I have sympathy for Mr. Kirk. His motive was good, his problem was he used an unqualified paid preparer. We should always report all 1099 income received. IRS matches them every year with tax returns in a program called CP-2000. Not reporting income is asking for trouble.
Washington, D.C. (March 3, 2009)
By WebCPA staff
Ron Kirk, the Obama administration’s nominee for U.S. Trade Representative, has agreed to pay $9,975 in back taxes he owed on $37,750 in speaking fees.
The former Dallas mayor routinely asked for his speaking honoraria to be donated to his alma mater, Austin College, but he made the wrong entries on his 2004-2007 tax returns for the income and charitable deductions, according to a report by the Senate Finance Committee. He explained to the committee in answers to a questionnaire that since he routinely asked for the speaking fees to be donated to Austin College, he did not think the honoraria counted as taxable income and his paid preparer agreed. However, he now plans to file amended tax returns.
His confirmation hearing is scheduled for Monday, March 9. Kirk is at least the fifth nominee for an Obama administration post to run into tax problems. Other problems have arisen with Treasury Secretary Timothy Geithner and Labor Secretary Hilda Solis, who were both confirmed. However, Health and Human Services Secretary-designate Tom Daschle and chief performance officer Nancy Killefer were forced to withdraw their nominations (see How (Expletive) Hard Is This?).
In Kirk’s case, he paid additional tax of $2,188 and additional interest of $139 last October for tax year 2006 after the IRS notified him that he had failed to report a speaking honorarium of $5,000 and dividend income of $819. The return was prepared by a paid tax preparer and filed jointly with his wife. The IRS identified the unreported income during a routine match of his Form 1099 income with the Kirks’ tax return.
Despite the tax problems, Senate Finance Committee Chairman Max Baucus, D-Mont., expressed his support. “Mayor Kirk is the right person for this job and I will work to move his nomination quickly,” he said in a statement.