Statement from the Senate Finance Committee on the Nomination of Thomas A. Daschle: 

Thomas A. Daschle recently filed amended tax returns for 2005, 2006 and 2007 reporting $128,203 in additional tax and $11,964 in interest. The adjustments resulted from additional income for consulting services and the use of a car service, and reductions in charitable contribution deductions. Senator Daschle filed the amended returns voluntarily after Barack Obama announced his intention to nominate the senator to be the Secretary of Health and Human Services. The Presidential Transition Team identified the charitable contribution issue and Senator Daschle self-identified the income adjustments.

Senator Daschle paid his long-time personal accountant to prepare his original and amended tax returns for years 2005, 2006 and 2007. All returns were filed jointly with his spouse. The 2006 tax return was examined by the Internal Revenue Service. Senator Daschle was represented during the IRS examination by his accountant. The senator did not have any personal contact with the IRS examiner. The IRS did not propose any adjustments to Senator Daschles tax return and accepted it as filed.

Tax Adjustments

Background

On January 2, 2009, Thomas A. Daschle filed amended tax returns for 2005, 2006 and 2007 to report the following adjustments:

Unreported income from the use of a car service in the amounts of $73,031, $89,129 and $93,096 in 2005, 2006 and 2007, respectively.

Unreported consulting income of $83,333 in 2007.

Reductions to charitable contribution deductions of $1,500, $7,575 and $5,888 in 2005, 2006 and 2007, respectively.

The car service and the consulting income were received in connection with Senator Daschles business relationship with InterMedia Advisors. The table on the next page shows the additional income and reduced deductions, tax and interest the senator reported with each amended return.

Finance Committee Staff reviewed Senator Daschles original and amended returns for tax years 2005, 2006 and 2007. Staff requested information to substantiate several items on the returns and has completed the review of this data. Senator Daschle met personally with staff on January 26, 2009 and his accountant participated in the meeting via telephone. Telephone interviews were conducted with the InterMedia General Counsel and Accounts Payable clerk on January 29, 2009.

Car Service Income

Senator Daschle is a limited partner in InterMedia Partners of Englewood, CO and Chairman of its Executive Advisory Board. Senator Daschle also is an independent consultant to InterMedia Advisors, LLP of New York City. He entered into a business relationship with InterMedia in February, 2005. Beginning in April, 2005, the senator was provided the use of a car and driver by Mr. Leo Hindery, the Managing Partner of InterMedia. In addition to being business partners, Mr. Hindery and Senator Daschle have been personal friends for many years. Charges for the car and the services of the driver were billed to InterMedia. InterMedia did not issue Senator Daschle a Form 1099 for the value of the car service and Senator Daschle did not report the value of the car service as income on his original tax returns for 2005, 2006 and 2007.

Senator Daschle told staff that in June, 2008, something made him think that the car service might be taxable and he disclosed the arrangement to his accountant. Under Section 132 of the Internal Revenue Code, the value of transportation services provided for personal use must be included in income. Senator Daschle estimated that he used the car and driver 80% for personal use and 20% for business use. On January 2, 2009, Senator Daschle filed amended returns for 2005, 2006 and 2007 reporting the value of the car service as income. He did not pay self-employment tax on the personal value of the service. It was determined during the Committee review of Senator Daschles returns that the personal value of the car service is subject to self-employment tax. The senator has acknowledged that the 2005, 2006 and 2007 tax returns will need to be adjusted to pay the applicable Medicare taxes of 2.9% of the personal value of the service.

Consulting Income

Senator Daschles consulting arrangement with InterMedia Advisors provided that the senator be paid $83,333 per month ($1,000,000 per year) for his services. Senator Daschle received a Form 1099 from InterMedia Advisors each year reporting income from consulting fees, bonuses and reimbursements. The 2007 Form 1099 did not include the May, 2007 payment for consulting fees in the amount of $83,333. Senator Daschles accountant told Committee staff that at the time he was preparing the senators 2007 tax return he thought the Form 1099 might be understated. Staff reviewed e-mails between the accountant and Senator Daschle from March, 2008 discussing the amount reported on the Form 1099 and whether any payments were missing. Senator Daschle told the accountant that the January, 2007 check was received in December of 2006, and that was why the 2007 Form 1099 reported only 11 monthly payments. However, during the January 29, 2009 teleconference, InterMedia personnel told Committee staff they were unaware of any times when Senator Daschle was paid earlier than the first Friday of the month. The amount on the 2007 Form 1099 matched Senator Daschles personal records of payments received from InterMedia Advisors in 2007. Neither included the missing payment. The accountant did not pursue the matter further and reported the 2007 1099 amount on the Daschles 2007 Form 1040.

In December, 2008, the senators accountant contacted InterMedia while compiling information for Senator Daschles financial disclosure reports. InterMedia then discovered that the May, 2007 consulting fee payment had been omitted from the Form 1099 and notified the accountant. InterMedia personnel explained to Committee staff that the regular accounts payable (AP) clerk was on maternity leave when the May payment was due The temporary AP clerk completed a wire-transfer for the payment to the senator instead of following the usual procedure of issuing a check on the first Friday of each month. The wire-transfer was not posted to the normal InterMedia account and therefore it was not included in the 2007 Form 1099 that was issued.
Senator Daschle reported the $83,333 missed payment as income on the amended 2007 tax return. InterMedia Advisors filed a corrected Form 1099 on January 7, 2009.

Charitable Contributions

During the vetting process, the Presidential Transition Team identified certain donations that did not qualify as charitable deductions because they were not paid to qualifying organizations. Senator Daschle adjusted his contribution deductions on his amended returns for 2005, 2006 and 2007 to remove these amounts and add additional contributions

Outstanding Issues

Committee staff still is reviewing whether travel and entertainment services provided to the Daschles by EduCap, Inc., Catherine B. Reynolds Foundation, Academy Achievement, and Loan to Learn should be reported as income.

In response to Committee staff inquiries, the senator provided additional documentation for the Daschles charitable contributions for 2005, 2006, 2007. Staff notes that while copies of checks were provided, the proper donee acknowledgement for contributions over $250 was not provided for many of the charitable contributions as required for deductibility. The returns were not amended for these amounts.

USA Today

Tom Daschle is the latest Obama nominee to not pay his taxes

Former Senate majority leader Tom Daschle, who is President Obama’s nominee to head the Health and Human Services Department, “recently filed amended tax returns to report $128,203 in back taxes and $11,964 in interest, according to a Senate document obtained by The Associated Press.”

ABC News’ Political Punch blog reports that much of the problem “deals with a car and driver lent to Daschle by a wealthy Democratic friend — a chauffeur service the former senator used for years without declaring it on his taxes.”

Politico writes that “Daschle used the Cadillac and driver around Washington while working as a consultant to a New York City private equity firm, InterMedia Advisors. He used the limo 80% for personal use –- resulting in unreported income of more than $255,000 for the three years, Senate Finance Committee documents show.”

By Monica Landley, Wall Street Journal

Vice President Joe Biden, in a bid to become an influential second-in-command, is striving to carve out meaty roles for himself quickly.

In an East Room ceremony on Friday with President Barack Obama, Mr. Biden is launching a task force to work on social and economic policies aimed at helping the struggling middle class. He’s selling the giant stimulus package on Capitol Hill, and schmoozing his former colleagues during workouts in the congressional gym. Next week, Mr. Biden heads to Munich for an international security conference, in a bid to repair relations with European countries.

The flurry of activity follows a first week marked by gaffes. At a swearing-in ceremony of White House staff, Mr. Biden joked about Chief Justice John Roberts’s faulty memory, provoking President Obama to give him a stern nudge to stop. During the taping of “The Oprah Winfrey Show” the day before the inauguration, his wife, Jill Biden, said her husband was given the choice of being vice president or secretary of state, which was quickly refuted by the White House.

By Jake Tapper, ABC News

Some of the worst offenders were Obama supporters like Franklin Raines of Fannie Mae

At the Senate today, Sen. Claire McCaskill, D-Mo., introduced legislation to cap the salaries of executives from companies that received federal bailout funds. The limit applies to salary, bonuses and stock options, and is set at the amount of money earned by the president of the United States: $400,000.

“Going forward, if you want taxpayers to help you survive, if you want the people at your financial institution to have a job tomorrow, then you’re going to have to limit everyone’s pay at your company to the same salary that the president of the United States makes,” said McCaskill, a co-chair of President Obama’s campaign. “Now once they’re off the public dole, once the taxpayers aren’t footing the bill, then it’s not as much our business what they get paid. But right now they’re on the hook to us. And they owe us something other than a fancy waste basket and $50 million jet.”

By FOXNews

Obama sees defense as place to cut budget

The Obama administration has asked the military’s Joint Chiefs of Staff to cut the Pentagon’s budget request for the fiscal year 2010 by more than 10 percent — about $55 billion — a senior U.S. defense official tells FOX News.

Last year’s defense budget was $512 billion. Service chiefs and planners will be spending the weekend “burning the midnight oil” looking at ways to cut the budget — looking especially at weapons programs, the defense official said.

By Molly Hooper, The Hill

Gov. Mitt Romney had tough words for Barack Obama

Republicans wrapped up their retreat Friday by signaling they are losing patience with President Obama and the Democratic leadership in Congress.

Former Gov. Mitt Romney (R-Mass.) criticized the new administration on Friday, saying it had promised to reach out to Republicans on the Capitol Hill, but then offered an economic recovery package that included few, if any, proposals from the minority party.

Romney, who helped write the House Republican substitute voted down Wednesday afternoon, said enough of the rhetoric, it’s time for Obama to act.

By Floyd and Mary Beth Brown

Obama is continuing the full court press

In sports they call it a misdirect; magicians and illusionists will slip a card into the deck while they distract you elsewhere. What President Obama is doing with the 647-page, $825 billion so-called “stimulus package” legislation is closest to the tried-and-true tactics of a team of pick-pockets. One grabs your attention by yelling about some emergency problem, while the other slips his hand in for your wallet. Before knowing it, you have been robbed blind.

Chief of Staff Rahm Emanuel in November described their tactic this way: “Never let a serious crisis go to waste. What I mean by that is it’s an opportunity to do things you couldn’t do before.” And have they ever!

While President Obama is at the White House spreading fear with dire predictions of an impending economic collapse, fellow Democrats in Congress are having a heyday slipping their favorite, pet projects into the massive pork bill. It’s no wonder the “package” is 647 pages long when you look at what’s included. The Wall Street Journal did an in-depth study of the legislation and concluded, “this bill was written based on the wish list of every living — or dead — Democratic interest group.” Not only that, the vast majority of the bill will do nothing to help the economy. 

By: NewsMax

Castro may be old, but his is still troublesome

Ailing Cuban leader Fidel Castro demanded on Thursday that President Barack Obama return the U.S. naval base at Guantanamo to Cuba without conditions, and he accused the new U.S. leader of supporting “Israeli genocide” against Palestinians.

Castro, who had recently praised Obama as “honest” and “noble”, lashed out at his administration for stating that Washington will not return Guantanamo if it has any military use for the United States and without concessions in return.

“Maintaining a military base in Cuba against the will of the people violates the most elemental principles of international law,” Castro wrote in a column posted on the government-run website www.cubadebate.cu