This is starting to look like either total carelessness or willful evasion.
Either way - not good
Questions and answers in Geithner's tax problems
By STEPHEN OHLEMACHER – 1 hour ago
WASHINGTON (AP) — President-elect Barack Obama's choice to run the Treasury Department hit a snag this week when it was revealed that the nominee failed to pay delinquent federal taxes from earlier this decade until just before his nomination was announced.
It was also revealed that the nominee, Timothy Geithner, had employed an immigrant to provide household help whose work papers expired while she was still working for him.
Geithner failed to pay a total of $34,023 in taxes from 2001 to 2004. He paid some of it in 2006 after he was audited by the Internal Revenue Service, which he would oversee as Treasury secretary. He paid the rest after Obama expressed his intent to nominate him. Geithner also paid a total of $8,679 in interest.
Here are some questions and answers about Geithner's tax troubles:
Q: How did Geithner fail to pay more than $30,000 in federal taxes?
A: Geithner worked for the International Monetary Fund from 2001 to 2003. Under federal law, international organizations like the IMF are exempted from paying the employer share of Social Security taxes. Also, they don't withhold the worker's share from paychecks, like other employers do.
U.S. workers at such organizations are instead required to pay self-employment taxes. Geithner failed to pay self-employment taxes during his entire tenure at the IMF, according to the Senate Finance Committee's report.
Q: Was Geithner ever notified that he was required to pay self-employment taxes?
A: Yes. The IMF provides employees with several documents throughout the year to help them understand and meet their tax obligations. The documents included an employee tax manual, quarterly wage statements and year-end wage statements. Geithner acknowledged receiving all these documents.
Q: How did Geithner's delinquent taxes come to light?
A: In 2006, the IRS audited Geithner for the tax years 2003 and 2004, resulting in $16,732 in additional taxes and interest. The IRS waived penalties. Geithner left the IMF in 2003, but some of his compensation was not paid until 2004, so that year was affected, too.
Q: What about his delinquent taxes from 2001 and 2002?
A: Geithner amended his tax returns for 2001 and 2002 after Obama expressed his intent to nominate him to be Treasury secretary, according to the committee report. Geithner paid an additional $25,970 in taxes and interest for those years.
Q: Why didn't Geithner pay the delinquent taxes for 2001 and 2002 earlier, after learning that he made the same errors for 2003 and 2004?
A: The IRS only audited Geithner for the 2003 and 2004 tax years, so tax agents didn't know about the delinquent taxes for earlier years. Generally, the IRS has three years from the date returns are filed to assess any additional tax. Geithner can expect questions at his confirmation hearing about why he waited until he was about to be nominated until he paid the delinquent taxes for earlier years.
Q: Did Geithner hire an illegal worker at his home?
A: Geithner hired an immigrant to provide household help whose work eligibility expired while she was employed by Geithner. The worker had documents verifying her status as a legal worker, but they expired in July 2005 and she continued to work for Geithner until October of that year.
Q: Did Geithner know her eligibility expired?
A: Unclear. The committee report paints Geithner as a sloppy bookkeeper. He recorded the document number and expiration date from the employee's work papers in an address book. He did not keep copies of the documents and did not confirm whether the employee renewed her papers after they expired.
