Glitch? Update: Daschle on tax enforcement in 1998

posted at 8:42 am on February 2, 2009 by Ed Morrissey

Someone needs to get the Washington Post a new headline writer.  Their coverage of Tom Daschle’s tax problems, which could derail his nomination as Secretary of Health and Human Services, has this for a headline:

Daschle Faces Questions From Senators on Tax Glitch

Glitch?  A glitch is when you write something on the wrong line of the tax return, or transpose numbers accidentally.  Daschle has failed to report income, gifts, and now apparently Medicare coverage for his driver.  He has paid over $140,000 in back taxes and penalties.

That’s a little more than just a glitch.

Paul Kane and Ceci Connolly and the Post actually report better than the headline suggests, though:

Daschle’s prospects became complicated during the first week of the year, when he detailed for the White House and the Finance Committee a series of tax filing errors made over the past three years. Most significantly, he did not pay taxes on a luxury car and driver provided by his friend and employer, Democratic businessman Leo J. Hindery Jr.

Daschle, a former Senate majority leader from South Dakota, will head to the Capitol today “ready and willing to answer any questions,” said Jenny Backus, his spokeswoman. He will also inform lawmakers that in addition to the $140,000 in back taxes and interest he paid on Jan. 2, he intends to send the U.S. Treasury an additional $6,000 to cover Medicare taxes on the driver.

Questions about the Medicare tax liability arose only Friday, Backus said, and Daschle agreed to pay the money.

The Post reported yesterday that Daschle kept Barack Obama in the dark about his tax problems for over a month after being nominated.  Connolly and other co-writers also inform readers that Daschle managed to lobby without having to register:

Thomas A. Daschle waited nearly a month after being nominated to be secretary of health and human services before informing Barack Obama that he had not paid years of back taxes for the use of a car and driver provided by a wealthy New York investor.

Daschle, one of Obama’s earliest and most ardent campaign supporters, paid $140,000 to the U.S. Treasury on Jan. 2 and about two days later informed the White House and the Senate Finance Committee, according to an account provided by his spokeswoman and confirmed by the Obama administration.

Although Daschle had known since June 2008 that he needed to correct his tax returns, he never expected the amount to be such a “jaw-dropping” sum and “thought it was being taken care of” by his accountant, spokeswoman Jenny Backus said. …

The disclosure of Daschle’s tax problems coincided with the release of the financial statement he submitted to the Office of Government Ethics, which details for the first time exactly how, without becoming a registered lobbyist, he made millions of dollars giving public speeches and private counsel to insurers, hospitals, realtors, farmers, energy firms and telecommunications companies with complex regulatory and legislative interests in Washington.

Daschle’s expertise and insights, gleaned over 26 years in Congress, earned him more than $5 million over the past two years, including $220,000 from the health-care industry, and perks such as a chauffeured Cadillac, according to the documents.

At some point, this nomination has to be more trouble than it’s worth.  After all, no one will buy the notion that Daschle’s “uniquely qualified” for the HHS position as some did with Geithner at Treasury.  The HHS position is a payback for Daschle’s support in the primaries, and Obama has a perfect excuse now to dump Daschle regardless of loyalty.  By keeping his tax problems secret, he’s proven rather untrustworthy.

And that gets to the heart of why the Senate should have rejected Geithner and why they should refuse to confirm Daschle.  It’s a matter of trust.  Neither man shows a compelling reason why they should have the public’s trust placed in them.  Both men will run vast bureaucracies and enforcement mechanisms, Geithner especially.  The public has the right to demand people with proven accountability, not people who blame their accountants — or their accounting programs.

Unfortunately, the public hasn’t demanded it, in part because the press has been willing to portray these as “glitches”.  Sen. Jon Kyl (R-AZ) noted the double standard of the press in covering the Obama administration and its obvious ethical issues, and wondered if a Bush nominee with even one-tenth the tax issues of Daschle would have gotten such supportive coverage.  If Daschle had been Republican, we would have seen screaming headlines pointing out how out of touch the free limo service would be for a nation struggling with economic crisis, and how Bush did nothing but appoint fat cat lobbyists to positions of power.  The silence along those lines with Daschle and Obama speaks loudly.

Update: From the Department of Delicious Irony, Michelle and many others find this Daschle quote rather germane to his confirmation:

“Make no mistake, tax cheaters cheat us all, and the IRS should enforce our laws to the letter. ” Sen. Tom Daschle, Congressional Record, May 7, 1998, p. S4507.

Maybe Geithner can arrest Daschle when the HHS nominee appears on Capitol Hill for his confirmation hearing — assuming he ever has one.


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Oooops! Forgot some!

6. Get elected to Congress, pass Porkulus the TRILLION dollar spending plan to increase our own retirement
7. Call Active Duty Marines every name imaginable before the investigation and, then, when all but one scapegoat are vindicated never apologize
8. Permit our homosexual boyfriend to run a Male Prostitution ring from our home
9. Stand in defiance when the House of ‘Representatives’ censures us for performing homosexual acts with young male Congressional Pages
10. Get drunk, drive a car off a bridge, kill a young woman and never go to jail

Being Democrat means never getting punished for criminal activity.

SeniorD on February 2, 2009 at 10:22 AM

Next upscale moron please…

RalphyBoy on February 2, 2009 at 10:23 AM

How is this possible???

bullseye on February 2, 2009 at 9:53 AM

He just doesn’t give a flying flip. Flat out does not care.

Your garden variety sociopath.

tru2tx on February 2, 2009 at 10:23 AM

Well, at least he is not a lobbyist, because Obama said……..

Johan Klaus on February 2, 2009 at 10:26 AM

So now if I don’t pay my taxes, I can just tell them it was a “glitch”?
So now we have the “wRangle Bill”, and the “Glitch Bill”, pretty soon we won’t ever have to pay taxes.
Also we could have the:
Drunken driver bill…sponsored by Kennedy
Male prostitution and bordello bill…sponsored by Frank
False accusation bill…sponsored by Murtha
Contracts to your Family bill….Feinstein
Land Deals…multiple sponsors, Clintons, Reid
So many more bills from the liberals…

right2bright on February 2, 2009 at 10:28 AM

Can you imagine if Rove had failed to report income or failed to pay taxes!? Or Rush!? Glitch indeed!

Christian Conservative on February 2, 2009 at 10:29 AM

Update – I tried to Call Bob Casey’s washington office D-pa. The lines were jammed and the voicemail was full.

I called the local office and got a staffer there. He was a nice enough guy.

What surprised me was that he seemed completly unaware of Dashle’s tax issues. The staffer was quite aware of the Geithner debacle with China but he was not aware that dashcle was skipping on tens of thousands of dollars of taxes.
So, how could it be that a staffer in a senator’s office was unaware of the status of a pending nomination??

1. Was he BSing me?? I don’t think so. He seemed sincere.
2. Do the political appartchiks live in such an isolate world that they just don’t care?
3. Do they hire really ignorant people for staff jobs with senators.

Keep in mind that the press practically crucified Sarah Palin because she didn’t snap out a list of papers she read every day. BUT, the staffers working for the senator can live in la-la land???

bullseye on February 2, 2009 at 10:31 AM

“kept Barack Obama in the dark ”

What good is a crime if you can’t lie about it as well.

Clinton taught us that.

notagool on February 2, 2009 at 10:32 AM

Seriously – what does it take for the IRS to go after Daschle and Geithner? Why do THEY ignore these tax cheats?

arizona on February 2, 2009 at 10:33 AM

Tsk, tsk. And all this after Joe Biden (he’s from Scranton, ya know) said that paying taxes was “patriotic”. Does this mean that Tom’s not a patriot?

GarandFan on February 2, 2009 at 10:34 AM

A few years ago the local paper in my community covered the IRS seizing a man’s property including his six year old son’s piggy bank with the accompanying few dollars in change inside. It’s good to know the IRS is on the job enforcing tax laws.

sdd on February 2, 2009 at 10:39 AM

Daschle, a former Senate majority leader from South Dakota, will head to the Capitol today “ready and willing to answer any questions,” said Jenny Backus, his spokeswoman.

Learning that Daschle has Thurston Howell III’s daughter as his spokesperson has me smilin’, Big Time.

Or, am I the only one that sees Tom Daschle as a dull version of Gilligan?

Shivas Irons on February 2, 2009 at 10:49 AM

Can you imagine if Rove had failed to report income or failed to pay taxes!? Or Rush!? Glitch indeed!

Christian Conservative on February 2, 2009 at 10:29 AM

My mind just exploded on overload…

right2bright on February 2, 2009 at 10:53 AM

Dusty on February 2, 2009 at 9:28 AM

Saturday, I came across a WSJ article that had a link to an initial Senate Finance committee report. I put them on the January 30 thread on Daschle. Here they are again.

The WSJ in tomorrow’s edition can be found here:

http://online.wsj.com/article/SB123335984751235247.html?mod=googlenews_wsj

And it links to the following report here:

http://online.wsj.com/public/resources/documents/DraftDaschleReport.pdf

Dusty, I can appreciate your confusion, the WaPo reporters did a terrible job of describing the new developments. From the article quoted above:

He will also inform lawmakers that in addition to the $140,000 in back taxes and interest he paid on Jan. 2, he intends to send the U.S. Treasury an additional $6,000 to cover Medicare taxes on the driver.

Questions about the Medicare tax liability arose only Friday, Backus said, and Daschle agreed to pay the money.

To backtrack, TD filed amended returns for 2005, 2006, and 2007 on 2 January 2009. These returns reported matters that resulted in increased income tax liability of about $128,000 and interest on that tax of about $12,000. Note, the taxpayer generally asks to have penalties waived. I don’t see a “reasonable cause” exception under these facts, so the IRS should be sending TD a bill for penalties. But I digress.

The increased tax results from (1) $83,000 of cash income that was omitted from his 2007 return; (2) omitted “imputed income” for the fair value of the limo service for 2005, 2006, and 2007; and (3) a reduction in his charitable contribution deductions in each of those three years for donations to organizations that, though they may have tax-empt status, are not organizations to which you can make a deductible contribution (say, a political organization).

The newest developments (at least one of which the WaPo reporters screwed up) are as follows:

All the income in question is self-employement because TD was not an employee (in which case he’d get a W-2) but an independent contractor (in which case he get a 1099-MISC) working under a consulting agreement that paid him $1 million a year. And when TD filed his recent amended returns, he came clean on all this income and paid the income taxes but he did not pay the additional Medicare taxes (2.9% for a self-employed) that he owed on that additional income. His income was so high that he doesn’t owe additional self-employment tax (which has a cap), but he does owe the additional Medicare tax (and interest) because that has no cap.

So don’t be confused by the WaPo reporting. TD’s payor paid TD his consulting fee (again, $1 million a year). TD’s payor (and not TD) employed the limo driver and owned the limo that it provided to TD as a taxable fringe benefit. So the payor is responsible for the limo driver and the car. What the reporters screwed up in trying to shorthand the description is that TD had not yet paid the 2.9% medicare tax on the total of about $207,000 of additional income that TD reported in his amended returns. The $6,000 figure mentioned is an approximation of $207,000 x 2.9%. Clear as mud?

But wait, there’s more!

The SFC report noted that for many of the legitimate charities to which TD made contributions he has canceled checks but not the required “contemporaneous donee acknowledgments.” So he may still have some of his charitable contributions reduced.

But wait, there’s even more!

TD received the use of a corporate jet from a different entity, a “nonprofit” (which may come under some scrutiny very soon). The SFC will be trying to determine whether this is yet another item of income omitted by TD.

BuckeyeSam on February 2, 2009 at 10:55 AM

I wonder what republican had a tax scandal that year?

Gwillie on February 2, 2009 at 11:04 AM

It’s ok because Daschle’s a Democrat which clearly means he is Above The Law. So let’s not get our panties in a twist here. Simple tax laws don’t apply to Democrats. Now let’s go find some Republicans to flog!

t.ferg on February 2, 2009 at 11:04 AM

Rules for thee not for ME!!!!!

Bwahahahahahaha.

Settle down citizen. Your behavior will not be tolerated. You must OBEY in the name of tolerance and unity.

James on February 2, 2009 at 11:07 AM

Over and over again we are treated to the spectacle of liberals who want to raise everyone else’s taxes refusing to pay their own.

It’s disgusting.

PJ Emeritus on February 2, 2009 at 11:15 AM

BuckeyeSam on February 2, 2009 at 10:55 AM

The key to this is the filing dates…he only came “clean” when he was being vetted, otherwise we must assume he would have kept cheating the gov. on his taxes.

right2bright on February 2, 2009 at 11:33 AM

Maybe Geithner can arrest Daschle

That would be like Bill Clinton lecturing Ted Kennedy on marital faithfulness.

jgapinoy on February 2, 2009 at 11:34 AM

The larger question here is what did Tom Daschle do to earn a million dollars? Those of you who are old enough will no doubt remember the major “scandal” that occurred in the 1980s when former Agriculture Secretary James Watt was revealed to have earned $250,000 for making a few phone calls to HUD on behalf of a client.

Daschle is up to his keister in the REAL “culture of corruption” in Washington, which is bipartisan (the only thing in Washington that truly is) and involves law and lobbying firms charging exorbitant fees and paying ridiculous salaries and consulting fees to former members of Congress and staff, for making a few speeches and participating in a couple of conference calls with clients.

rockmom on February 2, 2009 at 11:38 AM

That would be like Bill Clinton lecturing Ted Kennedy on marital faithfulness.

jgapinoy on February 2, 2009 at 11:34 AM

If you remember it was Rev. Jackson that did mentor Clinton during those dark years…all the while Jackson was hiding his illegitimate child, and covering up his “escapades”.
The amazing thing…they see nothing wrong with any of this.

right2bright on February 2, 2009 at 11:40 AM

Daschle is up to his keister in the REAL “culture of corruption” in Washington, which is bipartisan (the only thing in Washington that truly is) and involves law and lobbying firms charging exorbitant fees and paying ridiculous salaries and consulting fees to former members of Congress and staff, for making a few speeches and participating in a couple of conference calls with clients.

rockmom on February 2, 2009 at 11:38 AM

That is why I feel no “retired” gov. politician should be allowed to be a lobbyist.

right2bright on February 2, 2009 at 11:42 AM

Democrat Senator “Tax Glitch”,”Tax error”.

Republican Senator “Tax Dodger”,”Tax Cheat”.

portlandon on February 2, 2009 at 11:46 AM

Isn’t it ripe that these same people desiring to sodomize us with the heaviest tax burden in the history of mankind, do not pay their own taxes?

How much is enough, America?

dogsoldier on February 2, 2009 at 11:53 AM

Tom Douchebag was voted out in SD bcs they knew he was a cheat.
The SD big cities had kept him rolling in the power so finally the rural S. Dakotans went out & booted his butt out.
Perhaps they’d finally had it with him when he took private tours on the top of the Mt Rushmore heads-who knows.
But it’s amazing he’s being appointed for something.
Obama’s corruptive ties are amazingly well-documented & amazingly accepted by the elites.
If I knew people like that, I wouldn’t be able to buy a loaf of bread in my town!

Badger40 on February 2, 2009 at 12:03 PM

How much is enough, America?

dogsoldier on February 2, 2009 at 11:53 AM

Eligible voters need to start getting off their arses & vote in Dem #s.
I know I know-most of us have jobs & are apathetic, but we gotta get it done next time.
Dem voters outvote us by like twice!
Shame!

Badger40 on February 2, 2009 at 12:05 PM

It’s all Bush’s fault.

And I still want to know why our dear Leader has not been to Kentucky, nor made any mention of it? Ed? Michelle?

Knucklehead on February 2, 2009 at 12:05 PM

Dear Leader believes Kentucky went Hillary’s way because it is close to Arkansas… Forgetting that it borders his state of Illinois.

James on February 2, 2009 at 12:14 PM

The key to this is the filing dates…he only came “clean” when he was being vetted, otherwise we must assume he would have kept cheating the gov. on his taxes.

right2bright on February 2, 2009 at 11:33 AM

Sorry to all for the earlier lengthy entry. I found the WaPo article very confusing.

right2bright: I didn’t mean to suggest with “came clean” that Daschle was operating with a clean heart. Given that his payor was not going to fix the 2007 Form 1099-MISC to include the omitted $83,000 of cash compensation and had not issued (and presumably was not going to issue) him 2005, 2006, and 2007 Forms 1009-MISC for the limo service value, I’m convinced that Daschle was never going to report the income, unless ever forced to do so. He’s been holding his breath for the three-year statute of limitations to run on all three years.

The charitable contributions (about $15,000) are less significant, but he or his accountant have the obligation to confirm the tax-status of his charitable donees. It’s not that hard–you ask the donee if it has 501(c)(3) status or you look it up online (IRS Publication 78). Here’s the link, Daschle:

http://www.irs.gov/charities/article/0,,id=96136,00.html

BuckeyeSam on February 2, 2009 at 12:20 PM

BuckeyeSam on February 2, 2009 at 12:20 PM

Daschle would have never reported his “glitch” if he hadn’t been vetted…you are right about that.
I knew exactly what you meant…he was waiting, just like the “new treasurey sec.” waited for his statute of limitations to run out.
How about a bill stating that politicians have no statue of limitations (for taxes) as long as they are in office, since they have control of the process.

right2bright on February 2, 2009 at 12:30 PM

[BuckeyeSam on February 2, 2009 at 10:55 AM]

Thank you very much. Very clear, very concise and comprehensive. And thanks for the links, I guess I didn’t see the earlier Daschle thread.

Dusty on February 2, 2009 at 12:41 PM

How about a bill stating that politicians have no statue of limitations (for taxes) as long as they are in office, since they have control of the process.

right2bright on February 2, 2009 at 12:30 PM

Amen. I’m pissed about this. This is a disgrace.

Dusty on February 2, 2009 at 12:41 PM

You’re quite welcome. Don’t sweat the other thread. It was long and carried over for about three days.

BuckeyeSam on February 2, 2009 at 12:58 PM

Kerry on MTP yesterday:

“all fair and honest people will see this as a simple mistake” (not quite exact but I’m sure HA can find the Kerry/Hutchinson headtalk from yesterday).

You tell ‘em John! Vanquish the narrow minded bigots everywhere!

Limerick on February 2, 2009 at 1:04 PM

On April 15 I will file my taxes taking only legitimate deductions and claiming all of my income. I expect no refund from the feds. Probably will have to write a check for another 2000 to 3000 to the IRS. Boy…what a stupid chump I am!

sdd on February 2, 2009 at 1:44 PM

Probably will have to write a check for another 2000 to 3000 to the IRS. Boy…what a stupid chump I am!

sdd on February 2, 2009 at 1:44 PM

Not if you are a politician, they didn’t write the checks…

right2bright on February 2, 2009 at 2:26 PM

This fits into Obama’s meeting with out pre-conditions…he is accepting nominees without pre-conditions…it all fits.

right2bright on February 2, 2009 at 2:27 PM

Not if you are a politician, they didn’t write the checks…

right2bright on February 2, 2009 at 2:26 PM

Not a politican…just a working stiff who works two jobs to pay my bills. Thanks just the same Mr. Obama. I pay my own way. Don’t want the government to do it for me. It has something to do with integrity. Something your bunch doesn’t seem to know much about.

sdd on February 2, 2009 at 3:20 PM

This little tax cheat worm, Daschle, was the most disingenuous partisan of his time, yet GOP senators are going to roll over and accept his nomination without a fight. This just INFURIATES me.

petefrt on February 2, 2009 at 7:13 PM

The point is that Rangel and Daschle know that the tax code is kind of like the tipping code, setting out recommended levels of taxes based on your perceived satisfaction with the service. Daschle was so happy in 1998, I bet he overpaid that year… Under Bush? Not so much and he cut his taxes accordingly. I think that is a reasonable way to approach the government.

Laurence on February 3, 2009 at 1:04 PM

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