'A few little hiccups' for Treasury nominee
Geithner said he had mistakenly failed to pay some taxes. Obama reaffirmed support.
WASHINGTON - President-elect Barack Obama's choice to run the Treasury Department disclosed publicly yesterday that he had failed to pay tens of thousands of dollars in taxes from 2001 to 2004 - a last-minute complication that Senate Democrats tried to brush aside as a minor bump on an otherwise smooth path to confirmation.
Timothy Geithner paid most of the past-due taxes days before Obama announced his choice Nov. 24, according to materials released by the Senate Finance Committee. He had paid the rest of the taxes in 2006, after the IRS sent him a bill.
The still-unpaid taxes were discovered by Obama's transition team while investigating Geithner's background. Obama's staff told senators about the tax issues Dec. 5.
Finance Committee Chairman Max Baucus (D., Mont.) said he still hoped Geithner could be confirmed on Inauguration Day.
"These errors were not intentional; they were honest mistakes," Baucus said after he and other committee members met with Geithner behind closed doors yesterday.
Baucus and the panel's ranking Republican, Charles E. Grassley of Iowa, said they would announce a date for a confirmation hearing soon.
One Republican committee member, Utah Sen. Orrin G. Hatch, said he was satisfied with Geithner's answers. "I support him," Hatch said. Other Senate Republicans were noncommittal.
After senators met with Geithner, the panel released 30 pages of documents detailing his tax errors - and how he came to employ a housekeeper whose legal immigrant work status briefly lapsed in 2005.
Senate Majority Leader Harry Reid (D., Nev.) dismissed the events as "a few little hiccups."
Obama reiterated his support. Geithner has "dedicated his career to our country and served with honor, intelligence and distinction," incoming White House spokesman Robert Gibbs said. "That service should not be tarnished by honest mistakes, which, upon learning of them, he quickly addressed."
Geithner, 47, who has been president of the Federal Reserve Bank of New York, told transition officials and senators that he did not know he owed self-employment taxes when he worked for the International Monetary Fund.
He failed to pay those taxes for money he earned working for the IMF from 2001 to 2003, according to materials released by the Senate committee. In 2006, the IRS notified him that he owed $14,847 in self-employment taxes and $2,383 in interest from 2003 and 2004, which he paid after an audit. The IRS waived penalties for those tax years.
Transition officials found last fall that Geithner also had not paid the taxes in 2001 or 2002. He paid $25,970 in back taxes and interest for those years several days before Obama announced his choice, the committee documents showed.
Geithner and his supporters have said his mistake was a common one for people hired by international organizations that do not pay the employer share of Social Security taxes. Geithner told Obama's team and senators that an accountant had reviewed his tax returns after Geithner prepared them and did not discover the problem.
But Tom Ochsenschlager, vice president of tax for the American Institute of Certified Public Accountants, said it would be difficult for someone preparing a tax return for a self-employed person to skip the Social Security and Medicare tax lines.
Geithner also said he did not realize a housekeeper he paid in 2004 and 2005 lacked current employment documentation as an immigrant for her final three months in his employ, the documents indicated. The committee's records do not show how or when senators learned about the expiration of her work status.