Oct. 22 (Bloomberg) -- Republican vice presidential nominee Sarah Palin's costly makeover may raise her tax bill.

The Republican National Committee disclosed spending more than $150,000 through Sept. 30 for designer clothes, shoes, makeup and other accessories for Palin, or the equivalent of about $5,000 per day since John McCain picked her as his running mate in August. After the expenditures were reported by Politico, the campaign said it had always been the intention to donate the clothing to charity.

On another matter, Palin said she will release her medical records, which have been kept private by the campaign. ``So be it if that will allow some curiosity seekers perhaps to have one more thing that they either check the box off that can find something to criticize or to rest them assured over,'' Palin said in an interview on NBC Nightly News. ``I'm healthy, happy and I've had five kids.''

As for her taxes, Palin earned $166,080 last year, according to her IRS returns. Under some circumstances, the Internal Revenue Service may consider the clothing taxable as income to her, experts said. As a former Goldman Sachs Group Inc. banker learned last year, the write-off for donating used designer clothing can amount to a fraction of their retail value.

``This is clearly income,'' said Paul Caron, associate dean of the University of Cincinnati School of Law and editor of TaxProf Blog. ``The charitable deduction will not eliminate all, or most, of the income.''

Campaign Accessories

The RNC spent $153,340 last month on ``campaign accessories'' and makeup and hair services, including $75,063 at a Neiman Marcus clothing store and $49,426 at Saks, Federal Election Commission reports show.

They were classified as coordinated expenditures made on behalf of federal candidates and were part of the $4.4 million spent that month. The RNC can spend $19 million in coordination with presidential nominee John McCain's campaign.

``With all of the important issues facing the country right now, it's remarkable that we're spending time talking about pantsuits and blouses,'' said Tracey Schmitt, a McCain campaign spokeswoman. ``It was always the intent that the clothing go to a charitable purpose after the campaign.''

A Palin campaign official who requested anonymity said the Republican National Committee purchased and owns the clothes and considers Palin, as the party's vice presidential nominee, to be the equivalent of an employee of the RNC.

Returning the Clothing

Former IRS Commissioner Margaret Milner Richardson said the issue may be moot if Palin returns the clothing to the Republican National Committee before the end of the year.

``It might be hard to make the case that the clothes were taxable income stick,'' said Richardson, who served under President Bill Clinton. ``If she keeps them past the end of the year, even if she donates them to charity, then I think that she should include their fair-market value in income -- it would be hard to classify them as a gift -- and then take the charitable deduction.''

Roberton Williams, principal research associate at the Tax Policy Center, a Washington research group, said the campaign might be able to call the clothing a uniform, which wouldn't be taxable to Palin if the RNC can make the case she's an employee and only uses the clothing for business purposes.

``If she were clearly an employee, it would be fine,'' Williams said. ``There is the question of whether or not she is an employee.''

Not a Uniform

Donald Alexander, an IRS commissioner for President Richard Nixon who is now an informal adviser to Democrat Barack Obama's presidential campaign, said the RNC cannot successfully argue that Palin's clothes are a uniform.

``They can make the uniform argument, but they won't win,'' Alexander said. ``Unlike bus drivers and the Alaska National Guard, you're not required to wear a uniform'' as a political candidate, he said.

``Looking nice is not sufficient'' to meet that test, Alexander said.

IRS regulations say employer-provided clothing or a uniform is non-taxable to the employee only if the employee must wear the clothes as a condition of employment and the clothing isn't suitable for everyday wear.

The IRS in 1989 examined the tax returns of former President Ronald Reagan and his wife, Nancy, in an effort to decide whether to pursue additional taxes for the value of gifted and loaned designer dresses, furs, jewels and accessories. Fashion experts at the time estimated that Mrs. Reagan wore outfits from famous designers worth at least a million dollars.

Thrift Stores

Donated clothing usually fetches a much lower deduction value than the retail price because the write-off can't exceed what the clothes would fetch in thrift stores, according to IRS regulations and legal decisions.

Designer clothes, in particular, can be worth much less than their original value after they are donated. In the case involving a former Goldman Sachs banker, the U.S. Tax Court disallowed $40,005 of a $48,954 charitable deduction that the banker claimed for designer shoes and clothes given to a New York thrift shop.

If the IRS determined the clothing is taxable income to Palin, she might be able to deduct about 18 percent of their value, or $28,000, using the Tax Court decision as a guide. That would leave her owing taxes on about $126,000. Based on her 2007 income, she would be in the 33 percent bracket and owe roughly $42,000 in taxes.

The Democratic National Committee hasn't purchased any clothing or accessories for Obama or his running mate, Joe Biden, according to a review of its filings. Obama spokesman Ben LaBolt said the campaign also hasn't paid for any clothes worn by Obama or Biden.

Clinton's Clothing

Howard Wolfson, who was New York Senator Hillary Clinton's spokesman when she was challenging Obama for the Democratic nomination earlier this year, didn't respond to a question about how much she spent on clothing or whether any of it was provided by her campaign.

Former North Carolina Senator John Edwards, another challenger for the Democratic nomination, did charge his campaign for two $400 haircuts. He later reimbursed the money.

To contact the reporter on this story: Ryan J. Donmoyer at e-mail rdonmoyer@bloomberg.net

Last Updated: October 22, 2008 19:28 EDT