Victims of the Tax Code? Not So Fast.

By Michael S. Rosenwald
Washington Post Staff Writer
Wednesday, February 4, 2009

The tax system is complicated. It is, according to many lawyers and tax preparers, in need of sweeping reform.

But the tax code can hardly be blamed for the recent problems of Obama administration appointees who came up short in what they owed the government, several tax experts said yesterday.

"I can't believe they didn't know what was going on," said Deborah Schenk, a New York University law professor and editor of the influential journal Tax Law Review. "The tax code is a mess, but I don't think that's an excuse for what they did."

She was speaking, of course, about the three newest D.C. politicians to come under high-profile scrutiny for tax predicaments in a town that has certainly had some experience in this subject area, dating to Zoe Baird's nanny tax problems that ended her attorney general hopes in 1993.

Yesterday, former senator Tom Daschle withdrew his nomination for secretary of health and human services after failing to pay $146,000 in taxes, most notably on a car and driver provided to him by a business associate and friend. Just before Daschle pulled out, Nancy Killefer, a former member of the IRS Oversight Board, withdrew her nomination to be deputy director of the Office of Management and Budget -- and the nation's first chief performance officer. Her problems surrounded a failure to pay unemployment taxes for a household employee.

Last month, Treasury Secretary Timothy F. Geithner survived his tax controversy -- not paying taxes on income earned while he worked at the International Monetary Fund, despite receiving written notification saying he needed to.

"These are not rocket-science kinds of tax issues," said University of Cincinnati law professor Paul Caron, who also writes the popular TaxProf Blog. "I take them at their word, but on the other hand, these were not cases of something really esoteric."

Kenneth Brier, a Boston tax lawyer, said he could see an argument for how the details of the recent tax troubles point to the system being too complex, but he also said, "What this is telling us is that even people who should know better somehow don't. People who should be able to hire good tax help still don't get it right."

Schenk, the NYU law professor, said that if it takes losing talented people to tax issues to make tax-code reform a higher priority that would be something good to comes out of the situation. "But do I think these problems will move tax reform front and center?" she said. "No. There's too much else on the table right now."

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