U.S. Court Rejects ‘TurboTax’ Defense Relied on by Geithner
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By Cary O’Reilly
Aug. 26 (Bloomberg) -- A federal court rejected an attempt by two Ohio residents to use the so-called TurboTax defense that Timothy Geithner relied on to help win Senate confirmation as U.S. Treasury Secretary.
The U.S. Tax Court in Washington rejected an appeal of accuracy-based penalties assessed by the Internal Revenue Service on Kenneth and Linda Hopson, who claimed they relied on tax-return preparation software that failed to detect income they had omitted from their 2006 federal tax returns.
“Petitioners were not permitted to bury their heads in the sand and ignore their obligation to ensure that their tax return accurately reflected their income,” the court said in an opinion issued yesterday. “In the end, reliance on tax return preparation software does not excuse petitioners’ failure to review their 2006 tax return.”
Geithner, who now oversees the IRS, testified during his confirmation hearing in January that he prepared his own returns when he worked at the International Monetary Fund in 2001 and 2002, using TurboTax, an Intuit Inc. product. He said his failure to pay taxes owed on some income during those years was not flagged by the software.
He told the Senate Finance Committee he accepted responsibility for failing to pay almost $50,000 in taxes, saying his errors were “careless.” Geithner paid some of the money after being audited by the IRS and the rest shortly before he was nominated to the Treasury post.
A Treasury spokeswoman, Nayyera Haq, didn’t immediately return a telephone call seeking comment.
The case is Hopson v. Commissioner of Internal Revenue, 25584-08S, U.S. Tax Court (Washington).
To contact the reporter on this story: Cary O’Reilly in Washington at caryoreilly@bloomberg.net.
Last Updated: August 26, 2009 14:33 EDT
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