Daschle apologizes for failing to pay taxes

February 2, 2009 8:51:40 AM PST
Tom Daschle, President Barack Obama's choice to head the Health and Human Services Department, apologized Monday to the Senate panel that will decide his fate, saying he was "deeply embarrassed and disappointed" about failing to pay more than $120,000 in taxes. Determined to salvage his nomination, Daschle wrote a letter to the top leaders of the Senate Finance Committee in which he sought to explain how he overlooked taxes on additional income for consulting work, the use of a car service and paperwork to support claims for charitable contributions.

Daschle recently filed amended tax returns for 2005-07 to report $128,203 in back taxes and $11,964 in interest.

"I am deeply embarrassed and disappointed by the errors that required me to amend my tax returns," said Daschle, the former Senate Democratic leader. "I apologize for the errors and profoundly regret that you have had to devote time to them."

In the letter dated Feb. 1 and released Monday, Daschle provided a timeline for when the errors were discovered and tax payments made. The former Senate Democratic leader is expected to answer the committee's questions when they meet in closed session on Monday.

Uncertain is whether the tax issue will stall or derail Daschle's nomination. Obama, speaking with reporters, said he "absolutely" stands by his Cabinet choice. Sen. Max Baucus, D-Mont., chairman of the committee, issued a statement supporting Daschle's confirmation.

"The ability to advance meaningful health reform is my top priority in confirming a Secretary of Health and Human Services, and I remain convinced that Senator Daschle would be an invaluable and expert partner in this effort. I am eager to move forward together," Baucus said.

Daschle and Baucus have had tussles in the past over Baucus' handling of former President George W. Bush's 2001 tax cut proposals, the Medicare prescription drug bill in 2003 and trade legislation. Baucus has shown a greater willingness to negotiate with Republicans than most Democrats.

Daschle was an early supporter of Obama's presidential bid and several of Daschle's former Capitol Hill staffers went to work for Obama after Daschle, then South Dakota senator, lost his re-election bid in 2004.

Daschle filed the amended returns after Obama announced he intended to nominate him as secretary of Health and Human Services.

Daschle explained in his apology letter that the presidential transition team flagged charitable contributions they concluded were deducted in error. When his accountant realized amended tax returns would need to be filed, he suggested addressing another matter that Daschle raised with him earlier in the year: whether the use of a car service provided by a close friend and business associate, Leo Hindery, should be reported as income.

The unreported income for that car service totaled more than $250,000 over three years.

At about the same time, Hindery's company informed Daschle's accountant of a clerical error it made on a form it provided to Daschle that he subsequently reported to the IRS. The error resulted in an additional $88,333 in unreported consulting income for 2007.

"I disclosed this information to the committee voluntarily, and paid the taxes and any interest owed promptly," Daschle wrote. "My mistakes were unintentional."

A financial disclosure form Daschle filed about a week ago shows that he made more than $200,000 in the past two years speaking to members of the health care industry that Obama wants him to reform.

The speaking fees were just a portion of the more than $5.2 million the former senator earned over the last two years as he advised health insurers and hospitals and worked in other industries such as energy and telecommunications, according to a financial statement filed with the Office of Government Ethics.

Jenny Backus, a spokeswoman for Daschle, said the money he earned in speaking fees from health care interests do not pose a conflict for the health care reform Obama wants him to lead.

"He welcomed every opportunity to make his case to the American public at large and the health industry in particular that America can't afford to ignore the health care crisis any longer," she said.

Among the health care interest groups paying Daschle for speeches were America's Health Insurance Plans, $40,000 for two speeches; CSL Behring, $30,000; the National Association of Boards of Pharmacy, $16,000; and the Principal Life Insurance Co., $15,000.

Daschle said in a letter to the Department of Health and Human Services ethics office that if he's confirmed by the Senate, he will resign as a senior policy adviser at the Washington law firm of Alston and Bird LLP. He reported earnings of more than $2 million from that firm during the past two years.

Daschle also earned more than $2 million in consulting fees from InterMedia Advisors LLC of New York, an investment firm specializing in buyouts and industry consolidation. He said he also intends to resign from that firm upon his confirmation.

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