Tuesday, January 13, 2009

Obama Treasury Nominee Failed To Pay Taxes; Employed Illegal Alien

The man President-elect Barack Obama has nominated to run the Treasury Department failed to report and pay taxes on self-employed income he earned for three years while working for the International Monetary Fund and once employed an illegal alien as a domestic worker. The AP reports:

President-elect Barack Obama's choice to run the Treasury Department and lead the economic rescue effort disclosed to senators Tuesday that he failed to pay $34,000 in taxes from 2001 to 2004, a last-minute complication in an otherwise smooth path to confirmation.

Timothy Geithner paid most of the past-due taxes days before Obama announced his nomination in November, an Obama transition official said. The unpaid taxes were discovered by Obama's transition team while investigating Geithner's background, the official said . . .

Geithner failed to pay self-employment taxes for money he earned while working for the International Monetary Fund from 2001 to 2003, the transition official said. In 2006, the IRS notified him that he owed $14,847 in self-employment taxes and $2,383 in penalties from 2003 and 2004.

Transition officials discovered last fall that Geithner also had not paid the taxes in 2001 or 2002. He paid $25,970 in taxes and interest for those years several days before Obama announced his nomination, the transition official said.

Geithner also 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 transition official said.


Obama's spokesperson described these missteps by Geithner as "honest mistakes." Excuse me, if you don't report and pay taxes on income you earn for three years running, you are either a tax cheat or stupid, assuming you weren't financially broke. For ordinary taxpayers, the consequences of such "honest mistakes" can be dire: "DO NOT PASS GO, GO DIRECTLY TO JAIL!". We're suppose to have confidence in this guy running the Treasury Department when America's confidence in its financial system has reached an all-time low? Where's the outrage? Why isn't the media demanding the immediate withdrawal of this nomination? You can bet the reaction would have been entirely different if he had been nominated by a Republican president. What a joke.

UPDATE: The Senate Finance Committee members have known about Geithner's tax problem since December 5 according to Politico. Geithner didn't even bother to pay most of the back taxes until after Obama decided to nominate him. And Republican Sen. Orrin Hatch says he's still backing the nominee. This country is doomed. We don't even have a loyal opposition in D.C. any more.

UPDATE II: The Obama-loving Huffington Post is dismissing Geithner's failure to pay taxes as a "common error" made by self-employed persons:

"When one is self-employed you do owe self-employment taxes which are essentially the employee and employer portion of your taxes," said George Yin, a tax professor at the University of Virginia Law School and formerly Chief of Staff of the U.S. Congress's Joint Committee on Taxation. "If that is what they are referring to than yes, there are some people who serve as consultants and don't necessarily understand their obligations to pay self employed taxes. My guess is that it is not an infrequent error."

As a self-employed business owner, it's an obligation I've always understood, but I've never been president of the Federal Reserve Bank of New York or held high level jobs at the International Monetary Fund and the Treasury Department like Geithner so what do I know. Does anybody care that the Secretary of the Treasury is over the IRS?

15 comments:

IndyPaul said...

The HuffPost article also notes:

"Moreover, the mistake he made is common enough that in February 2007, the IRS offered current and former U.S.-based employees of foreign embassies, missions and other international groups a "one-time settlement initiative" to essentially resolve mistakes like the one Geithner made."

He was employed by the IMF, not self employed. Because the IMF had employees from multiple countries, their tax policy was to add the tax liability due to the individual country to an employee's check. When it came to the Social Security and Medicare taxes, they added the employee's share but not the employer's. Or the employer's but not the employee's since the two are the same. The arrangement where American Employees are called upon to pay half of the taxes for their pension and retirement medical care, are unusual in international terms and the notations of that on the check were apparently obscure enough that the IRS agreed that even tax preparers were justified in missing it.

Advance Indiana said...

Look, Paul, IMF employees get to skate on paying federal income taxes while they're working for the IMF. They are instructed that they still have to pay the payroll taxes as if they are self-employed. This guy has known for at least two years he had a tax problem. He didn't bother paying off the back taxes until he was nominated. He was either trying to cheat the government out of the taxes or he was just plain stupid. It's one set of rules for ordinary taxpayers and another set of rules for the elites. You should be ashamed for making excuses for this pompous, Ivy League know-it-all.

Advance Indiana said...

If you're talking about the way in which the Bush administration carried out the war on terror (i.e., Gitmo, interrogation methods, etc), I refer you to Jack Bauer's answer to the smug senator on "24". I think that just about sums it up. Check back with me after the first terror attack that happens on Obama's watch because he dismantles our ability to capture, detain and interrogate those waging a war of terror against us.

IndyPaul said...

This "pompous Ivy League know it all" may just be our best shot of digging us out of the colossal hole the Republicans have put us in. And you think he shouldn't get the job because his tax preparers misread some obscure notations that the IRS has largely excused due to their obscurity? Yet (in a comment I believe is misplaced), you excuse the extraconstitutional methods of the Bush Administration based upon a Hollywood program?? Who should be ashamed for making excuses??

Advance Indiana said...

Don't try to blame his tax preparers. He knew he owed the taxes and he tried to get by without paying for them. If he had never taken a federal job, he probably would have never paid them. The "24" example is spot on. I do not believe enemy combatants are entitled to the constitutional protections afforded to criminal defendants in this country. If you think you can wage war against enemies subject to those restrictions, then we may as well concede victory to the terrorists.

artfuggins said...

Why are we using fictional references to try and make a mountain out of a molehill on this issue? Fictional entertainment shows should not be used to justify or used as examples of behavior.

Advance Indiana said...

According to an IRS agent who e-mailed FOX this morning, all new audit agents hired by the IRS are subject to a 3-year audit of their tax returns. If something appeared anything remotely to Geithner's situation, the agent would automatically be terminated. As you see, a different set of rules for the guy at the top of the food chain than those beneath him.

IndyPaul said...

Your belief regarding Guantanamo detainees is counter to that expressed by the US Supreme Court on at least two occasions. In other words, Bush compromised our Constitution in devising his sceme for detainees, which the Court struck as unconstitutional, then devised another scheme, which the Court also struck. I'd say if we compromise our values and system, the terrorists have already won.

If Geither were subject to the three year audit you mentioned, nothing of interest would be revealed. The unpaid taxes relate to 2002-3.

Advance Indiana said...

He would never have been hired to begin with because of the results of the 2006 audit, not to mention the unpaid back taxes, which he decided to pay only after Obama nominated him.

IndyPaul said...

This DailyKos post lists "Repeated References to a Fictional TV Character as a Role Model and Source for Torture Policy" as its Exhibit B to "Distraught Conservatives Retreating into Realm of Fantasy." http://www.dailykos.com/storyonly/2009/1/14/2215/69079/594/683841

IndyPaul said...

Add Lindsey Graham to the list of Geither's supporters:

“Now’s not the time to think in small political terms,” Mr. Graham said. “I think he’s the right guy.”

AI said: "If he had never taken a federal job, he probably would have never paid them."

Ummm, he was President of the FEDERAL Reserve Bank of New York.

Advance Indiana said...

In case you haven't figured it out, Paul, the Federal Reserve operates as an independent source of authority pretty much doing what it pleases. If Geithner had applied for a job with the IRS, he would have been turned down because of the past tax problem under IRS employment guidelines for IRS examiners.

IndyPaul said...

So he wouldn't have paid the taxes if he hadn't taken a federal job, but since he's been in a very prominent federal job for 5 years, the independence of the job makes it different?

So the IRS excused the error wholesale because of its obscurity, but requires an 3 year audit for new auditors, but Geither wouldn't get the job because of a six year old error which was excused wholesale by the IRS itself?

So Guantanamo is constitutional because you say it is despite TWO Supreme Court decisions to the contrary?

How about we leave the interpretation of the tax code to the IRS, and interpretation of the Constitution to the Supreme Court? You can continue to think in small political terms.

Advance Indiana said...

No, this is just the beginning of you liberals rewriting all the rules of determining right v. wrong now that your man is in charge. Everything that was wrong when done by someone in the Bush administration is now right because The One decreed it. Curious that you aren't the least bit bothered that John Brennan, an old CIA hand who has embraced all of those notions of combatting terrorism you find so objectionable, as his national security advisor.

Advance Indiana said...

Let me make this point once and for all on this matter. Geithner received reimbursement in each of those 3 years for the payroll taxes he was suppose to report and pay to the federal government. Yeah, that's right. I pay both the employer and employee's share of payroll taxes as a self-employed business owner. Geithner got all of that money given to him and then didn't bother to report and pay it. And he still hadn't paid the money to the government he had received many years after the fact, even after being audited. It is as outrageous as it appears in every sense. Yes, a tax cheat is now in charge of the IRS. If he were a Republican and this was a Republican president, his nomination would have been dead on arrival.