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Daschle Owed Back Taxes That Exceeded $128,000

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

In a statement last night, White House press secretary Robert Gibbs said: "Senator Daschle brought these issues to the Finance Committee's attention when he submitted his nomination forms, and we are confident the committee is going to schedule a hearing for him very soon and he will be confirmed." He declined to provide information on when and how the president learned of the situation.

Daschle, 61, is one of Obama's last Cabinet nominees still unconfirmed. Obama has yet to name a second choice for commerce secretary after New Mexico Gov. Bill Richardson (D) withdrew his nomination, citing an ongoing "pay-to-play" investigation into one of his political donors. The Senate is expected to vote Monday on the nomination of Eric H. Holder Jr. for attorney general.

Backus, Daschle's spokeswoman, said Daschle "naively" believed the car service was "nothing more than a generous offer from a friend.

Last June, Daschle "mentioned the use of the car" to his accountant and asked whether the service could be construed as a reportable gift or payment, Backus said. The accountant intended to correct the error in Daschle's 2008 tax filing, she said.

Daschle's "failure to recognize this as an issue and to discuss it with his accountant earlier is something he regrets and for which he takes full responsibility," she said.

According to the Senate committee, Daschle used the car 80 percent of the time for personal purposes. That service was worth more than $255,000 in unreported income, according to the committee report.

Under tax law, not reporting income -- including free services such as air travel or a car service -- can be a crime. But such lapses must be "willful and intentional" to be prosecuted, according to a tax expert.

Top Senate aides and a handful of lawmakers expressed reluctance to publicly speculate on how damaging the revelations might be.

A spokeswoman for Sen. Charles E. Grassley (Iowa), the ranking Republican on the finance panel, issued a statement promising a thorough examination.

"All relevant information about a nominee must be made public in order for the confirmation process to go forward," said spokeswoman Jill Gerber. "Committee members must weigh all the facts of a nominee's record."

Meanwhile, some of Daschle's former Senate colleagues rallied behind him, predicting he will be confirmed.

"He has a long and distinguished career and record in public service and is the best person to help reform health care in this country," Jim Manley, spokesman for Senate Majority Leader Harry M. Reid (D-Nev.), said in a statement. "Sen. Reid looks forward to a swift hearing and is confident Daschle will be confirmed."

The central issue for Daschle hinges on what has been an obscure -- but financially rewarding -- aspect of his post-Senate life: his role as chairman of the advisory board of Hindery's InterMedia Advisors.

Daschle and two other former senators -- Bob Kerrey (D-Neb.) and Slade Gorton (R-Wash.) -- headed the board and were rewarded handsomely for the investments InterMedia made in small niche media corporations.

Founded as InterMedia Partners, the New York-based firm was recast in March 2005 when Daschle was brought in as an investor and head of the advisory board. That group consists of other major Democratic figures, including Cappy R. McGarr, who runs a Dallas investment firm and served as Daschle's political treasurer, and Bernard L. Schwartz, a former chief executive of Loral Corp. and a major Democratic donor.

Research editor Alice Crites contributed to this report.

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