January 21, 2009

AP Geithner Hearing Report: No Mention of IMF ‘Reimbursements’ for Taxes Not Paid, Related False Statements

GeithnerIdunnoLOL0109.jpgThe Associated Press’s 1:12 p.m. coverage (saved here, as the dynamic link changed during the drafting of this post) of the Senate Finance Committee’s hearing on Barack Obama’s nomination of Timothy Giethner as Treasury Secretary has plenty of discussion of Geithner’s tax “mistakes” (the picture, but not its heading, is from a November 21 New York Times article).

But as has been the case with every AP report I’ve seen, there is no mention of the fact that the International Monetary Fund, Geithner’s 2001-2004 employer, partially reimbursed him for his Social Security and Medicare “self-employment tax” liabilities.

Here are the first eight paragraphs of AP Economics Writer Martin Crutsinger’s report:

Geithner apologizes for not paying taxes

Treasury Secretary-designate Timothy Geithner said Wednesday he was careless in failing to pay $34,000 in Social Security and Medicare taxes earlier this decade but declared “I have paid what I owed” and apologized to Congress.

He told the Senate Finance Committee he was sorry that his past transgressions were now an issue in his confirmation at a time of deepening economic distress. He urged Congress to act quickly and forcibly to deal with the crisis. A top administration priority is to foster economic recovery and “get credit flowing again,” Geithner testified.

As to his failure to pay payroll taxes from 2001 to 2004 while he worked for the International Monetary Fund, Geithner said: “These were careless mistakes. They were avoidable mistakes.”

“But they were unintentional,” he said. “I should have been more careful.”

Geithner told the panel that, for the 2001 and 2002 tax years, he had prepared his tax returns himself with a popular tax-preparation computer program.

He said that he hired an accountant to do his 2003 and 2004 taxes who also “did not catch my error.”

He acknowledged signing an IMF statement saying he was aware that it was his responsibility to fully pay U.S. Social Security and Medicare taxes.

“I absolutely should have read it more carefully,” he said. “I signed it in the mistaken belief I was complying with my obligations.”

To refresh, here is what AP has, as far as I know, failed to report thus far in any of its Geithner coverage. Byron York wrote it up at National Review a week ago on January 14 (bolds are mine):

Geithner Accepted IMF Reimbursement for Taxes He Didn’t Pay

The IMF did not withhold state and federal income taxes or self-employment taxes — Social Security and Medicare — from its employees’ paychecks. But the IMF took great care to explain to those employees, in detail and frequently, what their tax responsibilities were. First, each employee was given the IMF Employee Tax Manual. Then, employees were given quarterly wage statements for the specific purpose of calculating taxes. Then, they were given year-end wage statements. And then, each IMF employee was required to file what was known as an Annual Tax Allowance Request. Geithner received all those documents.

The tax allowance has turned out to be a key part of the Geithner situation. This is how it worked. IMF employees were expected to pay their taxes out of their own money. But the IMF then gave them an extra allowance, known as a “gross-up,” to cover those tax payments. This was done in the Annual Tax Allowance Request, in which the employee filled out some basic information — marital status, dependent children, etc. — and the IMF then estimated the amount of taxes the employee would owe and gave the employee a corresponding allowance.

At the end of the tax allowance form were the words, “I hereby certify that all the information contained herein is true to the best of my knowledge and belief and that I will pay the taxes for which I have received tax allowance payments from the Fund.” Geithner signed the form. He accepted the allowance payment. He didn’t pay the tax. For several years in a row.

On Monday, blogger Steve Hull made an important additional point (bold is mine):

….. when our soon-to-be Messiah President says “it was an honest mistake that could happen to anybody”,  I must strongly disagree.   For 20 years, I was in a position where I had to make just those kind of filings and payments.  I too had to sign a quarterly statement, under penalty of perjury, certifying that I had indeed made such payments.  I also knew darn well that if I didn’t make said payments, it would eventually catch up with me and I would end up in jail… instead of nominated for, and likely to be confirmed as, the person with the most power over the entire US economy in history.

I believe that the reimbursement and false attestation aspects of Geithner’s situation, if known by most Americans, would cause a tidal wave of public outrage well beyond what has been seen thus far.

In the rest of Crutsinger’s report, you’ll see evidence that some Republicans, including Iowa’s Charles Grassley and Kentucky’s Jim Bunning, are raising objections to Geithner’s nomination. However, despite stating that his phones are “‘ringing off the hook’ from people in Kansas complaining about the prospects of having a Treasury secretary who was careless in tending to his own tax liabilities,” Pat Roberts said, “You will be confirmed.”

A concise rundown of the troubling aspects of Geithner’s nomination, which are by no means limited to his tax problems, is here.

I should also note that at least one of Crutsinger’s earlier dispatches from the hearing  — dispatches that I would expect many AP subscribers will run without updating during the rest of the day — did not mention the existence of Geithner’s tax problems, even though they have hung over the nominee for at least a week. Does anyone think that an AP reporter would have granted a GOP presidential nominee such deference?

Cross-posted at NewsBusters.org.

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2 Comments

  1. While I expect our “leaders” in the senate to ignore the will of the people, it is important to keep the phones ringing off the hook. Today I called the office of every senator up for election in 2010. None would say how their boss would vote but most admitted they were getting lots of calls against this crook. This appointment is analogous to putting O.J. Simpson in charge of a battered woman’s shelter. There are 300 million Americans I have to believe we can find one who has paid their taxes honestly to head up the Treasury Department.

    Comment by Largebill — January 21, 2009 @ 6:25 pm

  2. Plain and simple this man just does not make the cut. I am truly hoping that Obama will retrack his initial choice. There is a big different between not filing correct papers and meeting a tax liability; for several years, I might add. This just flies in the faces of corporate America’s payroll tax payers who pay on time. Let’s look at President Obama’s second choice. President Obama all ready strikes me as not only having a choice B, but perhaps a choice C,D……..we can do better, “Yes we can!”

    Comment by Mary — January 21, 2009 @ 10:50 pm

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