Another Obama Nominee with an IRS problem?

I remain convinced that President Obama nominated some people he should not have because of their tax problems. Now we have news that the New York Times reports yet another nominee has an issue. But I'll be honest, at first blush, this does not look like much of anything.


According to the Times, State Department Chief of Protocol Capricia Penavic Marshall has placed blame for the problem on the Postal Service and on miscommunication between her husband and their accountant.


Ms. Marshall, who was the social secretary in the Clinton White House, notified the Obama administration about the late filings before she was nominated on May 14. She has since provided written answers to questions about the matter from Senator Richard G. Lugar of Indiana, the top Republican on the Foreign Relations Committee, which will hold a hearing on the appointment next Wednesday. The post requires Senate confirmation.


Some folks have been expressing concern that Ms. Marshall was not penalized for failing to file. Such fears are misplaced. Penalties for failing to file on time are based on what you owe to the IRS. If you have already withheld enough, you are getting a refund. If you are getting a refund or owe nothing, there is no penalty. The fact that they were not penalized is not all that suspicious.


And if you think about it, in failing to file, she only penalized herself — she was likely getting money back. This really is a much different situation than with other nominees.


Luckily for Ms. Marshall, these were for tax years 2006 and 2007. If this was for 2005 (and assuming not request for extension was filed), Ms. Marshall would have lost her right to claim a refund (a claim for refund must be filed within 3 years after the tax return was due or within two years of over-payment).


UPDATE: A reader, a Matt Ohzourk who writes to  Instapundit reminds me that there is a flat penalty $135 flat penalty for late filing a return even if there is no tax due. And I agree, that’s a penalty that the IRS is quick to grant relief for if you can come with a "reasonable cause defense." The general rules is that penalties that you can blame on your CPA, Attorney or an IRS employee are the easiest to abate.