Tax Questions Raised About Court Candidate : Law: Stephen Breyer only recently paid Social Security levies for domestic worker, White House acknowledges.

President Clinton delayed the announcement of his first Supreme Court nomination Saturday as White House officials confirmed that the front-runner, Judge Stephen G. Breyer, had failed to withhold taxes for a domestic worker.

A White House official said Breyer, chief judge of the U.S. 1st Circuit Court of Appeals in Boston, had neglected to deduct Social Security taxes from the wages of an elderly woman who works in his home, but that he later paid the taxes retroactively.

The development, the latest in a series of embarrassing setbacks involving Clinton’s choices for top legal positions in his Administration, is certain to raise new questions about the judgment exercised by the President and his advisers in screening key appointees.

Clinton’s first two choices for attorney general, Zoe Baird and Kimba M. Wood, were abandoned following disclosures that they had employed immigrants as domestic workers and failed to withhold Social Security taxes on their behalf.

In Baird’s case, the workers were illegal immigrants hired in violation of a 1986 immigration reform act. Wood withdrew her name from consideration in February although she had done nothing illegal because her domestic help had been employed prior to 1986.

The White House official, who requested anonymity, said Clinton and other Administration officials had known for some time about Breyer’s failure to pay the taxes but did not believe the lapse justified removing him from consideration for the high court.

“This is not something we learned about today,” the official said. “We are not dismissing it out of hand. We are taking it seriously.”

Sources said the issue involves an 81-year-old woman who has known the family since the 1960s and has worked for them one or two mornings a week since 1980, when the family moved to Boston from Washington.

The woman, a naturalized citizen who left Ireland at age 17, did some cleaning and baking and was paid $50 a week in the form of a check written by Joanna Breyer, the judge’s wife.

The woman was retired and receiving Social Security payments when the Breyers hired her, and the obligation to withhold taxes never occurred to them until the Baird controversy began making headlines in February, the White House source said.

Under federal law, employers must withhold Social Security taxes for any domestic worker whom they pay more than $50 per quarter.

Breyer checked with the IRS, was told he owed back taxes and ultimately paid a total of about $3,000, including a penalty for 1992 of more than $100, the source said. He is awaiting word from the IRS on the penalty that he still owes for the years 1980 through 1991.

“It was as benign as these situations can possibly be,” said a source close to the Breyers.

The disclosure came after the White House announced that Clinton was postponing any nomination announcement until Monday at the earliest. The delay was attributed to his preoccupation with the U.S.-led attacks in Somalia.

Breyer, a 54-year-old jurist praised for his consensus-building skills, is widely considered to be Clinton’s first choice to fill the Supreme Court seat vacated by retiring Justice Byron R. White. Breyer met with Clinton for a working lunch on Friday.

The White House official said the judge’s failure to withhold taxes is not comparable to the controversy surrounding Baird’s scuttled nomination for attorney general, one of the first political fiascoes of the new Administration.

“This is not a Zoe Baird problem,” the White House official said. He compared it instead to the problems of Commerce Secretary Ronald H. Brown and Transportation Secretary Federico Pena, both of whom failed to withhold Social Security taxes for domestic workers and claimed that they had been unaware of their legal obligation to do so.

Brown and Pena had already been nominated when Baird’s problems became public, and they paid the taxes retroactively.

The White House learned of Breyer’s tax situation last month. Within the past few days, Administration officials informed about a dozen key senators. Most said they believe that the situation should not constitute a problem, sources said, but at least two reportedly view it with some concern.

One White House official noted that Senate Minority Leader Bob Dole (R-Kan.), who would be expected to lead any Republican attack on Breyer’s confirmation, did not consider the tax issue to be disqualifying.

But at least one member of the Senate Judiciary Committee, which must confirm Clinton’s nominee, predicted that the revelation could cause problems for the President.

“Obviously, the women’s groups will be somewhat outraged to the extent that Zoe Baird couldn’t be confirmed as attorney general and Kimba Wood was withdrawn, or withdrew herself,” Sen. William S. Cohen (R-Me.), said in an interview broadcast by CNN. “I don’t know the facts of this entirely . . . but it would create a problem in terms of the differences in treatment between men and women. I think it would create a problem for everyone on the committee to the extent it is seen as favoring a male nominee.”

Kenneth R. Feinberg, a Washington lawyer and friend of Breyer, described the problem as a “minor technical infraction.”

“The idea that this most qualified jurist might be excluded from the post for this is outrageous,” Feinberg said. “Unless the President and the Congress stand up and make clear that this is not disqualifying, it will send a message that could keep good people out of government.”

Two congressional sources said they believe that Clinton still intends to select Breyer for the post.

Breyer had been expected to easily win Senate confirmation, if nominated. He enjoys bipartisan support on the Senate Judiciary Committee, where he once served as chief counsel.

A White House official insisted Saturday that the decision to put off the announcement was not connected to the complication involving Breyer’s domestic employee.

Earlier Saturday, White House spokeswoman Dee Dee Myers said Clinton decided to delay the nomination announcement because he had been too preoccupied with the military action in Somalia to give the selection his full attention.

Times staff writer Robert L. Jackson contributed to this story.