Wednesday, April 1, 2009

And before anybody tees off on Kathleen Sebelius over her taxes...

... let me suggest you get a life.

I don't agree with Governor Sebelius' policy views, and I don't like the agenda she's been picked to pursue.

But that's neither here nor there regarding the question of her tax problems.

At first, like everybody else, I groaned when I saw the headlines and the figure of around $7,800 in back taxes and interest.

Then I read that this amount comes from the combined total of three different years, and breaks down as follows:

-- Charitable contributions over $250 are supposed to include an acknowledgment letter from the charity in order for a deduction to be taken. Out of 49 charitable contributions made, three letters couldn't be found.

-- Sebelius and her husband took deductions for mortgage interest that they weren't entitled to. The couple sold their home in 2006 for less than what they owed on the mortgage. They continued to make payments on the mortgage, including interest. But since they no longer owned the home they weren't entitled to take deductions for the interest. The same thing happened with a home improvement loan. Sebelius said they "mistakenly believed" the payments were still deductible.

-- Insufficient documentation was found for some business expense deductions.

She found 46 of 49 acknowledgement letters from charitable contributions dating back to 2005? Which doesn't mean that she didn't make the contributions (notice, she didn't lack the canceled checks or proof that she made the donations), it just means she couldn't properly document it to the letter of the law.

Likewise, some business expense deductions were found not to be fraudulent or illegal or evasive, but just to lack sufficient documentation. Big whoop.

Finally, that mortgage interest thing: I was in a somewhat similar situation twelve years ago, and got four different opinions on what that statute actually said (three from accountants; one from the IRS--which told me I could take the deduction, by the way).

Anybody--anybody--making above $250K who had to turn in three years of tax returns to get scrubbed would frankly be thrilled to come out of the process owing less than $8K.

It has nothing to do with your morality and pretty much everything to do with a tax code that makes criminals of us all.

So here's my final answer on Kathleen Sebelius: grill her over policy and positions all you want.

But if you're trying to gin up an issue over her taxes, you're part of the problem.


kavips said...

Nice Job, on bringing this to our attention..

I agree.

a most peculiar nature said...

I agree.

If anything, the people in the administration with tax issues can serve as poster children for simplification of the tax code.

If they can't understand it, who can?