snowden-tax-returnDepending on the source, millions of Americans and other people worldwide have read, watched the news, or heard about Edward Snowden, a hero in the eyes of some and a traitor in the eyes of others.  However, in the legal community, perhaps the million (or even million-plus) dollar question is not “where’s Snowden,” or “is he on the side of good of evil,” but rather: What happens if and when Snowden requires legal representation?  The Department of Justice has officially charged Snowden with espionage, and despite the issues surrounding the controversy being million dollar questions, Snowden, himself, is far from a millionaire and, absent help from his allies, lacks the resources needed to “flight”…or fight.

Interestingly, the experts in the Snowden debate have ranged from the predictable: international legal expert witnesses, constitutional law scholars, and veteran journalists, to the obscure: Forbes is giving tax information to those who might be interested in what Mr. Snowden’s legal fees would cost him, were he to be extradited to and face charges in the United States.  See Robert W. Wood, “Helped by WikiLeaks and Julian Assange, Edward Snowden Needs Perry Mason,” Forbes (Jun. 23, 2013).

This raises an interesting question, in the context of the Snowden debate.  Who ARE the experts?  Is it CNN, who finally made the connection between the antiquated game, “Where’s Waldo?” and Edward Snowden’s mystery locales?  Glenn Greenwold, the London-based journalist and “Guardian” for Snowden?  Constitutional law professors?  The Department of Justice?  One thing is clear:  Whether international, constitutional, political, or financial, experts of all kinds are needed to unravel the puzzles and ensuing questions that Edward Snowden’s flight has given rise to.

The primary consideration for attorneys must be the legal implications of Snowden’s deeds, whether they agree with his actions or not.  For days, attorneys and international law experts have scratched their heads, trying to reach some consensus whether or not Snowden had even committed a crime, and if so, what crime he had committed against the United States government.

Now that the U.S. has officially charged Snowden with espionage, many scholars have changed their focus to extradition laws, trying to figure out whether or not certain countries are obligated, as a matter of law, to return Snowden to the United States for prosecution.

Still, at least part of the legal community is preparing a hypothetical (or even real) defense for Snowden and, in so doing, attorneys are trying to figure how a defendant without real funds can pay for quality legal representation.  Fear not, litigators:  When in doubt, ask another expert.  And Forbes contributor Robert Wood, who discusses taxes and litigation, has spelled out a masterful plan for how Snowden just may be able to fund a legal defense.  No comment is ventured as to whether a defense is actually needed, on moral or international extradition grounds.

Wood has it all worked out, down to whether Snowden’s legal team would need a W-2 or a 1099, when figuring out how Snowden can attempt to deduct legal expenses from his tax returns.  He even adds a standard joke about how Snowden may not wish to ask for the IRS’s help on this issue.

In all seriousness, however, financial expert witnesses will be needed to assist in making ends meet for Snowden, particularly if he faces a legal battle.  Wood makes an interesting point, and one that is not without political heat:  It actually does matter, for tax purposes, whether Snowden is considered a “whistleblower” or not.  Id. While personal legal expenses are not tax deductible, according to Wood, two legal points may save Snowden’s financial life, at least.

First, a determination of whether or not Snowden’s legal expenses (even if they are funded by outside groups) are actually “personal” or not is of substantial importance, tax-wise.  Id. If the expenses are considered to be “personal,” they are generally not tax-deductible.  However, if the expenses are “political expenses,” they may be exempt, and there’s an even more interesting twist:  If Snowden claims that he profited off of his actions, financially speaking, he just may be able to write his legal fees off as “business expenses.”  Id.

Second, legally speaking only, can Snowden be considered a “whistleblower”?  If so, expenses for whistleblowers, while in the course of their employment, are deductible.  See id, e.g. This has long been a government policy, in an effort to encourage, rather than punish, employees in corrupt or hostile work environments.  No one will argue that the context stays the same when the work environment is the NSA, but the protections are written into the law regardless of one’s employer.  Administrative law judges (ALJs) have the dubious task of considering whistleblowing claims, whenever the U.S. federal government is a defendant.  Though ALJs are employed by the federal government, their task is to objectively determine whether or not a charging party, claiming to be a whistleblower against an Executive government agency, is legally correct, but only in civil actions.  In Snowden’s case, an ALJ would hardly be equipped to handle the range of legal issues.

Who determines Snowden’s fate?  At present, that is a question that cannot, with any certainty, be answered.  Who knows about the tax consequences and deductions that Snowden may or may not be eligible for?  CPAs, accountants, tax law experts, and financial planners are just some of the experts that may fit the bill.  Attorneys who even ponder being a part of Snowden’s legal future will have to consider and spell out to him what the most effective and financially sound course will be.  However, in this day and age, and with Snowden not winning any popularity contests, his legal team’s best bet may be to ask a private expert, not the IRS.  Even without the Snowden scandal, the IRS is perhaps best left alone, at least for now.  He’s already alienated one government agency.  Legal advocates for Snowden will need the best experts they can get, and tax experts will all be part of the million dollar question, the million dollar fee (?), and, theoretically, the million dollar tax write-off.

By: Kat Hatziavramidis, Attorney-at-Law