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Growing Tax Problems of the Obama Nominees

Emac's Bottom Line FOXBusiness

The number of nominees with tax problems that the White House has presented to Congress for various government posts has grown, as even more officials up for appointment to the Treasury Dept., which oversees the IRS, have been ensnared.

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Media reports have it at four, others at five, ever since Treasury Secretary Tim Geithner's own tax problems almost scuttled his appointment.

Actual number: The list has grown to nine.

And it has mushroomed at a time when the Obama Administration has created record deficits, as it has passed a $3.5 trillion budget, a $787 billion stimulus package, and as it attempts to pass a health reform bill that many believe will create even bigger tax bills down the road. 

The White House and Congress have put "the largest budgetary burden ever on American taxpayers in history," as "it is nominating individuals who have not paid their fair share in that burden, and that needs to stop," Bill Wilson, president of Americans for Limited Government says.

Administration officials in many of the cases have dismissed the tax issues as too minor and insignificant to stall certain nominations, as in the case of Kathleen Sebelius, secretary of Health and Human Services. 

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But at minimum, the hitches and problems are clear evidence that the tax code is a confused tangle of barbed wire--which is why the government needs America's Museum of Mass Confusion to collect it, the monolithic IRS, notes the Heritage Foundation. And with the legislative changes afoot, the tax code will entangle even more Americans.

The list of nominees with tax problems:

1)Lael Brainard, nominee for Treasury Undersecretary of International Affairs: According the Associated Press, Brainard "was late in paying real estate taxes in 2005, 2006 and 2007. A report by the staff of the Senate Finance Committee, which is overseeing her confirmation, also challenged the accuracy of a home office deduction Brainard. The challenge led Brainard to reduce the deduction on her 2008 return, says ALG. The AP also reports Brainard was evidently not forthcoming to the committee: "The committee's top Republican is unhappy that the committee staff had to submit 10 sets of questions to Brainard before getting complete information about the discrepancies."

2)Capricia Marshall, Chief of protocol for the State Department, a position that carries the status of an ambassadorship – Marshall failed to file taxes in 2005 and 2006.

3)Kathleen Sebelius, secretary, Health and Human Services: The former governor of Kansas amended three years' worth of tax returns to correct "unintentional errors," paying back taxes and interest totaling just under $8,000.

4)Ron Kirk, Trade Representative: The former mayor of Dallas, Tex. owed nearly $10,000 in back taxes for 2005, 2006 and 2007; filed an amended return after the Finance Committee noted the discrepancies.

5)Caroline Atkinson, Treasury Undersecretary of International Affairs (same job Brainard is going for):  "Caroline Atkinson, was told she had to withdraw after a 'tax problem' was revealed early in the vetting process, according to officials,” reports the ABC News blog.

6)Tom Daschle, nominee for Secretary of Health and Human Services: Failed to pay taxes on more than $300,000 worth of income he gained through consulting work, including the taxfree use of a car and driver for several years.

7)Nancy Killefer, nominee, Administration's Chief Performance Officer: Withdrew after Killefer was found to have failed to pay employment taxes for household help.  

8)Hilda Solis, Secretary of Labor: Husband had unpaid tax liens against his business in Los Angeles county; in all, 16 state and county tax liens amounting to $11,640.

9)Timothy Geithner, Secretary of the Treasury:Extent of tax problems longer than previously known. Geithner didn't pay Social Security and Medicare taxes while he worked for the International Monetary Fund between 2001 and 2004. As an American citizen working for the IMF, Mr. Geithner was technically considered self-employed and was required to pay Social Security and Medicare taxes for himself as both an employer and an employee, reports the Wall Street Journal. In 2006, the IRS audited Mr. Geithner's 2003 and 2004 taxes and concluded he owed taxes and interest totaling $17,230, according to documents released by the Senate Finance Committee. The IRS waived the related penalties, the Journalreports.

The Obama transition team also discovered the nominee had failed to pay the same taxes for 2001 and 2002. "Upon learning of this error on Nov. 21, 2008, Mr. Geithner immediately submitted payment for tax that would have been due in those years, plus interest," a transition aide told the Journal. The amount owed: $25,970.

Other tax issues also surfaced during the vetting, including the fact that Geithner took dependent-care deductions for his child's stay at overnight sleepaway camps in 2001, 2004 and 2005, even though sleepaway camps don't qualify, the Journalsays.

In addition, according to the amended tax returns he subsequently filed, Geithner paid $4,334 in additional taxes, and $1,232 in interest for infractions, such as an early-withdrawal penalty from a retirement plan, an improper small-business deduction, a charitable-contribution deduction for ineligible items, and the expensing of utility costs that went for personal use, the Journalsays. And he employed an immigrant housekeeper who briefly lacked proper work papers.

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