No questions about taxes at Sebelius hearing

Members of the Senate Finance Committee decided not to question Governor Kathleen Sebelius of Kansas, President Obama's nominee for Secretary of Health and Human Services (HHS), about a back tax issue at a generally friendly confirmation hearing today. Although earlier in the week Senator Charles E. Grassley of Iowa, the committee's ranking Republican, had indicated that he intended to raise the tax issue, he said on Wednesday that Governor Sebelius made a good-faith effort to pay her taxes correctly, and errors discovered in a recent review should not count against her, the Washington Times reports.

In a letter delivered to Senate Finance Committee ranking member Senator Grassley (R-IA) and Chairman Senator Max Baucus (D-MT) on March 31, Sebelius said that she and her husband, Gary, had paid $7,040 in back taxes and $878 in interest after discovering "unintentional errors" in their tax returns for 2005-2007. Sebelius and her husband had asked a CPA to audit their returns when she was nominated for the position by President Obama.

The letter, made public by the Associated Press, described three areas where Sebelius and her husband made errors. They were:

  • Charitable contributions: For charitable contributions in excess of $250, taxpayers must have an acknowledgment letter from the charitable organization in order to take a tax deduction. Out of 49 charitable contributions we made in these three years, there were three for which we could not locate our acknowledgment letter. The amended returns eliminated these deductions.
  • Interest: In July of 2006, my husband and I sold our home for an amount less than the outstanding balance on our mortgage. We continued paying off the loan, including interest we mistakenly believed continued to be deductible mortgage interest. Another loan for home improvements was treated similarly. These errors were corrected in our amended returns.
  • Business expenses: In reviewing our taxes, we discovered we had insufficient documentation required to claim some of our tax deductions for business expenses. While the amended returns reflect these changes, they did not affect the amount of taxes owed because we were subject to the Alternative Minimum Tax."

An earlier nominee for the HHS post, former Senator Tom Daschle, withdrew his name after it was revealed that he probably owed $140,000 in taxes for the services of a driver provided by his employer.

In addition to Sebelius and Daschle, four other senior nominees to the Obama administration have faced scrutiny about tax problems. Treasury Secretary, Timothy Geithner admitted he had not paid about $43,000 in taxes. Former Representative Hilda L. Solis, now Secretary of Labor, faced questions about $6,400 in tax liens against her husband's business.

Former Treasury official Nancy Killefer, whom Obama had nominated to be the administration's chief procurement officer, withdrew after admitting she had not paid employment taxes for a household worker. And in early March, after reviewing his tax returns, the Senate Finance Committee reported that former Dallas Mayor Ron Kirk, now the U.S. trade representative, failed to pay almost $10,000 in taxes.

Upcoming CPE Webinars

Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.