I have a new story on still more questions about Treasury Secretary-designate Timothy Geithner’s tax problems. You know the defense, heard from the Obama team, that Geithner’s failure to pay Social Security and Medicare taxes was a “common mistake”?
“There’s not a high incidence of non-payment of taxes,” Bill Murray, an IMF spokesman, told me Thursday. “We have a very low incidence of that here.” Murray took care to say that he was not commenting in any way on Geithner or the current controversy. But he pointed out that the IMF has an ethics office, which issues a yearly report on various transgressions among the organization’s 2,600 employees (about 25 percent of whom are Americans). The ethics office’s 2007 report contained a chart of those transgressions; tax problems were listed under the heading “Unpaid Debts.” In that column, there was exactly one example in 2007. “It’s not unprecedented that people have had problems paying their taxes, or not paying their taxes, but it’s not a widespread issue,” Murray told me.
And what about the Obama transition team’s suggestion that two accountants signed off on Geithner’s returns — and one of them told him he was exempt from self-employment taxes?
It turns out that is not the complete story. According to knowledgeable sources, Geithner, when he prepared his original 2001 return, reported that he would make a pension contribution. He later decided not to make that contribution and therefore needed to file an amended return. He approached an accountant for the specific purpose of changing the pension contribution entry and filing the amended return. It appears that Geithner gave the accountant the tax return, but no underlying documentation.
Senate staffers have talked to the accountant and have concluded that the accountant approached the task narrowly—he fixed the pension line and filed the amended return. It could be that Geithner thought the accountant gave the return more careful scrutiny overall, but it seems doubtful that the accountant gave Geithner’s return a clean bill of health, as the transition office implied.
The transition office also says another accountant prepared Geithner’s 2003 and 2004 returns—2003 was the last one in which Geithner actually worked for the IMF. The transition memo says that the second accountant “prepared Mr. Geithner’s 2003 and 2004 returns and advised him in writing that he was exempt [from] self-employment taxes on his IMF income.”
If that is the case, it is still true that Geithner filed his 2001 and 2002 returns—and collected reimbursement from the IMF for doing so—without paying self-employment taxes. And whatever the second accountant said, it appears that Geithner himself has not claimed to investigators that he believed he was exempt from paying the self-employment tax. If he had been assured by experts that he was exempt, then he might have been expected to make that argument, but he didn’t. Instead, it appears Geithner has told investigators that he wasn’t aware that he hadn’t made the payments, that it somehow slipped by him.