Gov. Sarah Palin must pay back taxes on expenses she charged the state for living in her home outside Anchorage instead of at the state capital.
A review of state policy and federal tax laws determined the per diem payments should be treated as income, Department of Administration Commissioner Annette Kreitzer said.
The charges came to light after Palin was named John McCain's running mate on the Republican presidential ticket.
Palin had collected nearly $17,000 in per diem payments before she was named to the Republican ticket. The expenses were paid for more than 300 nights she slept at her home in Wasilla and commuted 40 miles to her Anchorage office instead of living in the governor's mansion in Juneau, the state capital.