Tax issues shadow Obama health nominee Daschle

By Jeff Mason and Andrea Shalal-Esa

WASHINGTON (Reuters) - President Barack Obama's choice to spearhead U.S. healthcare reform, Tom Daschle, paid more than $100,000 in back taxes for a three-year period, setting up a potential roadblock to his nomination, documents showed on Friday.

White House press secretary Robert Gibbs said Daschle, a former Senate majority leader, had filed amended tax returns to the Internal Revenue Service and made payments with interest.

A Senate Finance Committee report obtained by Reuters showed Daschle paid $128,203 in back taxes and $11,964 in interest for 2005 to 2007, to cover income for consulting, the use of a car service and lower deductions for charitable contributions.

"He didn't think to report it to the IRS. He didn't think of it as taxable income, but it came up during the vetting process," said a congressional aide, who asked not to be identified.

Gibbs said the president still expected Daschle, a Democrat who represented South Dakota in the Senate, to be confirmed to lead the Health and Human Services Department.

"Senator Daschle brought these issues to the (Senate) Finance Committee's attention when he submitted his nomination forms and we are confident the Committee is going to schedule a hearing for him very soon and he will be confirmed," Gibbs said in a statement.

"The President has confidence that Senator Daschle is the right person to lead the fight for health care reform. In preparation for his nomination, Sen. Daschle and his accountant identified some tax issues and fixed them."

Daschle is not the first high-profile nominee for Obama's Cabinet to run into trouble with taxes. Treasury Secretary Timothy Geithner's nomination faced criticism for his late payment of $34,000 in self-employment taxes to the IRS. He was eventually confirmed.