Treasury secretary nominee Timothy Geithner on Wednesday said he made "careless mistakes" when he did not pay all of his taxes while working at the International Monetary Fund and apologized to senators for adding to their burden when the economy is in the midst of a severe recession.
"These were careless mistakes," Geithner told members of the Senate Finance Committee during his nearly four-hour confirmation hearing. "They were avoidable mistakes, but they were unintentional. I should have been more careful. I take full responsibility."
Geithner, now the president of the Federal Reserve Bank of New York, has been under fire since it was revealed last week that he did not pay his taxes in full while at the IMF from 2001 to 2004. International organizations such as the IMF are exempted from Social Security taxes, so U.S. citizens who work there are supposed to pay them as if they are self-employed. Geithner did not.
Geithner, who as Treasury secretary would be in charge of the IRS, paid back taxes for 2003 and 2004 after an IRS audit in 2006. Geithner paid further back taxes and interest after similar problems for his 2001 and 2002 returns were discovered during vetting by the Obama team.
In total, Geithner paid $34,023 in back taxes and $8,679 in interest.
In the hearing, Geithner said he should have caught the error on several occasions and noted that in hindsight, the documents he signed while an employee at the IMF were very clear in telling workers how to file their taxes.
A number of senators, including both Republicans and Democrats, appeared to accept his assertion that he made an innocent error. He is expected to be confirmed by the Senate. The Finance Committee is expected to vote Thursday.
"You come to this committee with a great reputation for integrity," Sen. John Kerry, D-Mass., said. "And I accept completely the explanation you have given us with respect to the mistakes on your tax returns."
But others, including Sens. Jon Kyl, R-Ariz., and Jim Bunning, R-Ky., said they could not understand how Geithner could make such an error and questioned why he didn't realize he owed money for the entire time he was at the IMF when the IRS audit originally uncovered the problem. Bunning displayed a blown-up copy of a form Geithner signed while at the IMF that outlined his tax obligations.
"When you found out what you had done wrong, it is incomprehensible to me that you did not immediately realize that you had done it wrong for the entire time that you had been at the IMF," said Kyl, who accused Geithner of "dancing around" his questions on the issue.
"I took the audit very seriously," Geithner responded, noting he should have asked more questions at the time of the audit. "I hired an accountant to go back and help me figure out what I'd done wrong and how to correct it. I paid what the IRS said I owed."
Several lawmakers, including Sen. Pat Roberts, R-Kan., said the tax issue made their constituents angry about President Obama's pick for Treasury secretary.
"After that was reported, my phone lines lit up," Roberts said, while noting he did not think the issue was enough to stop Geithner's confirmation. "And I'll leave it there, except to say that if you did not pay these taxes simply because it was a matter of oversight and confusion, Mr. Chairman, we have a wonderful example I think and the best case yet for undertaking reform to make the tax code simpler for all taxpayers."