Timothy Geithner, President-elect Obama's nominee for Treasury secretary, failed to pay tens of thousands of dollars on his tax returns, according to the transition team. He also employed a housekeeper whose legal immigration status lapsed while working for him.
Treasury Nominee's Tax Returns Scrutinized
Timothy Geithner, President-elect Obama's pick for Treasury secretary, watches as Obama speaks after a meeting with members of his economic team last week.
Mandel Ngan / AFP/Getty Images
Timothy Geithner, President-elect Obama's nominee for Treasury secretary, failed to pay tens of thousands of dollars on his tax returns and employed a housekeeper whose legal immigration status lapsed while working for him. That's according to the Obama transition team and documents released Tuesday by the Senate Finance Committee, which is vetting Geithner's nomination.
Geithner admitted to making a mistake in his personal tax returns from 2001 to 2003. He learned of the error on his returns back in November, when he was being vetted for possible nomination to the Obama Cabinet. The mistake resulted in a $34,000 shortfall in his taxes.
The Obama transition office says the delinquent taxes have been paid. Obama spokesman Robert Gibbs describes it as a common mistake on a tax form.
Despite the glitch, Gibbs said that Geithner is the right person to help lead the economic recovery during challenging times.
"He's dedicated his career to our country and served with honor, intelligence and distinction," Gibbs said in a statement. "That service should not be tarnished by honest mistakes, which, upon learning of them, he quickly addressed."
The taxes in question related to Geithner's employment with the International Monetary Fund from 2001-2003. The IMF doesn't withhold money for U.S. taxes, but it adds the approximate amount to the employee's pay, and then the employee has to forward tax payments on to the IRS, according to the papers released by the Senate.
During his time with the IMF, Geithner was required to pay both Social Security and Medicare taxes for himself as both employer and employee. It appears that Geithner forwarded some tax payments but not others. For instance, he owed Social Security tax to the U.S. government. He did forward the employee portion to the IRS, but did not send the portion normally paid by the employer, which he was also supposed to do.
The IRS had previously examined Geithner' taxes for 2003 and 2004, according to the documents, and he had agreed to pay additional amounts, but the IRS waived penalties. The records show some other adjustments and amended returns filed by Geithner for other years, too.
Geithner is currently president of the Federal Reserve Bank of New York.
Separately, Geithner employed a part-time housekeeper whose immigration papers expired in the last three months she worked for him. She later received a green card restoring her legal status. Geithner apparently paid all the required employment taxes.
It's unclear how the problems with his tax returns will affect Geithner's chances for confirmation. Senate Finance Committee Chairman Max Baucus, a Montana Democrat, and ranking Republican Charles Grassley of Iowa issued a joint statement Tuesday saying the panel would continue to investigate the matter. But given that the economy is in the tank and that Geithner — considered a financial whiz by many — has an otherwise sterling reputation, the revelations may not be significant enough to derail his prospects of becoming the next Treasury secretary.
Still, a new date has not been set for Geithner's confirmation hearing, which had been scheduled for Thursday but was postponed.
With reporting by Don Gonyea, Maria Godoy and John Ydstie.