Sebelius' $7,000 Tax Problem. Yes. $7,000. The Horror.

[Bolo Boffin]

Apparently Sebelius made some charitable contributions and misplaced the proof or never got it.

And so she and her husband have paid the back taxes and the penalties, which is around $7,000.

And the rightwingers are a-screaming.

You know, when people are tossing around trillions and billions all day long, it amazes me that a little $7,000 mistake is getting this kind of treatment. Ay yi yi...

A link from the WSJ:

http://online.wsj.com/article/SB123851568142774123.html

[MercutioATC]

1. I am SUCH an idiot.

I could have had a Cabinet position but no...I had to go and pay taxes...

[emilyg]

2. Chuckle.

[Brucie Kibbutz]

6. I'm sure there are still some positions for sale.

For the right buyer, of course.

[Ikonoklast]

9. Then hope that you are never self-employed and get audited.

You have to come up with a piece of paper from four years ago that states exactly what you said it does, in my case.

Not as easy as it sounds, and paperwork is how they get you.

But...they didn't get me. I could justify every single thing, and my accountant's math was spot-on.

But then again, she used to work for the IRS.

[MercutioATC]

11. I'm not in line for political promotion and even I have a CPA do my taxes.

I'll bet she does, too.

There's really no excuse for this.

[Ikonoklast]

13. People make mistakes all the time.

Especially when trying to interpret the Byzantine rules of the IRS.

Get into the recapture of depreciation of capital goods sold for residual value and get back to me on that one.

Bet you can get ten different numbers from six different CPA's. And none of them are right according to the IRS interpretation of the rules.

[Control-Z]

16. My husband is

self employed/independent contractor, and we too were audited, 10 or so years ago. It was a living nightmare - the fear factor alone - second only to the time and effort I put into finding every last shred of evidence, piece of paper, and receipt to prove we weren't criminals.

I never want to go through that again and consequently have three times the amount of (mostly worthless) paper saved than ever before. My file cabinets are stuffed to the brim and I've got box after box of overflow. I hate it. I would love to shred it all. But I know that the moment I did, the next audit would commence.

I swear, I feel like we're becoming IRS magnets. Last year they tried to get us for $79,000.00 in unreported income. I cried when I got the notice. Thank goodness our accountant was able to clear it up. THEY had made the mistake - of adding a zero to one of our 1099s.

I was literally shaking while I gathered our tax documents this year. Not for anything we've done wrong, but for the nightmare they can make out of a taxpayer's life if and when they so choose.

[BlooInBloo]

3. Aside from the mountain-out-of-molehill issue...

Why can't any of these people do their fucking taxes right? Aren't they all wealthy and have accountants? Sheesh.

[bigwillq]

5. Especially if you're the governor.

Yes, people make mistakes. Could happen to anyone. Doesn't mean they're not qualified to hold that position. But still...have your taxes checked more than once. They can certainly afford it. I would go to a few different accountants to make sure they were clean. It's embarrassing.

[Psephos]

4. Actually, the interest deductions they took for which they weren't eligible were the bulk of it

I won't participate in pooh-poohing "overlooked" taxes just because there's a D after the name. Political power is like banking: it relies on perceptions of fidelity and trust, and collapses when those are in doubt. The Obama nominees have been a parade of tax clowns whose sub rosa message is "taxes are for the little people."

[Bolo Boffin]

10. Yes, it was more than the charitable contributions.

I was relying on the little information I had when composing the OP. The WSJ article has the three types of errors made.

[hfojvt]

15. a message that the RWNM wants to promote

Democrats are tax cheats, democrats are tax cheats. Don't forget Al Franken too.

I am gonna pooh-pooh these mistakes and won't call them 'mistakes'. Perhaps because I recently filed 3 1040-Xs myself. My mistakes were in the IRS's favor, but still. And last year, doing my taxes on line, the computer programs mis-calculated my Earned Income Credit, $6 in my favor. The IRS corrected it before they even deposited my refund, but still, in the eyes of the rightwing smear machine, I would be just another liberal tax cheat.

[Psephos]

19. The difference is:

You're a private citizen. These people are standard bearers for our politics.

Don't try the RWNM b.s. on me. You're the RW tool if you think it's cool to degrade the Democratic Party brand by making excuses for people with a D after their name. I'm interested in keeping the brand strong.

[PSPS]

7. Doesn't anybody in Washington pay taxes?

If I had made a $20,000 charitable contribution (which is what $7,000 in taxes would amount to,) I'd certainly have a receipt. And if I didn't, it would be easy enough to get one long after the fact.

It sure must be hard, being so rich that a $20,000 "mistake" is considered "insignificant."

Can't Obama find, you know, honest people who aren't ensconced in wealth and mired in "tax problems" because of it?

[backscatter712]

8. You know what's really horrible...

Sebelius caught it herself - she had an accountant go through her taxes, and found the issue, and immediately filed an amended tax return and repaid the back taxes.

OH THE HORROR!!!!!11!11!!1oneone!1oneeleven

The funny thing is that this happened to my Dad once, and it turned out the IRS screwed up and refunded him too much. He had to file an amended tax return and pay the money back so it wouldn't turn ugly. Tax laws, and the accounting is really easy to screw up.

I'm absolutely giving Sebelius the benefit of the doubt until I hear something that indicates otherwise.

[Psephos]

12. She didn't "catch it herself" until she knew she'd be under the vetters' microscope

Which is rather like slowing down on the freeway when your radar detector starts beeping, and then taking credit for being such a safe driver.

Seriously, doesn't it piss you off that so many of the powerful people who claim to represent our vision of justice and fairness underpay their taxes? I have yet to hear of a single one of them that overpaid them...seems like all the "errors" are in one direction only. Hmmm.

[backscatter712]

17. If it was $140,000 like Daschle, you'd have a point.

But like I said, this is $7,000, and I didn't see other hanky-panky involved, like an undocumented housekeeper or carnal relations with lobbyists. Maybe as time moves on, things will come out that would suggest that this was intentional, but right now, I'm giving Gov. Sebelius the benefit of the doubt.

And as I mentioned, this is the sort of thing that can happen due to differing interpretations or misinterpretations of tax law. It happened to my dad, and it's happened to other people that I know. In this case, I'm giving her the benefit of the doubt - she didn't intend to break the law or cheat on taxes, this was easily due to an accounting error (as mentioned, even the CPAs don't agree on what's deductible and what isn't,) and she repaid immediately when she discovered the problem.

And yeah, she did catch it when she had an accountant go over her taxes in preparation for her confirmation hearing. I would have done the same thing.

[Psephos]

18. I have a point; it's just not as big a point as it would have been with Daschle

Wish I had your income, by the way. So that I could think of $7,000 as chump change.

For the rest of us, the principle matters. Our elected officials have to walk the walk as well as talk the talk. Or maybe they should find another line of work.

[hfojvt]

14. the home mortgage interest part confuses me

They sold a home in 2006 for less than they owed on the mortgage, and continued to pay the mortgage and took the interest as a deduction. According to the 1040 rules "a home mortgage is any loan that is secured by your main home or second home. It includes first and second mortgages, home equity loans, and refinanced mortgages."

So clearly, you can deduct interest payments even if the home is not your primary residence. They were in an odd situation and it's certainly not clear in the instructions that such interest payments can't be deducted. Most people in that situation would probably have to settle the debt at closing, rather than continuing the mortgage. A bank is not gonna let you switch from a loan secured by a house to a loan secured by only your word. Or you would have to secure it with equity in your new home, which is kinda hard to do if your "new" home is the Governor's mansion.

[Bolo Boffin]

20. Evidently what the balance was secured with was not something they could deduct interest on

And it's not something I would have thought about, either.