Sebelius Tax Errors: Nominee Pays More Than $7,000 In Back Taxes

WASHINGTON — Health and Human Services nominee Kathleen Sebelius recently corrected three years of tax returns and paid more than $7,000 in back taxes after finding "unintentional errors" _ the latest tax troubles for an Obama administration nominee.

The Kansas governor explained the changes to senators in a letter dated Tuesday that the administration released. She said they involved charitable contributions, the sale of a home and business expenses.

Sebelius said she filed the amended returns as soon as the errors were discovered by an accountant she hired to scrub her taxes in preparation for her confirmation hearings. She and her husband, Gary, a federal magistrate judge in Kansas, paid a total of $7,040 in back taxes and $878 in interest to amend returns from 2005-2007.

Asked by The Associated Press to comment on the amended tax returns as she left a Capitol Hill restaurant Tuesday night, Sebelius said, "We put out a statement and the statement speaks for itself."

Several Obama administration nominees have run into tax troubles, notably the president's first nominee for HHS secretary, former Senate Democratic leader Tom Daschle. He withdrew from consideration while apologizing for failing to pay $140,000 in taxes and interest.

Finance Committee Chairman Max Baucus, D-Mont., quickly issued a statement supporting Sebelius.

"Congress is going to need a strong partner at the Department of Health and Human Services to achieve comprehensive health reform this year, and we have that partner in Gov. Sebelius," Baucus said. "There is absolutely no doubt in my mind that Gov. Sebelius has the political experience, determination, and bipartisan work ethic to get the job done with Congress this year. She's the right person for the job."

There was no comment from the White House.

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Sebelius is to appear Thursday before Baucus' committee, which will vote on sending her nomination to the full Senate. Sebelius testified Tuesday before the Senate's Health, Education, Labor and Pensions Committee before the tax issue became public, getting a friendly reception.

Sen. Chuck Grassley of Iowa, the top Republican on the Finance Committee, said through a spokeswoman that he is reserving judgment until the vetting process, including the nomination hearing, is completed.

In her letter to Baucus and Grassley, Sebelius wrote that the accountant discovered these errors:

_Charitable contributions over $250 are supposed to include an acknowledgment letter from the charity in order for a deduction to be taken. Out of 49 charitable contributions made, three letters couldn't be found.

_Sebelius and her husband took deductions for mortgage interest that they weren't entitled to. The couple sold their home in 2006 for less than what they owed on the mortgage. They continued to make payments on the mortgage, including interest. But since they no longer owned the home they weren't entitled to take deductions for the interest. The same thing happened with a home improvement loan. Sebelius said they "mistakenly believed" the payments were still deductible.

_Insufficient documentation was found for some business expense deductions.

An administration official said Sebelius filed the amended returns before documents formalizing her nomination were sent to the Finance Committee. Sebelius advised the committee of the mistakes, and senators requested an explanation, said the official, speaking on condition of anonymity because of the sensitivity of the issue.

In a letter to Sebelius dated Tuesday, Baucus and Grassley wrote that they'd reviewed the three years of amended returns and "no additional items were identified that needed to be addressed."

___

Associated Press writer Ricardo Alonso-Zaldivar contributed to this report.

Comments

[lynettema]

Let's start reporting how many Republicans have made errors on their tax forms. Errors do not equal evasion. This is a common problem people. Tax forms are difficult by design. Even accountants make mistakes on these forms. Sometimes I wonder if those in the IRS always get them right.

[whosyourdaddy]

Odd that so many democrats so strongly favor increasing taxes yet so often turn out to not be paying them.

[2stupid4words]

Is this a great country, or not? Since the vetting process for government service has rendered so many individuals who inadvertently forgot to pay their taxes, an individual can ask the question, "What about all of those people that served before? Did they pay their taxes or were the errors swept under the Oval Office rug? Or did anyone really care about unpaid taxes? After all, paying taxes is a voluntary act, or is it?"

[trimom]

Please. They went over this woman's tax return with a fine tooth comb and that was all they could find.

I ask you, how many people out there take a business deduction for car expenses? I am talking schedule C here. Now, do you keep a daily log of your business/personal mileage? Think hard now.

If you were still paying on your mortgage and received a Form 1099 would you deduct that interest?

Can you document all of your charitable deductions? Hmmm really? How about those clothes you dropped off at goodwill three years ago? Still got that little receipt that they gave you? All it says is that she couldn't find the receipts for 3 out of FIFTY donations.

Please people, cut back on the caffeine.

[SweetBabu]

Thank you for that. I agree completely.

[MizLiz]

I'm sure a lot of people think that having a cancelled check to document their deduction is proof enough, and go ahead and use it. That may be okay for $200-$400, but if you're talking about a $16,000 annual tithe, you'd better have plenty of paperwork from the church. I usually include a copy with the return itself.

[aliceinks]

Now I know why the IRS has stopped audits. LOL They are making more than ever before on back taxes since O came into office and made his noms.
What is it with dems and not paying taxes? They want to raise them but not pay them.

[MizLiz]

We don't mind paying taxes (at least I don't) but we'd rather not waste it fighting Bush's little adventure. We'd like our money to go for schools and health care. Things republicans regard as a waste of good money.

[LucieLee]

She paid the taxes.....end of story!!

[cyoohoos]

This really a nominal amount. $7000 over 3 years? WTH is the IRS doing? Do they just rubber stamp returns?

[MizLiz]

Their budget has been slashed so many times, they can barely look at 5% of returns. You'd be shocked at the computers they're still using. UN-networked. Stuff we gave to our grandchildren years ago.

[PinkysBrain]

Since our Government seems to have a little problem generating the money they are going to need to fund all these new programs, I have a suggestion. Everyone in the U.S. gets a nomination for a worthless new Cabinet Position (Chief Performance Officer, Secretary of Duplicity, etc., etc.). All citizens would then feel compelled to audit their tax returns, reaping billions of dollars for the Treasury. I think this a common sense solution to our growing funding problem.

[BoSoxFanNC1]

LOL....another "tax cuts do not work because we dont pay our taxes"

I dont see many Left Wingers on this blog????? Hmmmmmm??? I am sure it was Bush's fault.

This vetting process seems to be an Obamination

[aliceinks]

I dont see many Left Wingers on this blog????? Hmmmmmm??? I am sure it was Bush's fault.

LOL No Palen or Rep. to bash. ; -)

[loki]

well at least with every nominee of Obamas the gov gets a little more tax money. Thats just more for wall street to get then.

[UbiVeritas]

Another highly ethical Obama nominee. I feel so much better now that change has come.

[Lillopa]

Now that is almost $250 thousand dollars now in "what was" lost tax revenues. hmm??---rich vs poor (us) --Are the wealthy not given massive tax loop holes , tax incentives, tax cuts and still not good enough? Love of Country first? Or Love in Worship of Wealth first? There are takers and givers in life--

[Lillopa]

Pres Obama had a strict vetting process if it were not Pres Obama, would never hear of this tax problem period! The Congress are not poor and are wealthy they do not do their own income tax returns hire professionals good ones, do they not?? Just like middle class people--Accounting Professionals are making alot of mistakes you think? hmmm?

[WilliePilgrim]

Replace the IRS's role in determining and collecting tax on income and replace it with a regularized/transparent process of collecting taxes based on consumption at the time of purchase. The tax code is so complex and byzantine, convoluted and at times dangerously vague, that no person can confidently know that they won't find agents discovering "a little problem". That is NOT how our founding fathers imagined our most intimate relationship with our governement being realized.
The IRS should be focused on black market activity, business and corporations that fail to render the taxes they collect to the Treasury, and seeing that tariffs and duties are observed. But really, lets get rid of the fear and make the 15th of april just another nice day in spring.

[freedomitchy]

According to the article: "Sebelius said she sold her home in Topeka, Kan., for an amount less than the outstanding balance on the mortgage. She continued paying off the loan and the interest for which they continued to claim a deduction." The real question is:

Did the bank(s) know that they were holding loans with no collateral? Inquiring minds, you know.