March 4, 2009
Another Obama Cabinet Pick Has Tax Problems
President Barack Obama’s pick for U.S. trade representative is the fourth nominee to have tax issues. Former Dallas Mayor Ron Kirk will file amended tax returns for 2005 through 2007 and pay almost $10,000 in back taxes.
Ron Kirk’s tax problems stem from excess deductions for basketball tickets and failure to report speaking fees.
White House officials and key senators call the errors minor and predicted that the issue should Kirk’s nomination to be U.S trade representative.
“When you put anybody’s tax filings under a microscope, people don’t have to be dishonest,” said Senate Majority Leader Harry Reid, D-Nev. “It’s just hard to do all the right things. It certainly shouldn’t disqualify him.”
Senate Finance Committee aides uncovered Kirk’s tax issues during weeks of his examination and evaluation for the cabinet position. Kirk, a lawyer and the Texas Democratic Party’s 2002 Senate nominee, will file amended tax returns for the last three years and pay the Internal Revenue Service $9,975 plus interest.
This careless error pales in comparison to some other Obama Cabinet picks.
Treasury Secretary Timothy Geithner paid $43,000 in back taxes before his confirmation. Tom Daschle, the former Senate majority leader who withdrew his bid to lead the Health and Human Services Department, paid $128,203 in back taxes, plus interest, for failing to report as income the car and driver a friend had provided to him.
Labor Secretary Hilda Solis’ confirmation was delayed for weeks amid questions about her husband’s unpaid taxes. Outside the Cabinet, an Obama pick for a top White House job withdrew over questions about her tax compliance.
Texas Sen. John Cornyn, a member of the GOP leadership and the finance committee who defeated Kirk in the 2002 race, had been supportive of the nomination. But Monday night, an aide called the tax problems “a very serious offense.”
“He’s very disappointed,” Cornyn spokesman Kevin McLaughlin said. “He’s hopeful Mr. Kirk will take the opportunity to provide an explanation when he comes before the finance committee.”
The top Republican on the panel, Sen. Charles Grassley of Iowa, “will reserve judgment on the nomination until the vetting process, including the hearing and any follow-up questions resulting from the hearing, is completed,” said spokeswoman Jill Gerber.
His tax bill includes three main discrepancies:
1. He owes $5,800 because of $37,750 in honorariums from 16 speeches dating to 2004. He assigned the fees to be paid directly to a scholarship fund at his alma mater, Austin College in Sherman. The Finance Committee said he should have reported the income and claimed a corresponding charitable deduction.
2. Kirk owes $2,600 stemming from deductions for season tickets to the NBA Dallas Mavericks: $6,208, $7,035 and $4,139 in 2005, 2006 and 2007, respectively.
A memo issued by Democratic and GOP Finance Committee staffs said, however, that “he has substantiated $9,900 of the total $17,382 as qualifying entertainment expenses.”
3. An additional $1,000 in back taxes involved deductions for $25,218 in tax and accounting fees over three years. Kirk attributed 90 percent to his law practice, but that was too high.
Last October, Kirk also paid the IRS $2,188 plus $139 interest for tax year 2006, after the IRS notified him that he had failed to report a $5,000 speaking honorarium and $819 in dividend income.
Expect some tough questioning by members of Congress but the consensus is that Ron Kirk will be confirmed as the U.S. trade representative and join Obama’s cabinet.
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