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Taxes Bite Another Obama Nominee


More Obama nominee tax problems: Now Nancy Killefer is pulling out as the President's choice to be a pioneering "chief performance officer" for the government. The reason: failure to pay employment taxes for household help.

Killefer, 55, is an executive with McKinsey. Her problems with the so-called nanny tax follow closely on the heels of nomination tax foulups involving Timothy Geithner, the new Treasury Secretary, and Tom Daschle, President Obama's nominee for Health & Human Services Secretary.

A White House spokesman said Tuesday, Feb. 3, that Killefer had asked for her nomination to be withdrawn and that the request was accepted. In a statement, Killefer said she is quitting because "in the current environment…my personal tax issue of D.C. unemployment tax could be used to create exactly the kind of distraction and delay" a chief performance officer must avoid.

The Associated Press reported on Feb. 3 that in 2005 the District of Columbia government filed a $946.69 tax lien on her home for failure to pay unemployment compensation for household help. That sum included $298 in unpaid taxes, $48.69 in interest, and $600 in penalties.

The lien was filed March 7, 2005, but Killefer didn't get the lien extinguished for almost five months, not until July 29, the AP said.

While tax issues have derailed Killefer and Daschle—who also withdrew from consideration on Feb. 3—they are not insurmountable. Geithner, who had failed to pay $34,000 in Social Security and Medicare taxes earlier this decade, was eventually confirmed at Treasury.

Obama nominated Killefer on Jan. 7 to fill the newly created position, aimed at improving efficiency and stamping out government waste. Killefer has worked in Washington before, serving in the Clinton Administration as the assistant secretary for management, chief financial officer, and chief operating officer of the Treasury Dept. from 1997 to 2000.

Before helping launch McKinsey's public-sector practice, she consulted with a range of consumer-goods and retail companies on strategy, marketing, and organizational effectiveness. She was the chairperson of the IRS Oversight Board from 2002 to 2004.

Epstein is a correspondent in BusinessWeek's Washington bureau. Sasseen is Washington bureau chief for BusinessWeek.


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