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A Rocky Road for Treasury Secretary-Designee Geithner?

January 13, 2009 4:15 PM

The Senate Finance Committee, which will oversee the confirmation hearings of Treasury Secretary designee Tim Geithner, has been meeting today to discuss some tax issues lurking in the past of the former New York Federal Reserve Bank president.

In a statement from incoming White House press secretary Robert Gibbs, a statement of support and an acknowledgment of mistakes:

"The president-elect chose Tim Geithner to be his Treasury Secretary because he's the right person to help lead our economic recovery during these challenging times," Gibbs said. "He's dedicated his career to our country and served with honor, intelligence and distinction. That service should not be tarnished by honest mistakes, which, upon learning of them, he quickly addressed. He made a common mistake on his taxes, and was unaware that his part-time housekeeper's work authorization expired for the last three months of her employment. We hope that the Senate will confirm him with strong bipartisan support so that he can begin the important work of the country."

The basic issue seems to be that when Geithner worked at the International Monetary Fund from 2001 to 2003, he filed his taxes improperly, and he also for a time employed someone who didn't have legal immigration status.

The tax issue, as I understand it, is that IMF employees receive W-2s as employees and are treated as if they were self-employed, so they do not have federal and state taxes withheld from their paychecks. As part of Geithner's vetting, the Obama Transition Team discovered that he had not paid self-employment taxes in 2001 and 2002.

On Nov. 21, 2008, Geithner paid $25,970 in these overdue taxes plus interest -- $2,364 and interest of $956 for 2001 and $16,812 and interest of $5838 for 2002 (Geithner had been notified in 2006 by the IRS that he owed self-employment taxes and interest for 2003 and 2004, after which he paid tax and interest totaling $17,230).

Which begs the question: If the IRS notified Geithner in 2006 that he owed self-employment taxes for his time at the IMF in 2003 and 2004, why did he not realize that those taxes should have applied to him in 2001 and 2002 as well?

There is another -- what seems to me to be a lesser -- issue with a housekeeper that the Geithners employed to clean their home from 2004-2005. She had a current Employee Authorization Document at the time she was hired, but three months before she stopped working for the family that authorization expired.

More to come as this all develops.

-- jpt

January 13, 2009 | Permalink | Share | User Comments (179)

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Hello right-wingers. Making a mistake on your taxes and then rectifying it is not a crime. Tax evasion is criminal.

"Joe the Plumber" lied and evaded paying "socialist" taxes. See the difference?!

Posted by: Common Sense | Jan 14, 2009 5:34:59 AM

I am no longer amazed by the way politicians "forgive" other politicians for "making mistakes" but I am NOT amused !

Ordinary citizens who fail to pay their taxes properly are crucified for doing so - even IF they really DID make an honest mistake they are not given the opportunity to say "I'm sorry" and get away with paying the taxes owed plus interest - they are jailed.

Our government has been infested with crooks for a long, long time - and Presidnt-elect Obama promised "transparency" and basically a zero tolerance for dishonesty in his government -- so why is he appointing people with "honesty issues" and why are they "forgiven" for their wayward ways ???

Our government will remain "crooked" -- that's the way poloticians play the game - it is disgusting !

Posted by: Elle | Jan 14, 2009 4:59:45 AM

There's no change on the horizon as far as I can see with this clown Obama's administration. As usual, when it's a democrat caught up in corruption, it's written off as an "honest mistake". Yet when a republican gets busted, it's the biggest corruption scandal in the country. What I want to know is when the "back taxes" were payed. If it wasn't until after he was nominated by Obama, then the only reason he payed them was out of political expediency. Otherwise, there's no doubt in my mind he wouldn't have payed them unless he got caught. That's how the party of "change" operates. Every last one of them!

Posted by: Greg Norbert | Jan 14, 2009 4:57:47 AM

If what has come out about this fellow's tax situation is truly as serious a legal issue as some here seem to think it is, then he simply won't be approved.

Despite the great legal tax minds that frequent this forum, I dare say few if any of us know how the IRS is bound to legally treat this particular type of reporting.

Posted by: pefros | Jan 14, 2009 4:00:30 AM

"Joe The Plumber's overdue tax was used decried by the liberals as A CRIME."---------------- and liberals were chewed to pieces for picking on the guy so who is the bigger hypocrit here?

Posted by: dk | Jan 14, 2009 3:52:07 AM

There is no statute of limitations for evasion of taxes. The fellow should be sent to the criminal division of the IRS and prosecuted to the full extent of law for tax evasion. Remember that is how we got the Godfather sent to the Rock? He belongs in the federal penitentiary.

Posted by: narumanchi | Jan 14, 2009 3:00:56 AM

Why is this guy getting special treatment by Obama's team or for that matter even by IRS? If this guy is treated as self-employed, then he should have been paying the full social security tax @ 15.3% (Of course, half of the tax could go arrive at the AGI. Plus, most of the people under-paying taxes are given hefty penalties, plus they are also required to pay interest from the date the estimated payments are supposed to be paid. This being the case, the total tax liability should be running into thousands of dollars for a period of seven or eight years just for the social security taxes. In addition, there is the question of payment of federal income taxes as well as state income taxes. Did he pay his state income taxes after paying up at least a part of his federal social security taxes and then figuring out the AGI, and then the taxable income? It is not imaginable that this guy was making under $100,000 per year as his taxable income. Will Mr. Obama make the guy to make public his tax returns, albeit voluntarily, for the past ten years since he is going to be the tax collector for the federal government? Let these intended or unintended follies play out fully in the public. Suppressing full facts is not the way we expect a real change promised by Mr. Obama.

Posted by: narumanchi | Jan 14, 2009 2:49:52 AM

Joe The Plumber's overdue tax was used decried by the liberals as A CRIME.

Obama's nominee's tax evasion is called by the liberals "HONEST MISTKAES".

AND THE LIBERAL MEDIA LOOK THE OTHER WAY.

LOL

Posted by: nononsense08 | Jan 14, 2009 2:35:16 AM

I think he should be held accountable for his 'honest mistake'just as any other person would be. I personally think he was aware of his oversite, but was hoping that he could slide by. And he apparently did for the most part. It makes me furious for Obama to claim that it is time for 'CHANGE' and really believe that the tax payers could or would overlook this. I don't believe the IRS would let this slide for anybody that I know.

Posted by: Deborah | Jan 14, 2009 1:17:12 AM

agreed Mike......... you want to put Americans back to work in America? Eliminate H-1B Visas!!!!!

Posted by: dk | Jan 14, 2009 12:58:26 AM

Marsha - I like your idea, but don't let it be Bill Gates. He ran his company to eliminate all his competition. Also, he testified in Congress last year that we need more visas for foreign engineers and scientists. We already have more American graduates in engineering and science than we need. But he wants the ones from other counties because they will work for less inorder to live in the US. Like I said, good idea, just not Bill.

Posted by: MikeMo1947 | Jan 14, 2009 12:55:53 AM

let me start by saying I'm a lifelong Dem and voted for Obama....... that being said, this guy should go away. He failed to pay his taxes and now he's cabinet material? Give me a break. There is no defending him.

Posted by: dk | Jan 14, 2009 12:55:03 AM

Are any of these political big shots not bringing skeletons in the closet-- despite careful vetting? Is any of our Washington management not employing illegals? Honorable? I don't think so. Change? Not likely.

Posted by: larry nelson | Jan 14, 2009 12:51:32 AM

I believed, with this election, we were transitioning to a government that was going to "Lead by example" so I am sure, in the future, whenever a US citizen makes an oversight on his/her tax submission, they will be treated with the same forgiveness and rules as the Treasury Secretary or any other government official is held to. How can anyone enforce rules that they themselves don't adhere to? The time has come to expect the highest morals in our leaders and ourselves.

Posted by: Shirley | Jan 14, 2009 12:46:01 AM

Why blame B.O for something some one else did, he may have not known about it till the news broke. Glad none of you slobs are going into office. Guilty until proven innocent...riiiiggggghhhhhttttt.....

Posted by: TOM | Jan 14, 2009 12:45:34 AM

Are any of these political big shots not bringing skeletons in the closet-- despite careful vetting? Does any of our Washington leadership not employee illegal domestic help? We don't need anymore crooks in DC. Yeah, some "change."

Posted by: larry nelson | Jan 14, 2009 12:44:52 AM

I guess the question is do we really want to trust this man with the most important day to day decisions about our money. Look, at best he was already irresponsible with his own money (and probably criminal). What will he do with ours?

Look, lets get someone in there who has actually built successful businesses. I know the left likes to punish success, but if this man fails we all get punished.

Posted by: Matt | Jan 14, 2009 12:27:07 AM

It is tough to determine which is more disturbing, the nominee's "oversight" in paying more taxes than my annual earnings or George Stephanopoulos' angst-ridden, woeful, apologist comments about how the nominee really, really was contrite in admitting his mistake. I detest the leanings of Fox news, but is this the journalism we can expect of ABC in the coming four years?

Posted by: Mel | Jan 14, 2009 12:19:10 AM

I actually thought President Obama was going to be different. Then he gives us a tax cheat as our treasury secretary and tells us he's the best man for the job. Same old stuff. What a let down, and he's not even in office yet.

Posted by: Chris | Jan 14, 2009 12:19:03 AM

i think its a mistake picking him,not paying taxes, what kind of message is he sending?

Posted by: glen | Jan 14, 2009 12:17:09 AM

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