Tags: timothy | geithner | taxes

Geithner Sends a Message on Paying Taxes

Thursday, 22 Jan 2009 12:20 PM

By Ronald Kessler

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Timothy Geithner’s expected confirmation as Treasury secretary sends a message to all taxpayers: It’s OK to cheat.

The idea that the financial whiz’s failure to pay $42,702 in Social Security and Medicare taxes from 2001 to 2004 was a “careless” mistake, as he claimed, is laughable.

As an American citizen working for the International Monetary Fund, Geithner was technically considered a self-employed contractor and therefore was required to pay Social Security and Medicare taxes for himself. The IMF repeatedly reminded Geithner that it does not deduct such taxes and that it is up to employees to declare them.

Just to be sure, I checked with a friend who worked with Geithner at the IMF.

“Upon being hired, we were all briefed on how taxes are to be handled, and we received payroll statements once a year listing the taxes that must be paid directly,” she said.

Asked how he prepared his taxes, Geithner told senators at his confirmation hearing on Wednesday, “I used TurboTax to prepare my returns.”

“Did the software prompt you to pay those taxes?” Sen. Charles Grassley, R-Iowa, asked. “Not to my recollection,” Geithner said.

But TurboTax would not prompt a filer to list the additional taxes paid. Such taxes are to be entered manually. Moreover, after a 2006 IRS audit found that he owed back taxes for 2003 and 2004, Geithner did not correct his returns for 2001 and 2002. Only after Barack Obama’s vetters asked him about those back taxes did he pay them.

“The IMF clearly explained the payroll tax obligations,” Sen. Jim Bunning, R-Ky., said. “Geithner’s failure to pay all of his taxes until he was to be nominated is hard to explain to my constituents who pay taxes on a regular basis.”

But Senate Finance Committee Chairman Max Baucus, D-Mont., said that while he thought that Geithner, who will be in charge of the Internal Revenue Service, had made “disappointing mistakes,” he needed to be confirmed so he could get to work on solving the country’s financial crisis.

There you have it from the senator in charge of overseeing the IRS: If the IRS catches you making up phony deductions or failing to include income on your returns, just chalk it up to a disappointing mistake.

Ronald Kessler is chief Washington correspondent of Newsmax.com. View his previous reports and get his dispatches sent to you free via
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