Sebelius becomes latest Obama nominee with tax trouble

Kansas Democratic Gov. Kathleen Sebelius Tuesday became the latest Obama administration Cabinet nominee to have tax problems come to light.

The Health and Human Services secretary nominee informed the Senate Finance Committee that she and her husband paid $7,040 in back taxes and $878 in interest for 2005, 2006 and 2007 taxes after a review by a certified public accountant found the errors. Sebelius characterized the discrepancies as "unintentional."

Finance Chairman Max Baucus, D-Mont., stood behind Sebelius and called for quick action on her nomination.

"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 in a statement. "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."

Sebelius is set to appear before the Finance panel Thursday.

Finance ranking member Charles Grassley, R-Iowa, is waiting to make a decision on Sebelius, a spokeswoman said.

"Sen. Grassley generally reserves judgment on nominees until the vetting process, including the nomination hearing, is completed," she said. "He gives the nominees a chance to give their point of view on all relevant issues, including any tax issues that have come to light through the standard committee vetting process."

Sebelius' tax errors stemmed from discrepancies over charitable contributions, interest on a home mortgage and business expenses. According to the letter to the committee, Sebelius could not locate three acknowledgements out of 49 charitable contributions that prove she could deduct donations of $250 or more.

In addition, Sebelius and her husband sold their home in 2006 for less than the amount left on the mortgage. They continued to pay off the leftover amount of the mortgage and a home improvement loan while wrongly deducting interest for the loans.

Lastly, the couple also had business expenses for which they could not find documentation, but the error did not affect the total taxes owed because they were subject to the alternative minimum tax.

Obama's first pick for HHS secretary, former Senate Majority Leader Tom Daschle, D-S.D., pulled out amid controversy over $140,000 in back taxes he paid from a car and driver he received from a close friend's private equity firm for which he consulted.

Treasury Secretary Timothy Geithner's confirmation was delayed due to tax trouble, particularly $34,000 in back taxes and $8,600 in interest from several years he was employed by the International Monetary Fund.

U.S. Trade Representative Ron Kirk also faced tax woes, having failed to pay almost $10,000 in taxes over three years.