Another Obama nominee runs into tax problems

AP News
Posted: Nov 18, 2009 6:47 PM

President Barack Obama's choice for a top job in the Treasury Department did not disclose all of her late tax payments until she was repeatedly prodded by Senate investigators, a congressional report issued Wednesday said.

Obama's nominee for undersecretary of the Treasury for international affairs, Lael Brainard, is the fifth presidential nominee to reveal tax issues during the congressional vetting process.

Brainard was late in paying real estate taxes in 2005, 2006 and 2007 on property in Northern Virginia, according to the report by the Senate Finance Committee staff.

The report also challenges the accuracy of a deduction Brainard claimed for running an office from her home. The challenge led Brainard to reduce the deduction on her 2008 return, though she declined to adjust returns for 2005, 2006 and 2007, telling committee staff she used a reasonable method to calculate the deductions.

Brainard paid most of the late property taxes before she was nominated, in March. However, she told the committee that she realized after her nomination that her 2008 property taxes had not been paid. They were paid in September, the report said.

Brainard is current in all her taxes, said Treasury spokesman Andrew Williams.

"At no time during the Committee staff's consideration of her nomination has Ms. Brainard been informed that the staff believes she owes additional tax, nor has she been asked to file any amended tax returns," Williams said.

The amounts in question were relatively small. Brainard paid $121.75 in interest and $1,279.34 in penalties on late real estate tax payments, the report said.

But the committee's top Republican, Sen. Chuck Grassley, R-Iowa, is unhappy that the committee staff had to submit 10 sets of questions to Brainard before getting complete information about the late payments.

After Brainard was nominated last spring, the Finance Committee had her fill out a routine questionnaire that asked whether she had made any late tax payments in the past 10 years. Her initial response did not include all the late payments. It did, however, acknowledge she had made late unemployment insurance payments for household employees "on a number of occasions," the report said.

"The dollar amounts involved aren't large compared to some other administration nominees this year, but the lack of candor, accuracy and timeliness in addressing the issues has been discouraging," Grassley said.

Finance Committee Democrats rushed to Brainard's defense. "I am satisfied Ms. Brainard has taken the steps necessary to fix the discrepancies in documents submitted to the committee," said Sen. Max Baucus, D-Mont., chairman of the Finance Committee. "We intend to move forward as soon as possible on this nomination, to bolster the efforts at Treasury and strengthen America's recovery at home and abroad."

Brainard's husband, Assistant Secretary of State Kurt Campbell, is the top U.S. diplomat for East Asia. Brainard and Campbell ran an international affairs consulting firm out of their home.

If confirmed by the Senate, Brainard would oversee American policies on issues including the International Monetary Fund, the World Bank and international tax treaties. Brainard was a deputy national economic adviser for international affairs during the Clinton administration.

Timothy Geithner was confirmed as Treasury secretary after it was disclosed that he had to pay more than $34,000 in back taxes and interest on income he made while working for the International Monetary Fund.

Former Senate Majority Leader Tom Daschle withdrew as a nominee to become Health and Human Services after it was disclosed that he failed to pay $128,000 in taxes.