U.S. Supreme Court Associate Justice Clarence Thomas listens during a ceremony on the South Lawn of the White House, Monday, Oct. 26, 2020, in Washington, U.S.
Al Drago | Bloomberg | Getty Images
Thomas and his wife, Ginny Thomas, made several voyages aboard the Michaela Rose, including voyages around Indonesia and New Zealand. Thomas did not report the luxury trips as gifts on government disclosure forms, saying he considered them personal trips with friends.
On Tuesday, Senate Finance Committee Chairman Ron Wyden (D-Ore.) sent a 12-page letter to Crowe’s attorney detailing new evidence he said “raises serious concerns about Mr. Crow’s luxury assets, including tax deductions” from his superyacht for both himself and also due to his personal recreational use for the benefit of his rich and powerful friends.”
Sen. Ron Wyden (D-OR) speaks during a press conference after the first Democratic luncheon since the imposition of COVID-19 restrictions on Capitol Hill, April 13, 2021, in Washington.
Erin Scott | Reuters
Tax records obtained by ProPublica show the Crow family took millions of dollars in business tax deductions from the yacht between 2003 and 2015 through a company they reported to the IRS as an active yacht charter business.
Rochelle Charter, Inc., created by the Crow family to charter the yacht, reported tax-deductible business losses in 10 of the 13 years ProPublic recorded.
In order for business losses to be deductible from federal income taxes, a company must do actual business with paying customers.
In his letter to Crow, Wyden wrote: “I fail to see how it would be reasonable for a taxpayer to argue to the Internal Revenue Service that a superyacht with a registration indicating that it is not engaged in a commercial activity could be harmed by the for-profit yacht charter. services.”
Asked by CNBC on Monday to comment on the deductions, including whether there was evidence Michaela Rose chartered the yacht or registered it as a commercial vessel, a spokesman for Harlan Crow’s office responded with a statement.
“Mr Crow engages professional accounting firms to prepare his tax returns and follows tax law in good faith. Any suggestion to the contrary is unfounded and defamatory,” the spokesman said.
“This politically motivated fishing expedition was not based on any legitimate legislative effort. The congressional committees are neither tax auditors nor law enforcement officers,” the spokesman said. “Targeting a private citizen for political purposes is highly inappropriate and unconstitutional and sets a dangerous precedent.”
Michaela Rose sails under the British flag. However, it is not registered as a commercial vessel in Great Britain
A spokesperson for the UK’s Maritime and Coastguard Agency told CNBC that the Michaela Rose was only registered as a Pleasure vessel under Part 1 of the UK Register of Shipping.
According to British merchant shipping regulations, “Pleasure vessels are vessels used for sporting or recreational purposes and are not operated for financial gain”.
The United States has a similar picture. According to US government documents reviewed by CNBC, the Michaela Rose is registered as a “pleasure boat” rather than a commercial vessel.
A U.S. Coast Guard official told the Senate Finance Committee that Michaela Rose has not received a certificate of authorization to engage in coastal trade in the United States.
Without registering as a merchant vessel or obtaining certificates and waivers to allow the vessel to engage in commerce, it is not clear how the Michaela Rose performed the commercial chartering necessary to qualify for the tax deductions received by the vessel. Crow Company.
“Any attempt to mischaracterize a pleasure yacht as a business is run of the mill tax fraud, plain and simple,” Wyden wrote.
Crow’s attorney did not respond to CNBC’s request for proof that Crow ever chartered the yacht or registered it as a commercial vessel in any jurisdiction.
After his mother’s death in 2014, Crow renovated the yacht, updating the interior to a more modern style. According to ProPublica, Crowe’s tax return for that year showed a $1.8 million loss from the company that operated the Rochelle Charter yacht.