Kansas Gov. Kathleen Sebelius, the president’s choice to head the Department of Health and Human Services, did not pay $7,040 in income taxes that she and her husband owed between 2005 and 2007, the White House disclosed Tuesday in another tax-related embarrassment for the Obama administration.
Sebelius’ bill stemmed from insufficient documentation of charitable donations and mistakes in deducting mortgage interest, she explained in a letter to the chairman and ranking Republican on the Senate Finance Committee.
It was not immediately clear how the disclosure would affect her prospects for Senate confirmation. Her unpaid taxes were substantially smaller than those of former Sen. Tom Daschle, who was forced to withdraw as President Barack Obama’s nominee to head health and human services in February after it was disclosed that he had failed to pay more than $128,000 in taxes.
But Republicans, already leery of Obama’s health-care reform plans, may give the tax matter a thorough airing when she appears Thursday before the Senate Finance Committee. A confirmation vote by the full Senate is expected later in April.
Committee Chairman Max Baucus (D-Mont.), who is helping lead the effort to write health reform legislation, rallied to Sebelius’ side.
“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,” Baucus said in a statement. “She’s the right person for the job.”
Jill Gerber, a spokeswoman for Iowa Sen. Chuck Grassley, the senior Republican on the panel, was more circumspect.
“Sen. Grassley is always concerned about tax adjustments by nominees, but reserves judgment until the nominee has a hearing and has a chance to offer an explanation,” Gerber said.
Sebelius — the sixth senior Obama nominee to reveal tax problems — said she paid the back taxes plus $878 in interest after they were identified by an accountant she hired to review her returns when Obama selected her.
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“That evaluation revealed unintentional errors, which we immediately corrected by filing amended returns,” she wrote in a letter to Baucus and Grassley. Sebelius explained the review found she did not have the required acknowledgment letters for three of the 49 charitable donations over $250 that she and her husband made in 2005, 2006 and 2007.
She said the couple also mistakenly continued to deduct interest on a home loan after she and her husband sold their house in 2006 for less than the mortgage’s outstanding balance. They made a similar error on a home improvement loan, she said.
Finally, she explained that she and her husband had insufficient documentation for some of the business expenses they had deducted.
The issue of unpaid taxes had not been announced publicly when Sebelius appeared Tuesday before the Senate Health, Education, Labor and Pensions Committee.
The governor told senators that she, like Obama, favors creation of a government-run program to cover at least some of the roughly 46 million people in America without health insurance. Such a program, which many Republicans oppose, could compete with private insurers.
Sebelius said the administration wants to work with the GOP. To demonstrate that, she was introduced by two Kansas Republicans.
One was Sen. Pat Roberts. The other was former Senate Majority Leader Bob Dole.
“The question is, can we forge a bipartisan proposal that is accessible, available and affordable?” Dole asked his former colleagues. “I think we can with steady and strong leadership. And Gov. Sebelius is ready to lead us in that direction.”