Back taxes cloud Daschle nomination

Former Senate Democratic leader Tom Daschle recently had to pay more than $100,000 in back taxes for a three-year period, which has delayed his confirmation as Health and Human Services secretary.

White House press secretary Robert Gibbs said Friday that Mr. Daschle, President Obama’s choice to spearhead health care reform, had filed amended tax returns to the Internal Revenue Service and made payments with interest.

A Senate Finance Committee report showed Mr. Daschle paid $128,203 in back taxes and $11,964 in interest for 2005 to 2007 to cover income for consulting, the use of a car-and-driver service, and lower deductions for charitable contributions.

“He didn’t think to report it to the IRS. He didn’t think of it as taxable income, but it came up during the vetting process,” a congressional aide who asked not to be identified told Reuters news agency.

ABC News first reported on the tax issue Friday evening, saying he owed more than $100,000, and White House officials later confirmed the report.

A Daschle spokeswoman did not immediately return a message seeking comment.

White House spokesman Bill Burton confirmed details of the ABC story but said Mr. Daschle’s role in the new Obama administration was not in danger of being derailed.

“The president has confidence that Senator Daschle is the right person to lead the fight for health care reform,” Mr. Burton said. “In preparation for his nomination, Sen. Daschle and his accountant identified some tax issues and fixed them.”

The tax issue and related vetting, the second to affect an Obama Cabinet nominee, explains why Mr. Daschle, one of the Democratic Party’s top minds on health policy and a popular party elder, didn’t win quick approval from the Democrat-controlled Senate.

His popularity among his colleagues and the customary deference senators extend even to former members of their chamber mean his confirmation is still considered likely.

Treasury Secretary Timothy Geithner failed to pay more than $34,000 in Social Security and Medicare payroll taxes from 2001 to 2004. Mr. Geithner has since paid the back taxes, with interest, and has been confirmed by the Senate.

After losing his 2004 re-election bid, Mr. Daschle became a consultant to a New York-based private equity firm, InterMedia Advisors, ABC reported. That company’s founder - Leon Hindrey, a Daschle friend and Democratic fundraiser - allowed Mr. Daschle to use his car-and-driver service. Mr. Daschle did not pay taxes for the use of the car, a problem officials discovered while going through his financial documents.

The White House insisted that Mr. Daschle, 61, would move forward and planned to meet Monday with Senate Finance Committee members to address their questions on his taxes.

“Senator Daschle will be confirmed as secretary of Health and Human Services. He has a long and distinguished career and record in public service and is the best person to help reform health care in this country,” Jim Manley, a spokesman for Senate Majority Leader Harry Reid, said in a statement. “Senator Reid looks forward to a swift hearing and is confident Daschle will be confirmed.”