The Newest Tax-Cheat: Sebelius--Health and Human Services

"Look, when will you guys realize that democrats don't pay taxes, we spend them. Geez, you act surprised by this stuff."

Sebelius admits errors, pays $7,000 in back taxes
Mar 31 09:02 PM US/Eastern
By ERICA WERNER

WASHINGTON (AP) - 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.
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."