Rep. Lois Capps from 2001 to 2005 rented a room in her home to a staffer but failed to report the income to the IRS until this year, the Daily Caller reports.
Jeremy Tittle, a "case worker" in the California Democrat's district office, rented a room in Capps' Santa Barbara home for $41,480, the website reports.
Capps' staff says the matter has been adequately addressed.
"Capps' accountant filed all her amended returns from 1998-2011 this year, and she has paid them," Millman wrote in an email to the website. "As soon as we became aware of this, Lois immediately filed an amended return and cleared it up right away... The amended returns are on her website and everybody can look at it."
The error is likely to factor prominently in Capps' 24th District re-election race against Republican former Lt. Gov. Abel Maldonado.
"How do you not report income you're getting from a person on both your congressional and campaign payroll who lives in your house? #REALLY," Maldonado tweeted early Friday morning.
Capps has led a Democratic charge against Maldonado to release his tax returns. The Maldonado campaign previously said he would release his 2011 tax return in June of this year.
But Maldonado and his family continue to be engaged in a dispute with the IRS over more than $4 million in taxes the IRS claims they owe on a Santa Maria farm. Maldonado's campaign said the candidate has filed an extension on his 2011 taxes as a result of the pending issue.
The Santa Barbara-area district was redrawn following the 2010 census and became more conservative territory. Capps still had a strong showing in the all-party June 5 primary, easily winning more votes than Maldonado in all three of the district's counties. But Republicans note their party vote was split between two Republican candidates in that race.