Clintons Admit to More Tax Errors and Pay $3,300
President and Mrs. Clinton acknowledged more errors Friday in their income tax returns in connection with the Whitewater investigation, and paid an additional $3,300 in back taxes and interest for transactions dating back to 1978.
It marked the third time in recent years that the Clintons conceded they had taken improper tax deductions or failed to report income from their years in Arkansas, where Clinton was state attorney general and later governor and Hillary Rodham Clinton was a private lawyer.
The latest back payment, made May 1 but not disclosed until Friday by the White House, followed findings by an independent panel of tax experts appointed by the White House. The tax analysts agreed with three of eight challenges raised by the Republican chairman of a House committee last August.
The analysts found that the Clintons claimed erroneous deductions for real estate interest in 1984 and 1987, resulting in additional taxes of $701, and failed to report a capital gain of $1,673 on their 1988 joint tax return, leading to $563 more in taxes. Another error occurred in allocating interest to the wrong year, resulting in a liability of $19 from 1978, the tax analysts said.
As a result, the first family this month paid $1,283 in additional federal taxes and $1,627 in interest. They also paid $246 more in Arkansas state taxes, plus $209 in interest.
The White House emphasized that the Clintons were under no legal obligation to pay the back taxes because the three-year statute of limitations on civil tax liabilities had long since expired. “The vast bulk of the first family’s Whitewater-related tax deductions were appropriate,” the White House said in a statement.
Yet, because the tax errors marked the third time that the Clintons have conceded they made mistakes on their Whitewater-related tax returns, their acknowledgment under congressional pressure could further open the president to political charges that he had tried to evade duties every citizen is obligated to perform.
On the other hand, testimony at Whitewater trials and congressional hearings has shown that James B. McDougal, the Clintons’ partner in their real estate venture in the Ozark Mountains, was an exceedingly sloppy record-keeper on whom the Clintons relied for accurate tax information. Outside certified public accountants have testified they prepared the Clintons’ returns based on data the couple furnished them.
When their real estate deals became an issue during the 1992 presidential campaign, the Clintons acknowledged taking $2,156 in unjustified tax deductions for Whitewater-related interest payments in 1984 and 1985 and voluntarily repaid the government $14,000 in back taxes and interest.
Two years ago the Clintons voluntarily paid $14,615 in back taxes and interest on newly discovered profits from Mrs. Clinton’s commodity trading in 1979 and 1980.
Rep. Jim Leach (R-Iowa), who issued last year’s report as chairman of the House Banking and Financial Services Committee, declined comment Friday on grounds that he had not yet studied the latest report of independent tax analysts.
Leach’s report, prepared by Donald C. Alexander, former Internal Revenue Service commissioner in the Nixon administration, had claimed that the Clintons owed a minimum of $13,272 in back taxes on their Whitewater investment.
Clinton attorney David E. Kendall, while acknowledging that the outside White House panel found tax deficiencies, called Leach’s report “overwhelmingly erroneous or unsupported.”
In a letter to Leach, Kendall added that the Clintons had failed to take advantage of certain offsetting tax advantages related to their Whitewater investment, apparently because of poor advice from their accountants at the time. But they were not claiming any benefits retroactively, he said.
In the battle of tax experts, the White House report was compiled by Sheldon Cohen, who served as President Johnson’s IRS commissioner; Jerome Kurtz, who held the same post in the Carter administration, and John S. Nolan, a tax policy official in the Nixon administration Treasury Department.
Meanwhile, jurors in Little Rock, Ark., ended seven days of deliberations without reaching a verdict in the Whitewater trial of Gov. Jim Guy Tucker, McDougal and his former wife, Susan McDougal. The judge suspended deliberations for the three-day Memorial Day weekend.
