Clintons pay $14,615 in back taxes

April 12, 1994|By Carl M. Cannon | Carl M. Cannon,Washington Bureau of The Sun Sun staff writer Susan Baer contributed to this article.

WASHINGTON -- President Clinton and Hillary Rodham Clinton paid $14,615 in back taxes and interest yesterday to cover previously undisclosed profits from Mrs. Clinton's 1980 commodities trading, the White House disclosed.

In a tense White House briefing for reporters, lawyers for the first family conceded that earlier statements they had made about Mrs. Clinton's commodities deals were "inoperative" and that Mrs. Clinton had made a profit of $6,498 in 1980 that was never reported to the Internal Revenue Service.

"The Clintons do not know how the error occurred but accept responsibility for it," said David E. Kendall, the Clintons' personal attorney.

For 1980, the year in question, the Clintons reported total income of $87,556. They paid taxes of $17,579.

The tax records and statements released at the White House yesterday showed that the Clintons underpaid their federal taxes by $3,315 that year. They also underpaid the state of Arkansas $514.

Mr. Kendall said that the state of Arkansas and the Internal Revenue Service compute interest differently, and so the total that was repaid yesterday came to $13,449 to the federal government and $1,166 to the state.

Mr. Kendall and White House Cabinet secretary John Podesta, also a lawyer, tried to put the best face on this development and noted that because the Clintons' transgressions occurred so long ago, they were not obligated to pay a dime.

"Here, the Clintons reached back 14 years to a time long closed by the IRS and, after careful investigation, have made the determination themselves to pay, not only the tax, but also interest for that entire period," said Mr. Kendall.

But privately, top White House officials admitted that however they dressed up the news, it wasn't very good politics for the first family to be admitting to the American people -- only four days before tax day -- that they once had significantly underpaid their taxes.

Moreover, it again drew attention to Mrs. Clinton's controversial dealings in the high-risk commodities market.

Separate accounts

The unreported income does not involve the controversial account with the Refco brokerage office in Springdale, Ark., in which Mrs. Clinton made a $99,000 profit in a 10-month whirlwind of trading, mostly on cattle futures, in a series of transactions that numerous commodities experts have described as highly unusual for a first-time investor.

Instead, it concerns a separate account, opened with Stephens Inc. of Little Rock, on Oct. 12, 1979, with $5,000.

Previously, Mr. Podesta and Lisa Caputo, Mrs. Clinton's spokeswoman, said that the first lady had lost $1,000 on this account and then closed it before her daughter Chelsea was born because she got cold feet and was distracted by her pregnancy.

But the White House acknowledged yesterday that, instead, Mrs. Clinton had doubled her money on the Stephens account and that trading had continued three months after Chelsea was born.

Over the weekend, Mr. Podesta acknowledged that his previous claim that Mrs. Clinton had made all her own trades was not true, either. James B. Blair, the Arkansas attorney who steered Mrs. Clinton into the commodities markets, had actually ordered the trades himself, although White House officials continued to insist that Mrs. Clinton actually made the decisions on the trading.

"I think it's become clear that he [Mr. Blair] placed most of the trades," White House spokeswoman Dee Dee Myers said.

Broker's discretion

The trades in Mrs. Clinton's second account were apparently made at the discretion of her Stephens broker, Bill Smith, according to Mr. Kendall's statement.

Asked how Mrs. Clinton could have failed to report her 1980 capital gains on her tax return, Mr. Kendall and other White House officials pointed to the complexities of the Stephens account and suggested that this may have caused some confusion because, through Stephens, Mrs. Clinton was trading in commodities, stocks and bonds with three different brokers.

"Stephens Inc. prepared annual year-end statements on which the Clintons and their CPA relied for the preparation of the family's tax returns," said Mr. Kendall.

But the year-end reports submitted to the Clintons by Stephens are clearly marked with the caveat that the information on them ** "is not necessarily an accurate figure for your tax purposes."

Mr. Kendall also conceded that Mrs. Clinton received monthly reports from Stephens that would have contained information about her capital gains.

Tax record responsibility

Several tax experts noted yesterday that the law requires all taxpayers to keep track of their income each year. And they said that the IRS would have assessed penalties if their failure to report the income had been caught at the time.

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