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Daschle Owed Back Taxes That Exceeded $128,000

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Tom Daschle, President Obama's nominee for Health Secretary will meet with the Senate Finance Committee to explain how he racked up a massive back tax bill. Kimberly Dozier reports. Video by CBSNEWS.com

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By Ceci Connolly, Paul Kane and Joe Stephens
Washington Post Staff Writers
Saturday, January 31, 2009

Thomas A. Daschle, nominated to be secretary of the Department of Health and Human Services, did not pay more than $128,000 in taxes over three years, a revelation that poses a potential obstacle to his Senate confirmation.

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The back taxes, along with $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 J. 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. She said that Daschle, a former Senate majority leader, and his accountant discovered the error regarding the luxury car service and reported it to the committee after his vetting was completed.

Daschle paid the back taxes six days before his first Senate confirmation hearing with the Senate Health, Education, Labor and Pensions Committee. The Finance Committee, however, has jurisdiction over his nomination.

Daschle, one of President Obama's earliest and most steadfast campaign supporters, is the second Cabinet nominee to acknowledge tax errors. On Jan. 13, Timothy F. Geithner, who was chosen to run the Treasury Department, disclosed that he had not paid some taxes and subsequently paid $43,000 in taxes and penalties. He was sworn in on Jan. 26.

Because of an apparent clerical error by the equity firm, Daschle did not report more than $83,000 in consulting fees in 2007 and has not provided sufficient documentation relating to $15,000 in charitable contributions over three years, according to the panel's report. He and his wife, Linda, gave $276,000 in charitable contributions during the three-year period being studied by the panel, according to a Daschle aide.

His spokeswoman, Jenny Backus, said the presidential transition team "concluded that some of his charitable donations were not properly documented and may have been deducted in error," and the couple paid $5,693 in back taxes.

Daschle has been called to appear before the full committee Monday in a closed-door session.

He is considering amending his tax returns a second time because he did not pay Medicare taxes on the additional taxable income he incurred related to his use of the Cadillac. Finance panel staff members found that lapse.

In addition to earning $2.1 million from the law firm Alston & Bird, the former three-term senator has also been on the payroll of Hindery's private equity firm, InterMedia Advisors, since he left the Senate in 2005, earning $1 million per year, according to documents filed with the Office of Government Ethics.

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

A White House aide, speaking on the condition of anonymity, said Daschle's tax problems were "discovered during the vetting process, and the Obama team became aware of it as Senator Daschle prepared to submit his nomination papers."


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