As a member of the highest court, one might expect impeccable adherence to law, however, Justice Clarence Thomas seems to be an exception to this norm. It appears that Thomas’s cloudy financial conduct has largely been overlooked, as Chief Justice John Roberts has refrained from public condemnation or demanding adequate corrective action. Given these circumstances, the stage seems set for another regulatory body to step in: the Internal Revenue Service (IRS). This report details the situation.
In 1999, Clarence Thomas received a substantial loan from Anthony Welters to purchase an RV. The loan, expected to be paid by 2004, was not settled until 2008, when Welters decided to forgive the remaining debt. This forgiven debt is considered income by the IRS, and if unreported, could land Thomas in considerable trouble with tax laws. The intricate details of the loan and repayment further muddle the financial picture as per this New York Times investigation.
Welters stated that the interest payments from Thomas exceeded the purchase price of the RV and hence decided to stop receiving payments. However, his calculations seem inconsistent. Even if Thomas had made all the scheduled interest payments, those would only amount to slightly more than $180,000 – nearly $87,000 short of the purchase price. Welters could only provide investigators with a single proof of payment: a canceled check dated December 2000 for $20,042 corresponding to one year’s interest payment.
Despite the existence of this single large payment, the principal and accrued interest when forgiveness took place, would have constituted taxable income for Thomas. This affair might explain why Thomas has been seen frequently at Federalist Society fundraisers, for as the popular saying goes, one can perhaps take liberties with the Constitution, but not with the IRS. The proximity to financial donors and lack of fiscal accountability have cast a dark shadow.
More information about Thomas’s financial irregularities can be found in the New York Times’ Senate Inquiry Findings and several articles addressing his questionable behavior here and here.