Obama nominee faces tax trouble, owes back taxes

WASHINGTON’ – Another Obama administration nominee has tax troubles. This time, it’s Ron Kirk, the president’s choice to be U.S. trade representative. Kirk owes an estimated $10,000 in back taxes from earlier in the decade and has agreed to pay them, the Senate Finance Committee said yesterday. The committee said the taxes arise from Kirk’s handling of speaking fees he donated to a scholarship fund that he set up at his alma mater, and for his deduction of the full cost of season tickets to the Dallas Mavericks professional basketball team. Kirk also agreed to make changes in his accounting of charitable deductions, including reducing the claimed value of a donated television from $3,000 to $1,500. The former Dallas mayor is the fourth nominee by President Barack Obama to run into tax problems. A third of the Senate voted against Tim Geithner’s confirmation 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 then withdrew as a nominee to become Health and Human Services after it was disclosed that he failed to pay $128,000 in taxes. Nancy Killefer, Obama’s pick for chief performance officer, also bowed out amid tax problems. White House spokesman Ben LaBolt said Kirk was working to clear up ‘a few minor issues’ uncovered by the Senate committee. LaBolt expressed confidence that Kirk would be confirmed by the Senate. Finance Committee Chairman Max Baucus, D-Mont., called Kirk ‘the right person for this job’ and said in a statement he will try to have the nomination move through his panel quickly. Kirk agreed to file an amended tax return this week, according to Baucus’ office. Sen. Charles Grassley of Iowa, the top Republican on the committee, said through an aide that he is reserving judgment until the vetting process on Kirk is complete. Kirk is scheduled to testify at a confirmation hearing next yesterday. Kirk, who was Dallas mayor from 1995 to 2001, is a partner in the Dallas office of the Vinson ‘amp; Elkins LLP law firm. He received $556,740 from the firm last year and a total of $460,265 from serving on the boards of PetSmart, Dean Foods and Brinker International, a restaurant company, according to financial disclosure reports released by the Obama administration. His tax problems arise out of speaking fees that he routinely paid directly to Austin College to support a scholarship fund but did not list on his tax returns, according to the Finance Committee report. The panel said Kirk should have listed the fees as income and claimed them as charitable donations. Last fall, the Internal Revenue Service notified Kirk that he had failed to report a $5,000 speaking fee, as well as dividend income of $816, from 2006. Kirk paid $2,327 in back taxes and interest in October, the report said. The disclosure led to questions from the Finance Committee aides, who found that Kirk had also failed to report a total of $37,750 in fees from about 16 speaking engagements from 2004 through 2007. The estimated effect was to reduce Kirk’s tax bill by $5,800, according to the committee report. The committee said Kirk’s paid tax preparer thought the arrangement was proper. Rich Boggs, CEO of Nationwide Tax Relief, said both Kirk and his preparer should have known better. ‘People put a lot of faith in their CPA. Sometimes, it’s convenient faith,’ said Boggs, whose firm represents tax delinquents before the IRS. Kirk also deducted more than $17,000 as entertainment expenses for the cost of Mavericks’ tickets. The committee said he substantiated about $9,900 of that amount, and will owe about $2,600 in taxes on the balance.