Health and Human Services nominee Kathleen Sebelius has paid back taxes and interest of more than $7,800 stemming from "unintentional errors" revealed during her accountant's review of recent tax returns.
The White House on Tuesday released a letter Sebelius sent to the Senate Finance Committee, detailing how she lacked proper paperwork in accounting for some charitable donations and business expenses. The Kansas governor also mistakenly claimed a mortgage interest deduction on a house she had already sold.
Sebelius was nominated for health secretary after President Barack Obama’s first choice, former Sen. Tom Daschle, dropped out after failing to pay more than $100,000 in income taxes on free limo rides provided by a friend and Democratic donor.
But the committee’s reaction to Sebelius’ tax issue was much different that the reaction to Daschle. In attempt to show he didn't consider her nomination in jeopardy, Finance Committee Chairman Max Baucus (D-Mont.) quickly issued a statement calling for quick action on Sebelius’ bid to serve as health secretary.
“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 Governor Sebelius,” said Baucus. “There is absolutely no doubt in my mind that Governor 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 and I look forward to hearing from her at the Finance Committee’s hearing on Thursday.”
The details about Sebelius' back taxes emerged several hours after she testified before the Senate Health, Education, Labor and Pensions Committee, which hears testimony from the HHS nominee as a courtesy but does not vote on whether to send the nomination to the Senate. That power rests with the Finance Committee, which conducts a thorough review of the nominees' records.
In her letter to the Finance Committee, Sebelius said she and her husband hired a certified public accountant to review their tax returns for 2005, 2006 and 2007.
“That evaluation revealed unintentional errors, which we immediately corrected by filing amended returns,” Sebelius wrote.
She paid $7,040 in additional taxes and $878 in interest, Sebelius said.
Regarding charitable contributions of more than $250, she said she could not locate acknowledgment letters from the organizations on three out of 49 donations made in those three years. Sebelius eliminated the deductions, she said.
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.
“Another loan for home improvements was treated similarly,” she wrote. “These errors were corrected in our amended returns.”
With the business expenses, Sebelius said she discovered “insufficient documentation required to claim some of our tax deductions for business expenses.”
Baucus and Iowa Sen. Charles Grassley, the ranking Republican on the Finance Committee, appeared to otherwise give her a clean bill of health. In a letter to Sebelius, the senators said “no additional items were identified that needed to be addressed as a result of our review.”
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