President Obama has nominated Tim Geithner to be secretary of the treasury. He used to work at the World Bank. He failed to pay his portion of Social Security tax for a number of years. When he was nominated to SecTrea, he paid the back taxes and penalties (but not for those taxes owned before the statue of limitations.)
OK, so now what?
In today’s Washington Post is a letter (second one down on the page):
from another World Bank employee who says not only does the WB provide W-2s to people like Geithner, it also pays them a bonus to cover their SS taxes. When you collect the money you sign a thingee saying you know you have to send the money along to the IRS.
He signed the receipt and kept the money. Then he told us he did not know he owed the money.
Supposedly something like half the people working at the World Bank at the same time made the same mistake. Its possible they’re all corrupt, but I think it more likely that the mistake was an easy one to make, even for people working in the field of finance.
The letter is written in the present tense, which makes me think that it’s addressing the current situation at the Bank. My understanding is that once it became evident that a large number of employees were making the same mistake, the rules for filing were changed for people in the same situation.
Googling Geitner-tax just pulls up a bunch of blogs though, so I can’t find the article I read this is. I’ll see if I can dig up a cite after work when I have some more time.
I don’t actually see any documented proof that Geithner got bonuses or signed any receipts, just a letter from somebody making claims about what he thinks is the case for certain kinds of employees, but without any specific knowledge of Geithner. It looks to me like the guy’s just talking out of his ass.
What makes this so utterly ridiculous is the scope of what it suggests. It would be like people fretting over me coming out four dollars to the good in some obscure transaction that took place years ago. The amount — somewhere around 35 grand — is barely noticeable in Geithner’s income statement. Its columns are probably headed “in thousands of dollars”, and has figures like 17,223 and 35. You’d think that if he wanted to screw the IRS, he’d do it for more than his monthly mortgage payment on his summer house. But not only that, the IRS assessed NO PENALTIES, meaning specifically that they found NO WRONG DOING. Something very similar to this happened to me, even though I thought I’d been scrupulous with taxes because of my healthy fear of nanny government. When the IRS determined that I owed, it assessed interest but no penalties, and I paid them. Much lower amounts, but in essence same same as Geithner.
I’m willing to believe that his failure to pay the tax was merely negligent, and not deliberate. But to not go back and pay the same tax for the prior years at that time, and then to go back and pay it after being nominated, seems like the worst possible combination. Either invoke the statute of limitation or pay the amount voluntarily, but to change direction only after coming under public scrutiny just accentuates the appearance of evasion.
With my French it is so hard to tell. I may have meant “Part Durex,” at this point there is just no way to be sure.
It seems to me that the letter was written by a World Bank employee who ought to know. Further you have to figure there are several thousand other people in the same sort of employment situation as the secretary-designate. Are the charges made by the letter true? I think most likely yes, elsewise there will be a basket of letters from other WB people in tomorrow’s paper.
Exactly. And Geithner also relied upon the advice of an expert preparer.
Tom Tildrum- he didn’t pay anything after the SOL, he made a voluntary contribution. You can’t pay any taxes after the SOL. The IRS can’t assess them, and thus any “payment” would be considered an overpayment and refunded.
A guy we’re investigating failed to declare his workers’ compensation benefits as income on his tax return last year, despite using a CPA. It’s going to cost him several hundred thousand dollars when he settles.
Geithner is an ordinary tax cheat who deliberately cheated, deliberately refused to pay back taxes when his cheating was discovered because the statute of limitations made back payment unenforceable, and refused in front of the senate to answer a direct question about why he had so behaved.
He is the worst–the absolute worst–type of personality to lead. It is precisely this personality (the law does not apply to me, and I will do whatever I can get by with even if what I get by with is cheating) that is responsible for the economic crisis.
I am surprised Mr Obama did not rescind his nomination.
I am a taxpayer. He stole from me. I do not want him in charge of the IRS.
The amount of his voluntary contribution was precisely the amount of his unpaid tax plus interest, yes? I don’t think the fact that Treasury put the money into one account as opposed to another changes the appearance of the matter.
What the fuck? What appearance are you talking about? The appearance of paying as little tax as you are forced to pay? What the hell do YOU do, like send in an extra grand or two?
On the whole, given the Byzantine nature of the American tax system, and the bulldog-like attitude of the IRS to even honest mistakes, i’m generally willing to give people a break if they make honest mistakes on their taxes. And if that bulldog-like IRS actually admits, as they did in this case, that the person has made an honest mistake, and decides not to add penalties to the back-taxes owed, i really think we should cut the person some slack.
But…
I really don’t see why this is relevant. If the failure to pay was an honest mistake, then let him off the hook; if the failure to pay was the result of deliberate intent, then punish him. But the fact that he makes a lot of money, and that the discrepant amount is a relatively small portion of his income, should not be any sort of excuse if his intent was indeed to deceive, and to keep money that he knew was owed.
Are you saying he made $17 million during the years with the IMF when the tax issues occurred? I’m not doubting that this is possible, but i haven’t actually seen an account of his income.
Again, i don’t know why this is relevant. Surely the argument “He so rich i can’t believe he’d steal such a small amount” is not, or should not be, a valid defense if someone is caught with his hand in the till.
This is the stuff that is relevant—the question of whether his payment shortfall was intentional, or an accidental result of a complicated system. I happen to believe that this was, in fact, the case, both for him and for you. What his income is, and what your income was, are irrelevant to me.
Yeah, i think there’s some merit to this. I actually would have had more respect for him if he said “I’ve paid back everything the IRS has a legal right to claim; some of what i failed to pay has now fallen outside the statute of limitations, and therefore i did not pay it back.”
Statutes of limitations are there for a reason. If the IRS didn’t work out his shortfall before the time limit, it’s out of luck.
I don’t think Lib was suggesting that this is a defense. I think he’s suggesting that this tends to support the notion that it was an inadvertent oversight, rather than a deliberate attempt to get away with an untaxed windfall.
I have the sense that the amount that was not covered by the SoL is the only part that had initially been brought to his attention – by an IRS that wanted a payment before any more of it slipped out of their reach. I’m not really clear on who brought the SoL’d part to light.