in Little Rock on October 5 for some new, high-tech “supplies” for $266.55, courtesy of the campaign, before you go.  And make sure to have the state reimburse you for the 110 miles for the LR-to-Hot Springs roundtrip.

Driving from Little Rock to Weiner, Weiner to Walnut Ridge, and Walnut Ridge back to Little Rock for 290 miles all in the same day, including a stop at the Lawrence County Chamber of Commerce Dinner?  Then why was there a payment from your campaign to Laurie Masterson for $3,589.12 for a fundraiser on that same date?

All of which is to say, I suppose, that anyone who really thinks that Mark Darr ever cared about fiscal accountability, cutting government spending, or eliminating government waste probably needs to include the caveat of “…except when it benefits him personally.”  Congrats, however, on electing someone who is either too ignorant or too dishonest to actually account for campaign and state funds and (I assume) to pay taxes on all of his actual income.

If we’re lucky, maybe David Ray and the rest of the ARGOP will actually say something about all of this.  I won’t hold my breath.

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