Tuesday, March 31, 2009

Sebelius Pays $7,000 in Back Taxes: So What?

This story just in from the AP:

WASHINGTON – Health and Human Services nominee Kathleen Sebelius recently
corrected three years of tax returns and paid more than $7,000 in back taxes
after finding "unintentional errors" — the latest tax troubles for an Obama
administration nominee. The Kansas governor explained the changes to senators in
a letter dated Tuesday that the administration released. She said they involved
charitable contributions, the sale of a home and business expenses.

It seems the "errors" she made on her charitable contributions and business expenses were limited to a lack of documentation. That's no big deal -- if I lost my documentation but knew I had made the expenditures, I'd take the deduction. The tax rules aren't set in stone -- that's why they have an active tax court, and sometimes you can justify expenditures with other evidence or you can seek to obtain copies of the required documentation. Often, you can negotiate with the IRS.

Taking a deduction for mortgage interest on a house she had sold seems odd. Usually a taxpayer receives a form 1098 from the mortgage company stating the amount of interest paid for the year in question. It's hard to make a mistake because of this. However, if the seller financed the sale to Sebelius, the latter wouldn't receive a form 1098 and it would be easier to make a mistake.

I imagine that $7,000 in back taxes for a woman in her tax bracket is rather insignificant, especially since it represents three years worth of returns. As a financial professional who actually does tax returns, I am not offended in the least by this.

Making a mistake does not make Sebelius a "tax cheat." It is silly for us conservatives to make an issue of this, though if the tables were turned, the Dems would broadcast it to the world and put the dirtiest spin on it imaginable. Just because they are Machiavellian doesn't mean we have to be. Besides, we have much bigger fish to fry.

Via Memeorandum

Via Yahoo News

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