Daschle missed $128,000 in taxes over three years

Revelation may pose an obstacle to confirmation

By Ceci Connolly
Washington Post / January 31, 2009
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WASHINGTON - Tom Daschle, nominated to be secretary of the Department of Health and Human Services, failed to pay more than $128,000 in taxes over three years, a revelation that poses a potential obstacle to his pending Senate confirmation.

The back taxes plus $12,000 in interest and penalties involved unreported consulting fees, questionable charitable contributions and a car and driver provided by a private equity firm run by entrepreneur and longtime Democratic Party donor Leo Hindery Jr., according to a "confidential draft" report prepared by Senate Finance Committee staff.

A spokeswoman for Daschle confirmed last night that he recently paid back taxes in excess of $100,000 but did not disclose the extent of Daschle's tax errors and the timetable of when he and others addressed those issues.

Daschle paid the back taxes after being alerted to the error by the presidential transition team just six days before his first Senate confirmation hearing, the report said.

One of Obama's earliest and most steadfast campaign supporters, Daschle is the second Obama cabinet nominee to acknowledge costly tax errors. On Jan. 13, Timothy Geithner, Obama's choice to run the Treasury department, disclosed that he had failed to pay some taxes and subsequently paid $43,000 in taxes and penalties. He was nevertheless sworn in on Jan. 26.

Daschle failed to report more than $83,000 in consulting fees in 2007 and has not provided sufficient documentation relating to a total of $15,000 in charitable contributions over three years, according to the Finance Committee report.

Daschle has been called to appear before the committee in a closed-door session Monday, committee staff said. As yet, Daschle has failed to provide adequate documentation relating to charitable contributions he claimed for the past three years, and staff is reviewing whether free trips he took should be reported as income.

Additionally, Daschle intends to amend his tax returns a second time because he failed to pay Medicare taxes related to his employment of the driver of the car service. The lapse was discovered by Finance Committee staff.

In addition to earning $2 million from the law firm Alston & Bird, the former Senate majority leader has also been on the payroll of Hindery's private equity firm, InterMedia Advisors, since he left the Senate in 2005, earning $2 million last year, according to documents filed with the Office of Government Ethics.

Daschle's failure to report the free car service to the Internal Revenue Service was first reported by ABC News last night.

Under tax law, not reporting compensation - including free services such as air travel or a car service - can be a crime. But such lapses must be intentional, a tax specialist said.

Top Senate aides and a handful of lawmakers expressed reluctance to publicly speculate on how damaging the revelations might be to their former colleague. A spokeswoman for Senator Charles Grassley, Republican of Iowa, the ranking Republican on the Finance committee, promised a thorough examination.

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