January 13, 2009

Treasury Nominee Geither’s Persistent Tax Problems Getting the Glossover Treatment; AP Coverage ‘Forgets’ at Least Chavez, Baird

Geithner0109.jpgTimothy Geithner, pictured at right in an AP photo, is Barack Obama’s nominee for Treasury Secretary.

Mr. Geithner will, among many other duties, oversee the Internal Revenue Service.

How odd, to say the least, that Mr. Geithner has had persistent tax filing and payment problems going back over 15 years involving self-employment taxes for both himself and his paid help, as well as with the employment of someone who for a time did not have proper legal status to remain in the country.

You would think that such things might place a cabinet nominee, especially to head Treasury, in jeopardy, and to cause the president who nominated him to have second thoughts. After all, in 2001, Linda Chavez’s nomination as Labor Secretary went down in flames over matters relating to an illegal immigrant whom Chavez had sheltered in her home a decade earlier. Also, in 1993, Zoe Baird withdrew as Bill Clinton’s nominee for Attorney General over the employment of illegal-immigrant domestic help and her failure to pay the related employment taxes on a timely basis.

But Geithner’s nomination is apparently getting the all clear, with pliant Republicans giving the okey-dokey, and press outlets like the Associated Press giving his problems the relatively no-big-deal treatment.

Here are some excerpts from tonight’s AP story by Brett J. Blackledge (stored here for future reference when there are subsequent updates; 5 AM Update: The link did indeed change; an alternate link that seems to match what AP had up at its own site at the time of this post’s appearance is here):

Geithner failed to pay self-employment taxes

WASHINGTON (AP) — President-elect Barack Obama’s choice to run the Treasury Department and lead the nation’s economic rescue failed to pay $34,000 in taxes from 2001 to 2004, but the last-minute disclosure didn’t stop Senate Democrats from moving forward with his nomination.

Timothy Geithner had paid some of the back taxes in 2006 after the IRS sent him a bill. When the Obama transition team discovered he owed even more back taxes, Geithner paid those additional taxes days before Obama announced his choice in November, according to materials released by the Senate Finance Committee considering his nomination.

….. Finance Committee Chairman Max Baucus, D-Mont., said he still hoped Geithner could be confirmed on Inauguration Day, asking senators for unanimous consent to skirt rules and schedule a hearing as early as Friday.

….. Utah Sen. Orrin Hatch, another committee member, said he continues to support the nominee.

….. After senators met with Geithner, the panel released 30 pages of documents detailing his tax errors – and also how he came to employ a housekeeper whose legal immigrant work status had briefly lapsed in 2005.

Senate Majority Leader Harry Reid, D-Nev., dismissed the events as “a few little hiccups,” and said he was “not concerned at all” about the impact.

….. Geithner also said he didn’t realize a housekeeper he paid in 2004 and 2005 did not have current employment documentation as an immigrant for the final three months she worked for him, the documents indicated.

One of his housekeepers’ legal authorization to work in the United States expired on July 15, 2005, and the person continued to work for Geithner until October of that year, the committee’s report states.

….. The committee’s materials said Geithner “has experience with Social Security tax issues.” He filed the taxes late for his household employees in 1996 for years 1993 to 1995; he incorrectly calculated Medicare taxes for his household employees in 1998 and received an IRS notice; and he received notices from the Social Security Administration and the IRS after not filing 2003 and 2004 forms for his household employees, the report states.

Would it be impolite to suggest that had Geithner not been nominated, the odds that he would have caught up on all of his tax obligations when he did are very, very low?

Giethner’s personal self-employment “mistakes” have to do with his obligation to pay Social Security taxes on his income when he worked at the International Monetary Fund. The IMF is exempt from paying the employer’s share, and apparently doesn’t withhold any amounts for Social Security on employees’ behalf. It’s easy to see how non-financial administrative employees might get tripped up here, but the idea that Giethner wasn’t aware of his obligations makes him either evasive, negligent, or incompetent. The same possible adjectives apply to the fact that he took as long as he did to catch up on his assessments. These are usually not qualities one looks for in a Treasury Secretary.

While the problem with the legal status of his housekeeper might seem minor, it should not be forgotten and Chavez and Baird withdrew their nominations in somewhat related circumstances. The AP’s Blackledge should have at least noted the past problems of other nominees and their results.

So why does Geithner deserve a Senatorial and journalistic pass, let alone an assumed instant, rule-skirting nomination on Inauguration Day? No one has even begun to explore the issue of how aware he should have been of some of the serious troubles at the Wall Street money center banks that just so happen to be headquartered in the Fed district he has overseen, and what he could have or should have done to prevent some of the implosions that occured there.

Cross-posted at NewsBusters.org.

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14 Comments

  1. If everyone who had nanny tax problems were disqualified from public office we probably would have a lot fewer US and State legislators, not to mention state legislators. The same for executive officials on the state and federal level and last, but not least, memories of the judiciary. More troublesome is the failure to pay into the biggest Ponzi Scheme there is…Social Security. Geither does not deserve a “pass” as you put it. he deserves what he got, a public spanking.

    Comment by Kurt J. Wolff — January 19, 2009 @ 12:41 pm

  2. Tim Geither should not be made the Treasury Secretary.

    Comment by ann — January 20, 2009 @ 1:32 pm

  3. With regard to nominating Timothy Geither as Treasury Secretary – I find this offensive and a slap in the face to all hard working tax paying Americans. This man cannot honestly control his personal finances, yet the President is putting him in charge of the entire Coutry’s finances? This cannot happen – not with our money. I object to the nomination and find it incredible that it has even occurred. You say you represent the people – the people do not want someone who evades his own personal taxes dumped on them. Kindly rethink this decision and understand we are insisting this nomination not proceed. Clean your own house before you decide to clean the country’s, Mr. Geither. 30 Grand is not an honest mistake – you got caught, you got away with it, and you are being rewarded for it.

    Comment by Rosie — January 22, 2009 @ 10:36 am

  4. http://messageboards.aol.com/aol/en_us/articles.php?boardId=543848&articleId=144509&func=6&channel=People+Connection&filterRead=false&filterHidden=true&filterUnhidden=false

    Comment by Rosie — January 22, 2009 @ 9:07 pm

  5. [...] Geither, is a free tading, right winger who can’t seen to pay his taxes. This is the guy we want setting the country’s economic vision and running the IRS. Both Bush’s and Clinton’s nominations were pulled for this exact same reason. For some reason this Geither character gets the easy treatment. [...]

    Pingback by Geither the Gullible « The Proletariat — January 24, 2009 @ 8:38 am

  6. Geither was under no legal obligation to pay the missed taxes from 2001 and 2002- the statute had expired. He could have refused to pay them when the vetters found out about 2001 and 2002 years- but Obama would not have nominated him unless he made a VOLUNTARY payment of those taxes. Geither in reality is being held to a higher standard if he wanted the treasury job.

    Comment by Ray — January 25, 2009 @ 12:43 am

  7. #6, spinning like a top.

    The point is that he never would have paid them if he had not been nominated, and as explained frequently in subsequent posts, the statute of limitations shouldn’t have applied, because it doesn’t “in the case of a false or fraudulent return with intent to evade any tax.”

    (Added at 9:45 — Intent is assumed because he was informed by his employer that he had to pay taxes, and received some or all of the money to enable him to do so.)

    Geithner filed false returns, and IMO based on the 9:45 add “intended” to do so as legally defined, and for reasons most succinctly laid out here (Items 8 and 7) and here.

    Comment by TBlumer — January 25, 2009 @ 8:59 am

  8. This aPPOINTMENT IS UNBELIEVABLE. WHY IS THIS HAPPENING TO THIS COUNTRY, WHERE CROOKED POLITICIANS ARE PUT IN JOBS SO CRUCIAL AT THIS TIME. PLEASE DON’T DO THIS.,

    Comment by ed&marilyn — January 25, 2009 @ 12:38 pm

  9. He should withdraw his name.

    Comment by Linda — January 25, 2009 @ 12:52 pm

  10. #7 TBlumer

    I agree with your first point- Geithner would not have paid the taxes from 2001 and 2002 unless nominated. As stated- he was under no legal obligation because of the statute of limitations that applies to all citizens. If Geithner WANTED the position, he was told, he must make a VOLUNTARY payment.

    The weak part of your agrument is “intent to evade”. If filed correctly the tax for each year would have been about $5000- the $34000 paid included interest etc.. The Geithner “audit” was a computer generated letter that the IRS sends out by the millions when the IRS information on record from payers ( like banks, brokers, employers, etc) conflicts with the taxpayers return. Geithner got a letter “audit” no different than a person who failed to include bank interest received or missed including a taxable IRA distribution on the 1040 filing. In Geithners situation over 50% of taxpayers miss it or calulate incorrectly. I suspect his overall income was rather “high” for those years- but it is POSSIBLE that he “knowingly” plotted to “save” himself 4 0r 5 thousand a year by deliberately “missing” the self-employment tax caluation. It is POSSIBLE that he “knowingly” thought the IRS reporting systems that cross matches information from payers and payee’s would never catch the most basic of omission type errors that the IRS flags by the millions. It is POSSIBLE- but only if you live with a certain degree of worry or might I say “conspiracy” in your beliefs.

    Comment by Ray — January 25, 2009 @ 2:37 pm

  11. #10 evasion is the STRONGEST part of the argument.

    What about “Intent is assumed because he was informed by his employer that he had to pay taxes, promised in writing that he would, and then didn’t” don’t you understand?

    That 50% is a false excuse, as Byron York demonstrated in one of his columns:

    But that figure appears to be a significant exaggeration of the specific situation at the International Monetary Fund, where Geithner worked. “There’s not a high incidence of non-payment of taxes,” Bill Murray, an IMF spokesman, told me Thursday. “We have a very low incidence of that here.”

    There is also reason to believe he was at some point desperate for money, as he took a retirement plan hardship withdrawal, a really dumb move, and “forgot” to pay the penalty until notified.

    Your claim that his payment of prior years when the Cabinet opportunity became available was somehow honorable would be funny if it weren’t so sad. I guess if a bank robber returns the money he’s entitled to run the bank.

    Comment by TBlumer — January 25, 2009 @ 9:48 pm

  12. #11 TB

    Silly… silly.. “Intent is assumed”. If that was true tens of thousands of citizens would be prosecuted. IRS records match payee and payor tax information and flag the obvious errors like Geithner’s. Tens of thousands of citizens miss all kinds of income items despite, being advised that they are taxable items. The IRS sends out letters by the 100s of thousands- its routine. If the “intent” was fraud it would not be on a basic error like this or for the small amount involved. In fact the IRS waived some penalities for Geithner and thousands of others on these types of errors.

    I read the York article. I agree the 50% figure includes all types of situations. So what. That does not prove anything. The IMF information referred is not quite accurate. The IRS nevers tells any employer about any citizens tax filing. If every U.S. citizen who had IMF income and failed to pay SE tax upon filing Form 1040, the compliance rate (obviously) would be zero. The IMF would not know that. The “tax debt” the IMF person sighted would have been a wage levy- garnishment for unpaid taxes. The levy does not say what specific situation caused the liability. The levy only goes out to the employer on record. The action that caused it could be totally unrelated to IMF income- for example missed bank interest. The levy only goes out as a “last” resort if taxpayers dont resolve the issue thru other means- at least a year.

    Comment by Ray — January 27, 2009 @ 11:56 am

  13. #12, horse manure.

    Every quarter, he was advised of the need to pay “self-employment” taxes.

    Every year, he was “reimbursed” for taxes, but he didn’t pay them (though “somehow” he did pay regular fed and state income tax).

    Every year, he attested under penalty of perjury that he intended to pay the tax. Every year he didn’t.

    15 years earlier and several times thereafter, he had nanny tax problems involving Social Security and Medicare tax issues, and supposedly learned nothing.

    Like I said, horse manure.

    I believe “thousands of citizens are prosecuted,” perhaps even every year, when the IRS concludes that the statute of limitations shouldn’t apply.

    Comment by TBlumer — January 27, 2009 @ 12:08 pm

  14. I too find this very unsettling. I am currently required to make payment to settle our 2007 tax bill. Why should any upstanding US citizen pay taxes when our supposed “Leaders” are let off the hook. They’d have us in deep doo doo if I even thought about missing one payment.

    Comment by EEngelke — February 5, 2009 @ 10:39 am

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