The Senate Finance Committee, which will oversee the confirmation hearings of Treasury Secretary designee Tim Geithner, has been meeting today to discuss some tax issues lurking in the past of the former New York Federal Reserve Bank president.
In a statement from incoming White House press secretary Robert Gibbs, a statement of support and an acknowledgment of mistakes:
"The president-elect chose Tim Geithner to be his Treasury Secretary because he’s the right person to help lead our economic recovery during these challenging times," Gibbs said. "He’s dedicated his career to our country and served with honor, intelligence and distinction. That service should not be tarnished by honest mistakes, which, upon learning of them, he quickly addressed. He made a common mistake on his taxes, and was unaware that his part-time housekeeper’s work authorization expired for the last three months of her employment. We hope that the Senate will confirm him with strong bipartisan support so that he can begin the important work of the country."
The basic issue seems to be that when Geithner worked at the International Monetary Fund from 2001 to 2003, he filed his taxes improperly, and he also for a time employed someone who didn’t have legal immigration status.
The tax issue, as I understand it, is that IMF employees receive W-2s as employees and are treated as if they were self-employed, so they do not have federal and state taxes withheld from their paychecks. As part of Geithner’s vetting, the Obama Transition Team discovered that he had not paid self-employment taxes in 2001 and 2002.
On Nov. 21, 2008, Geithner paid $25,970 in these overdue taxes plus interest — $2,364 and interest of $956 for 2001 and $16,812 and interest of $5838 for 2002 (Geithner had been notified in 2006 by the IRS that he owed self-employment taxes and interest for 2003 and 2004, after which he paid tax and interest totaling $17,230).
Which begs the question: If the IRS notified Geithner in 2006 that he owed self-employment taxes for his time at the IMF in 2003 and 2004, why did he not realize that those taxes should have applied to him in 2001 and 2002 as well?
There is another — what seems to me to be a lesser — issue with a housekeeper that the Geithners employed to clean their home from 2004-2005. She had a current Employee Authorization Document at the time she was hired, but three months before she stopped working for the family that authorization expired.
More to come as this all develops.