Tuesday, January 13, 2009 at 3:48 pm
Geithner's Tax Headaches
Treasury Secretary-designate Tim Geithner has been meeting this afternoon with the Senate Finance Committee to discuss two problems that have come to light regarding his personal finances. One of them involves a failure to pay self-employment taxes when he was working for the International Monetary Fund; the other, his employment of an immgrant housekeeper whose work authorization document had expired.
The meeting with the Senate Finance Committee, which will be holding his confirmation hearing in two or three weeks Friday (NOTE: the committee announced this hearing date on Tuesday night, suggesting it was satisfied with Geithner's explanation) next Wednesday (NOTE: C'mon, guys. Set a date and stick with it.), was called at Geitner's own request. Jay Newton-Small reports that, at the end of it, most Senators filed out without commenting. However, two of them--Utah Republican Orrin Hatch and Michigan Democrat Debbie Stabenow--said they continue to support the Geithner nomination.
Here's my understanding of what prompted all of this, based on sources in the transition operation and on Capitol Hill:
Before becoming President of the Federal Reserve Bank of New York, Geithner worked for the International Monetary Fund in 2001 and 2003. While he had paid all of his income taxes on his IMF earnings, he failed to pay self-employment taxes. (Geithner had initially done his tax returns himself, but an accountant preparing an amended return in 2002 also failed to catch the mistake.) Geithner voluntarily corrected that mistake upon discovering it on November 21, 2008, during the Obama transition vetting process, and paid an additional $25,970 as a result.
The confusion over the self-employment tax arose from an unusual system used by the IMF. Though its U.S. employees receive W-2s, they have been treated for tax purposes as though they are self-employed. (This problem has occurred frequently enough that in November 2006, the IRS made a settlement offer to all U.S. employees of embassies and international organizations in order to bring the employees into compliance with their U.S. tax obligations. )
Geithner had earlier encountered the same problem. It had come up in an IRS audit in 2006, under slightly different circumstances. Geithner worked for the IMF until the fall of 2003, and also received a small amount of income from the IMF in early 2004. An accountant prepared Geithner's 2003 and 2004 returns and assured him in writing that he was exempt self-employment taxes on his IMF income. In 2006, the IRS informed Geithner that he owed--and had failed to pay--self-employment taxes for that period as well. He paid tax and interest totaling $17,230 (of which $14,847 was tax and $2,383 was interest) for the two-year period, and the IRS waived all penalties.
The second problem: In 2004 and 2005, Geither's family employed a housekeeper to clean their home, and verified when upon hiring her that she had a valid permit to work. What he didn't know was that this document expired three months before she left his employ to have a baby. (She continued to reside legally in the United States, was married to a U.S. citizen, and was granted a green card a few months later.)
UPDATE: A statement from the Obama transition office:
"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. 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," said incoming White House press secretary Robert Gibbs.
UPDATE2: Jay Newton-Small sends this report by email:
Baucus just came out and gave a statement underlining his support of Tim Geithner. He said he has known about the issue for several weeks and he and Grassley used the time to do a thorough investigation. A joint report will be issued shortly. "Though serious, I do not believe these problems endanger the nomination," Baucus said. "The country needs a Treasury Secretary." Schumer said he expects a confirmation hearing in 2-3 weeks. "It's not at all disqualifying," he added.
UPDATE3: You can read the Finance Committee memo on all this here.
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Tuesday, January 13, 2009 at 3:53 pm
"The second problem: In 2004 and 2005, Geither employed a housekeeper to clean his home, and verified when he hired her that she had a valid permit to work. What he didn't know was that this document expired three months before she left his employ to have a baby."
.
Are you suppose to check your housekeeper's documents every 3 months or just when they have babies? I haven't checked mine in ages.
Tuesday, January 13, 2009 at 3:58 pm
Surprised Stabenow can tear herself away from omnipresent threat of Canadian trash to comment.
Tuesday, January 13, 2009 at 3:58 pm
Mountain or molehill? Seems like small potatoes to me.
That Hatch still supports him suggests that it is not a confirmation killer.
Tuesday, January 13, 2009 at 4:01 pm
"One of them involves a failure to pay self-employment taxes when he was working for the International Monetary Fund..."
FAILURE TO PAY TAXES, EH?
Who IS his accountant, Bill or Al?
= FRANKEN ACCOMPLISHED =
Tuesday, January 13, 2009 at 4:03 pm
P-NNTO: I also think it looks like it will not affect his nomination, but it was enough of a concern that Geithner asked for a special session with the committee, so I thought I should keep Swampers up to date on what is happening.
Tuesday, January 13, 2009 at 4:06 pm
"...his employment of an immgrant housekeeper whose work authorization document had expired..."
ZUIT, ZUIT, ZUITUNIO...
Yo, 57-state one:
Does VETTING come with the private beach pushups, or just the pecs?
These Chicago ensconced CLOWNS make the start of the 1993 Clixon admin look like smooth sailing.
= LONNIE GUNYEA ACCOMPLISHED =
Tuesday, January 13, 2009 at 4:06 pm
I wasn't criticizing the post KT just guessing at the ramifications. Thanks for keeping us current on the confirmation process.
Tuesday, January 13, 2009 at 4:07 pm
=SENATOR FRANKEN ACCOMPLISHED =
.
Fixed.
Tuesday, January 13, 2009 at 4:08 pm
Boring. Is the housekeeper blackmailing him over the unpaid taxes, because they slept together at the U.S. Mint on a mountain of money and now he won't even look at her and she loved him, she really loved him? Because that would be much more interesting. See if JNS can confirm.
Tuesday, January 13, 2009 at 4:08 pm
PS: Those gigs at the World Bank and IMF are pretty sweet. I want one.
Tuesday, January 13, 2009 at 4:10 pm
We have such a complicated tax and immigration documentation system that I think we can disqualify lots of people from working in govt. This cries out for a simple tax code and a work permis\t system that does not require one to hire Sherlock Holmes and a major accounting firm whose fees will swallow one's annual income.
Tuesday, January 13, 2009 at 4:11 pm
"Those gigs at the World Bank and IMF are pretty sweet. I want one."
.
If they come with immgrant housekeepers, so do I.
Tuesday, January 13, 2009 at 4:13 pm
"...she left his employ to have a baby..."
Speaking of John Edwards, will he too be attending the Big MeetUp On The Mall, or just trashing things from Cali via TMZ satellite?
I'm guessing that invitation was lost en route to Santa Fe, along with the transcripts of Bill Richardson's chats with neighbor Joe Wilson about all things Iraq and French.
Perhaps the change part will kick in soon...
http://www.HULAgate.org
Tuesday, January 13, 2009 at 4:13 pm
Doesn't this say a lot more about our tax system that the person we want to hire as the Treasury secretary can't actually figure them out?
Tuesday, January 13, 2009 at 4:15 pm
Libs now SUPPORT tax reform?
Oh good grape.
Tuesday, January 13, 2009 at 4:16 pm
Re Philippe (#14): When we have a system so complicated that the Treasury Secretary can't file his own returns, I completely agree.
Tuesday, January 13, 2009 at 4:18 pm
IS Hillary still available?
She, at least, knows where all the DNC dreg dog bones are buried.
Just ask Richie Richardson.
Maybe the change part starts Wednesday...
Tuesday, January 13, 2009 at 4:19 pm
Is there a problem here?
.
How about the guy's prescriptions for keeping the Treasury worthy of its name? Aren't those the real concern?
Tuesday, January 13, 2009 at 4:19 pm
Jeez, when our treasury secretary and current NY Fed governor and his accountant can't figure out our tax system....this SMACKS of the need for simplicity.
-
The story here is how ridiculously comples does our system need to be? Is it costing us jobs? I would be that it is. And what should we be doing about it to marginalize the impact on companies that would be doing business otherwise?
Tuesday, January 13, 2009 at 4:20 pm
=SENATOR FRANKEN ACCOMPLISHED =
...
HOLD YOUR HORSES HORSE HIPS.
Tuesday, January 13, 2009 at 4:22 pm
Agreeing with bitterpill, #11, how many questions does this raise, not about Geithner necessarily, but about everything, complicated tax and work codes, the accountablility of accountants (curse to the disgraced PCA profession) to scandal in general. Especially accountants. No doubt he was a busy guy and depended on others to sort it out. They failed. I don't know what to think of this beyond that. When I decide I will let everybody know.
Tuesday, January 13, 2009 at 4:23 pm
hulagate, I see you haven't taken my advice that you seek counseling. You will regret it.
Tuesday, January 13, 2009 at 4:24 pm
Yes America, this same high standard of VETTING employed by the crack-enabled Team Obama will be used when he goes calling, smelly Birkenstocks in hand, on the always loverly and hepful Iranians and North Koreans and Pakis and Conglesezzezzezzes and Zimbabweans and Illini and Oaklanders and Ruskies and Red Chinese...
Anyone else miss President Bush yet?
Tuesday, January 13, 2009 at 4:25 pm
formerlyjames (#21): why he attempted to file his own returns i'll never know. doesn't that call into question his judgment?
i wouldn't do that on a bet, and mine are relatively simple.
Tuesday, January 13, 2009 at 4:28 pm
Update: That change part is now officially scheduled to start Thursday (subject to loose change).
Hopefully.
Tuesday, January 13, 2009 at 4:29 pm
PCA, CPA, may the industry go to hell and the honest ones regroup anyway.
Tuesday, January 13, 2009 at 4:30 pm
HOLD YOUR HORSES HORSE HIPS.
.
All over but Barbara Bush singing.
.
FRIVOLOUS LAWSUIT ACCOMPLISHED!
Tuesday, January 13, 2009 at 4:31 pm
Meanwhile, back at Gitmo...
http://www.reuters.com/article/topNews/idUSTRE50C5JX20090113?feedType=RSS&feedName=topNews&rpc=22&sp=true
Thank goodness we now have a caring man that cares about America to lead us.
= BERT LANCE ACCOMPLISHED =
Tuesday, January 13, 2009 at 4:32 pm
The nanny issue sounds like a technicality.
.
Meanwhile, in much more important news, it looks like the BHO team is letting the Mexican government write their press releases. Either that, or by some miracle, BHO uses the same phrases in support of illegal activity as Mexico's president.
.
Note, of course, that you won't hear about that from Time or Tumulty
Tuesday, January 13, 2009 at 4:33 pm
What does it say about our system that we don't hold this guy responsible, either as inept or corrupt?
Tuesday, January 13, 2009 at 4:35 pm
KT, thanks for the note. I have always done my returns, sometimes complicated, sometimes not. Having accountants do it can lead to the troubles he faces because they are the equilivent of those deciding what is torture and what is not. Some go this way, some that. People think accountants are the experts, the final word, and everything is honkydory dealing with them. I have a newsflash. Remember Enron?
Tuesday, January 13, 2009 at 4:36 pm
Rezko, Richardson, Holder, Geithner, Hillary...
Sorry, WHEN, again, does the promised change part begin?
Tuesday, January 13, 2009 at 4:36 pm
Question Hillary is back!
.
Welcome back, QH!
Tuesday, January 13, 2009 at 4:37 pm
Deezam is this a wingnut holiday or something? Jeebus they are out in force today. Blogs need an ignore button like a chat room I swear lol
Tuesday, January 13, 2009 at 4:38 pm
Matt now has this above the fold, Muffins.
http://apnews.myway.com/article/20090113/D95MGFTO1.html
ISn't you glad we're BACK?
= NEWS ACCOMPLISHED =
Tuesday, January 13, 2009 at 4:38 pm
"What does it say about our system that we don't hold this guy responsible, either as inept or corrupt?"
.
After 8 years its SOP that no one is held responsible.
Tuesday, January 13, 2009 at 4:40 pm
Dear Numismatists Magazine: I never thought this would happen to me. I was working late rolling pennies at the Mint. I pocketed a sweet Indian Head in mint condition when my sexy housekeeper stopped by and saw me. She blackmailed me into having sexy sex with her and committing other minor technical infractions. Yours in irrational exuberance, T.G. in D.C.
Tuesday, January 13, 2009 at 4:41 pm
"After 8 years its SOP that no one is held responsible."
I think you would have a hard time getting the Republican Party to believe that.
Tuesday, January 13, 2009 at 4:45 pm
Didn't I say on the lsat thread that one of the biggest dangers the Obama administration faces is getting distracted by minutea while Rome burns.
Tuesday, January 13, 2009 at 4:46 pm
I wondered if kattest would be showing up for this.
Tuesday, January 13, 2009 at 4:46 pm
Swallow this, America:
The alleged incoming Treasury czar screwed up on his taxes, BIG TIME, and more than once -- and employed an illegal alien to boot.
He's another limo liberal though, so he just fessed up and paid the fine (when finally caught) -- not unlike the Clixon and Franken role models that get a free media pass every Time they appear in public under oath if not intern.
This IS the due they want running the IRS, and deciding whether or not all your non-nexus web purchases are subject to tax change. Speaking of change we don't need and can't afford.
Mind you, there will be calls for his casual clearance just as there will be calls to raise property taxes to fund flunking public skoos in cities that couldn't find there own state seats of guvment even if free hookers were painted on the topographical student union picture.
Same old libs.
Do As I Say, Not As I Do.
And they wonder how Fannie and Freddie and Barney Frankly got us so screwed up.
Oh well.
ROSTY HAPPENS.
http://www.HULAgate.org
Tuesday, January 13, 2009 at 4:49 pm
stuartzechman
I've been in oceanic research mode
Do enjoy the freshman results.
http://www.HULAgate.org
Tuesday, January 13, 2009 at 4:50 pm
Again, let's get some sexy stuff in here. If the housekeeper wasn't sexy, maybe the forms were. Was it the 36-24-36 he failed to file? SEXY. Something to spice it up. The "MF" in "IMF" is a good start. I can work with that.
Tuesday, January 13, 2009 at 4:51 pm
Official makes (insert opinion about severity here) mistakes.
Official addresses mistakes, and makes amends/retribution.
Official acknowledges mistakes, and volunteers information about said mistakes to public and to overseers.
How WEIRD!!!!
But considering the contrast to the DC standard MO, I move we all drink a very loud and public toast to this dude.
Tuesday, January 13, 2009 at 4:53 pm
pourmecoffee
Hold it.
I do the numismatist jokes around here.
Union, you know.
Tuesday, January 13, 2009 at 4:58 pm
"...People think accountants are the experts, the final word, and everything is honkydory dealing with them. I have a newsflash. Remember Enron?"
Remember underwear?
Remember the Lieberry?
Remember Rezko?
Remember Rosty?
Remember Janet Cooke?
Silly libs.
Tricks IS for Clixons!
Noteness... The Lieberry laundering funds for the Arabs and world socliast order IS not news. It IS ust news to the major media. What they pay the pinheads at Time has to be based per conjecture, instead of actual research and reporting.
We'll try to help with that, going forward...
Tuesday, January 13, 2009 at 4:59 pm
KT - I'm curious about the timing of these revelations. Did this come out today because there's likely to be more attention to Hillary than to Geitner?
.
I do think these are minor things. There seems to be no suggestion that he was intentionally trying to skirt rules. Yes, when the Treasury Secretary can't figure out the tax rules they need to be changed.
Tuesday, January 13, 2009 at 5:01 pm
Did anybody else notice that Sen "I love prostitutes" Vittner was the only Rethug who gave Sen Clinton sh!t today? That clown is gonna get it in his next election.
Tuesday, January 13, 2009 at 5:02 pm
pourmecoffee
... ... ...
Hey hey you you got offa my rant.
Celery, when will the silly dem party voters learn the media's old tricks?
They've anointed The One, his will be done -- and Jeb 2012 will be fun!
Tuesday, January 13, 2009 at 5:05 pm
hulagate, you intrigue me. Can you calm down a little, and more specifically explain your complaints? Your rants are too freefloating to understand. I want to listen to you, but you make it very difficult. Do you understand what I am saying?