Sebelius Corrects Tax Errors

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.

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."


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