2nd Cabinet nominee runs into tax troubles

[January 31, 2009]  WASHINGTON (AP) -- Another of President Barack Obama's Cabinet nominees has run into tax problems.

This time it's former Sen. Tom Daschle, chosen to lead the new president's health reform efforts. Daschle recently filed amended tax returns to report $128,203 in back taxes and $11,964 in interest, according to a Senate document obtained by The Associated Press.

Previously, Treasury Secretary Timothy Geithner's nomination was held up after it was revealed that he had failed to pay more than $34,000 in taxes.

The White House acknowledged Friday that "some tax issues" had emerged in connection with Daschle's nomination, but a spokesman said the president is confident the former Senate Democratic leader will be confirmed as the new health secretary.

Daschle filed amended tax returns for 2005, 2006 and 2007 to reflect additional income for consulting work, the use of a car service and reduced deductions for charitable contributions. He filed the returns after Obama announced he intended to nominate Daschle to head the Health and Human Services Department.

Most of the additional taxes resulted from unreported income from the use of a car service provided him by a close friend and business associate, Leo Hindery Jr. The unreported income for that service totaled more than $250,000 over three years.

Daschle also had unreported consulting income of $88,333, in 2007. He also had reductions to charitable contributions totaling about $15,000 over the three years covered, according to the Senate Finance Committee document. The document, marked "Confidential Draft," is a committee statement concerning Daschle's nomination.

The car service and the consulting income were received in connection with Daschle's business relationship with InterMedia Partners of Englewood, Colo. Daschle is a limited partner and chairman of its executive advisory board. He is also an independent consultant to InterMedia Advisors LLP of New York City.

Hindery founded InterMedia Partners, a private equity firm, in 1988. Daschle was paid $1 million annually for his services, the committee said. Daschle's 2007 tax return did not include one of his monthly payments of $88,333.

Beginning in 2005, Daschle was provided the use of a car and driver. Charges for the car and driver services were billed to InterMedia.

"Senator Daschle told staff that in June 2008, something made him think that the car service might be taxable and disclosed the arrangement to his accountant," said the committee statement. "Senator Daschle estimated that he used the car and driver 80 percent for personal use and 20 percent for business use. On January 2, 2009, Senator Daschle filed amended returns for 2005, 2006 and 2007 reporting the value of the car service as income."

The committee is scheduled to meet in executive session to discuss Daschle's nomination on Monday. A Democratic aide declined to comment on any issues discovered in the vetting process.

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

White House spokesman Bill Burton said 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," Burton said. "In preparation for his nomination, Senator Daschle and his accountant identified some tax issues and fixed them. They filed amended return with the IRS and made payments with interest."

Daschle, 61, was one of Obama's first announced Cabinet choices. He was also offered a newly created post, director of the White House Office on Health Reform. Combined, the two titles would give the former South Dakotan large sway over a campaign to change how the country addresses its health care and insurance systems.

The White House insisted Daschle would move forward in those roles.

Jim Manley, a spokesman for Senate Majority Leader Harry Reid, D-Nev., also predicted Daschle would be confirmed.

[Associated Press; By KEVIN FREKING]

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