Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 38
Well, God bless Senator Kyl (R-AZ), who asked Geithner the question I wanted asked:

"The question is whether it occurred to you before you were nominated or approached to be nominated that, in point of fact, you didn't have to go beyond 2003 and '04 because of the statute of limitations," Kyl said.

Geithner said: "I did not believe I had the obligation to go back. . . . I had no occasion to think about it, and I might not have thought about it had I not gone through the vetting process."

http://www.washingtonpost.com/wp-dyn/content/article/2009/01...

Either he was flat-out lying or he lacks the intellectual curiousity to be fit for the job. Read the whole article and you'll also be treated to his explanation that he didn't closely review the return he prepared himself and the incredible FU hubris of saying that it really doesn't matter because of the economic crisis.

The man isn't fit for the job, and he's mistaken in thinking he's the only one who could do it.

Phil
Print the post Back To Top
No. of Recommendations: 0
What I found baffling is that someone in his circumstances (non-traditional employment/payroll issues) thought he could do his taxes using TurboTax. Even when my taxes were relatively simple (only itemizing deductions), I ditched TT and went with Tax Act Pro. And if our situation gets much more complex, I will consider deferring to a CPA.

-Steph
Print the post Back To Top
No. of Recommendations: 16
Help me a little here, Phil.

He was audited in 2006. The audit covered 2003 and 2004 - which sounds pretty typical based on my experience.

The statute of limitations on his 2001 return would run out in 2005. The statute on 2002 would run out in 2006. I'll assume he filed a timely return - possibly with an extension.

So at the time of the audit, the statute had run out on the 2001 return. And, depending on exactly when in 2006 the audit was done and whether his 2002 return was filed on extension, the statute might have run on 2002 as well.

Of course, that is the ordinary statute. Perhaps we could allege fraud or some other circumstance that gives the IRS a 7 year statute. That 2006 auditor certainly could have done so, and opened up his 2001 and 2002 returns for assessment and collection had he/she felt it reasonable to do so.

But the auditor didn't.

Could that be because the auditor felt it was really an ordinary mistake and not fraud? And that the IRS had plenty of information available to it on a timely basis to have asked about his 2001 and 2002 returns, but failed to do so?

Back to Mr. Geithner - how exactly did he pay those back taxes if the statute had run? Now we're looking at paying 2001 and 2002 taxes in 2008. I haven't heard anyone say that the IRS assessed these taxes and sent him a bill. And now we're well beyond the statute. I must assume that he fessed up to them and paid them. Did he have to also fess up to fraud so that the IRS could assess and collect the taxes? Did he make a contribution to the public debt in lieu of the proper taxes due for those years?

I'm still willing to assume the man is innocent until proven guilty.

But don't confuse that position with my thinking he's the right man for the job. He has been chair of a Fed bank (NY, was it?) during the biggest banking crisis of my lifetime. And he did nothing to improve the situation. I see him as part of the problem, not part of the solution. That alone disqualifies him for the job.

--Peter
Print the post Back To Top
No. of Recommendations: 6
Help me a little here, Phil.

On those rare occasions when I can, it's always an honor.

He was audited in 2006. The audit covered 2003 and 2004 - which sounds pretty typical based on my experience.

Mine too.

The statute of limitations on his 2001 return would run out in 2005. The statute on 2002 would run out in 2006. I'll assume he filed a timely return - possibly with an extension.

So at the time of the audit, the statute had run out on the 2001 return. And, depending on exactly when in 2006 the audit was done and whether his 2002 return was filed on extension, the statute might have run on 2002 as well.


I assume that the assessment statute had expired for 01/02 by the time it came to light in 06.

Of course, that is the ordinary statute. Perhaps we could allege fraud or some other circumstance that gives the IRS a 7 year statute. That 2006 auditor certainly could have done so, and opened up his 2001 and 2002 returns for assessment and collection had he/she felt it reasonable to do so.

But the auditor didn't.

Could that be because the auditor felt it was really an ordinary mistake and not fraud?


I certainly haven't seen anything I'd refer as fraud.

And that the IRS had plenty of information available to it on a timely basis to have asked about his 2001 and 2002 returns, but failed to do so?

That assumes too many facts not in evidence. We really don't know why he got audited in 2006. Likewise, I at least have no idea what audit resources were being directed where when the 01/02 years were in play.

It appears to me that there was a systemic quirk that prevented the issue from automatically surfacing the way a missing 1099 would. I've been told by someone who works there that the IMF issues W-2's to its US national employees. Box 1 shows the grossed up pay minus the usual things that reduce it, and boxes 2-6 are all blank. (This is because, by treaty, IMF doesn't withhold income tax, and they're subject to S/E tax.)

While it's not all that unusual for a W-2 to show zero SS wages (mine always did since I wasn't covered by SS), since most if not all SS exempt people were made subject to Medicare tax in the 80's I can't think of a situation where there would be Box 1 wages but Box 5 Medicare wages of zero. (Maybe students paid by their school or a household employee below the taxable floor?)

As you know, W-2's are filed with SSA, not the IRS. IRS wouldn't have the information to check for this discrepancy, and it appears that SSA wasn't checking.

Back to Mr. Geithner - how exactly did he pay those back taxes if the statute had run? Now we're looking at paying 2001 and 2002 taxes in 2008. I haven't heard anyone say that the IRS assessed these taxes and sent him a bill. And now we're well beyond the statute. I must assume that he fessed up to them and paid them. Did he have to also fess up to fraud so that the IRS could assess and collect the taxes? Did he make a contribution to the public debt in lieu of the proper taxes due for those years?

He says he paid them during the vetting process, and I have no reason to doubt that. Whether the IRS was able to keep the money is, AFAIK, an unasked question. (While I was off to the endodontist my friend on the Hill sent me the Q&A's for the record. If I find anything in them I'll let you know.)

In an earlier thread you mentioned that it would have been normal, legal, behavior for him to leave the closed years alone in 2006. I agree. What troubles me is that in his testimony he said he never thought about looking back to the earlier years. If I buy that I have to assume that he's dumb as a post.

Phil
Print the post Back To Top
No. of Recommendations: 2
Either he was flat-out lying or he lacks the intellectual curiousity to be fit for the job.

I might have used something like "integrity", "morality" or "ethics" but I agree completely with this comment and the "God bless Senator Kyl".


Read the whole article and you'll also be treated to his explanation that he didn't closely review the return he prepared himself and the incredible FU hubris of saying that it really doesn't matter because of the economic crisis.

The man isn't fit for the job, and...


and why isn't he completely out of consideration at that point?

(I am likely illustrating my ignorance of the process but) hopefully they're trying to give the clod enough rope to hang himself.
Print the post Back To Top
No. of Recommendations: 1
Thanks for the thoughts.

It appears to me that there was a systemic quirk that prevented the issue from automatically surfacing the way a missing 1099 would. I've been told by someone who works there that the IMF issues W-2's to its US national employees. Box 1 shows the grossed up pay minus the usual things that reduce it, and boxes 2-6 are all blank. (This is because, by treaty, IMF doesn't withhold income tax, and they're subject to S/E tax.)

That agrees with what I've read in the media.

While it's not all that unusual for a W-2 to show zero SS wages (mine always did since I wasn't covered by SS), since most if not all SS exempt people were made subject to Medicare tax in the 80's I can't think of a situation where there would be Box 1 wages but Box 5 Medicare wages of zero. (Maybe students paid by their school or a household employee below the taxable floor?)

S Corporation shareholders who take no salary, but properly pass their health insurance premiums though the corporation would have box 1 wages and nothing else. Just in case you ever need to know. ;-)

As you know, W-2's are filed with SSA, not the IRS.

True.

IRS wouldn't have the information to check for this discrepancy, and it appears that SSA wasn't checking.

Don't the IRS and SSA share information? But I agree, it sounds like this particular situation wasn't considered when the IRS was developing its automated checking procedures.

In an earlier thread you mentioned that it would have been normal, legal, behavior for him to leave the closed years alone in 2006. I agree.

At least we agree on something. ;-)

What troubles me is that in his testimony he said he never thought about looking back to the earlier years. If I buy that I have to assume that he's dumb as a post.

If the years are closed why would you think about looking at them? I'll assume he's a fairly busy man, with a number of things on his mind. Why would he spend energy and time thinking about the impact of a tax audit on closed years?

--Peter
Print the post Back To Top
No. of Recommendations: 5
<Liar or Dunce?>


Can I vote for both?



B
Print the post Back To Top
No. of Recommendations: 2
If the years are closed why would you think about looking at them? I'll assume he's a fairly busy man, with a number of things on his mind. Why would he spend energy and time thinking about the impact of a tax audit on closed years?

He wouldn't. IMO an honest, straightforward man would consider the earlier years, realize they were closed, and move on. What I object to is what I interpret to be obfuscating. Look at his last response to the Q&A's I posted later. All it needed was a yes or no. What he provided was a carefully crafted recitation of what was included in the audit.

I've had sufficient Washington quibbling over the meaning of "is" to last two lifetimes, TYVM.

Phil
Print the post Back To Top
No. of Recommendations: 9
He wouldn't. IMO an honest, straightforward man would consider the earlier years, realize they were closed, and move on.

So it's legal, honest and straightforward to consider the mistake in the older years closed and move on with life.

Thank [deity or non-deity of your choosing]. I was afraid my old mistakes would haunt me forever. But fortunately, I am not seeking a future in the public spotlight.

What I object to is what I interpret to be obfuscating. Look at his last response to the Q&A's I posted later. All it needed was a yes or no.

Then let's check the clarity of the questions before we complain about the answers. How do you answer yes or no to a question that has so many clauses it's impossible to know which part you're answering yes or no?

What he provided was a carefully crafted recitation of what was included in the audit.

Personally, I think he had already answered the question several times. He didn't pay the taxes earlier. He probably knew that and that he got away with it because of the statute of limitations. The senators all knew that as well. And they appear to be the actions of a reasonable person.

I've had sufficient Washington quibbling over the meaning of "is" to last two lifetimes, TYVM.

Agreed.

And I've had enough of incompetent senators who miss the real issues as well.

So what if he didn't pay the taxes barred from assessment by statute? Let's talk about his relationships with top executives of failed and failing banks/brokerages. Why did some get bailed out and some get left to fail? Who did you know at the failed banks? Who did you know at the rescued banks? How did that influence your decisions? Who are the people with whom you worked closely at the IMF and the NY Fed? Where are they now? What contacts have you had with them regarding your potential appointment? Are any of them under consideration for positions on your staff?

Let's ask some tough questions instead of dancing on the head of a pin.

--Peter
Print the post Back To Top
No. of Recommendations: 7
<What I object to is what I interpret to be obfuscating.>


Simple answers to simple questions are often on backorder when it comes to our government (that includes federal, state and local).

I think the public gets upset because they know full well that they could easily get hammered for dollar amounts less than $100. I think it is similar in concept (though obviously less in scope) to the anger about giving billions to institutions that failed miserably while paying their top people obscene amounts of money. In most cases it just strikes fair minded people as not being fair at all.

Merril Lynch paid their CEO $100 million to go away. So unless he gave all of it to Bernie "Madeoff with my money", he did not share in the pain that Merril shareholders did. Many of us of a certain age learned that we have to take responsibility for our actions. Very few of us get to a postion of authority like the top managements of most banks and financial institutions held. They made reckless choices that had severe LT risk, but made them boatloads of money in the ST provided that the regulators kept to the sidelines. The whole bailout concept has rewarded that reckless behavior by minimizing the consequences to those who made those choices. Those who invested in these companies based on what we were told did suffer severe consequences.

My background is in quality assurance. One of the keys to dealing with any problem is to clearly identify the full scope of the problem. If you do not get that part right, the solutions you come up with may actually do more harm than good. The initial effort to save some of the financial institutions may have been well intentioned, but I believe that there were some basic flaws at its root. The biggest flaw was giving tens of billions to managers who were not good stewards of their company's assets in the first place.

Again, I am not an expert on any of this, but intuitively it just seems wrong to pour huge amounts of money into places when there are still many rocks that have who knows what buried under them. I say that full transparancy should have been the rule before any new monies flowed in. I read this week that Bank of America had a market cap of 25B, which is only 5B more than what they paid for Merril last fall. If I am reading things correctly, they have been given some 30+B since the fall.

I contrast all of this with a regional bank called Hudson City Savings. Their CEO was interviewed on CNBC yesterday. He said that 2008 was their best year ever. They made more loans than they ever had last year and they expect to easily exceed that amount this year. They also increased their dividend. They have had no need nor desire for any government money. One key element to all of that is that they steadfastly avoided the easy money earlier in the decade. They never made a single subprime loan. They went in the opposite direction of the "smartest people in the room". They stuck with a business model that worked for them. Unfortunately, many of the smartest people spend their energies trying to find ways around what is right in order to develop new things they can get away with.

All of this ties back into Geitner in that he will be the main guy responsible for getting us out of the mess we are in. As head of the NY Fed he had to have a good idea of the many things that were routinely going on in the financial markets. I too would have liked a series of questions about his relationships with those from saved and failed firms. I don't like the idea that the urgency of the situation allows for so many things to be obscured. Some particulars may well be complex, but they should be able to be translated into words that even us rubes can understand.

Part of what makes a market work is faith in the institutions and in the people that run them. One of the things that made many past problems seem less daunting was having Alan Greenspan in charge. While he too was incapable of giving a simple answer to a simple question, he was always able to calm the fears of the marketplace during a crisis.

Now the lustre has worn off of his legacy. It is now obvious that he could have done things that would have limited the damage from his extended period of dirt cheap money. So could others like Cox the SEC chairman, Paulson, the ratings agencies and last but not least the chairmen of the House and Senate finance committess Barney Frank and Christopher Dodd. Some of them like Frank actually came out and said last summer that everything was fine at Fannie and Freddie shortly before all the wheels fell off of them.

You will have to excuse me if I remain uninspired with those responsible for fixing things. From my perspective this is not a democratic or republican issue. We have incompetance on both sides of the aisle.


B
Print the post Back To Top
No. of Recommendations: 10
First of all, I disagree with criticism of Geithner for doing his own taxes, either by hand or with software. All reasonably intelligent adults without extraordinary circumstances should be able to do our own taxes. Now, regarding the errors:

There are 2 major defenses for the IMF snafu:
1. It's a common error, because the fact that employees have to pay the employer's share of SE tax is unlike the typical tax situation. In fact, although the situation is unusual, the error is not:

http://article.nationalreview.com/?q=MmY2ODY3MzkxZTViMGFkNDA...

“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.


2. Having paid the back taxes and interest for 2003 and 2004, Geithner was justified in not looking back farther if the IRS was satisfied to not look back farther. I'd buy this if that's what Geithner said, but in fact he played stupid, claiming that he didn't even think about '01 and '02 at the time his '03 and '04 errors were discovered.

In addition, there were many other errors:
- the nanny situation,
- used overnight camp in child-care deduction calc's,
- took deductions for ineligible charitable donations, AND
- did not pay the early-withdrawal penalty for a retirement plan.

OK, I'm not perfect. I've had errors on my tax returns. However, my errors:
- were not as numerous as Geithner's, and
- were generally not in my favor.

When there are a LOT of errors, and ALL of them are in the filer's favor, that doesn't look like honest mistakes. That looks like cheating.

I believe Geithner cheated. I do not believe he is the "only" one for the job. Regardless of his knowledge and intelligence, given his lack of integrity, he should not be Treasury Secretary.
Print the post Back To Top
No. of Recommendations: 7
Did he have to also fess up....

That, I think, was the thrust of the Senator's question, assuming Pil didn't quote him out of context (I've not read the article Phil cited, the Washington Post having no credibility).

And Hr Geithner chose to weasel-word his answer. I got audited once, too, about 20 years ago on a mutual fund account my parents had set up for me 20 years prior to that and not told me about/I forgot they'd told me about it. At the end of the audit, I owed some taxes, interest, and penalties on the fund's dividends paid for the year being audited. In the course of my research, I discovered I'd held the account for several years prior. In the cover letter accompanying payment of my bill, I told the IRS that, and said that if they prepared a bill for the prior years, I'd pay it.

There's legally required to pay, and there's ethically required to pay. I'm just an ordinary pogue. If I could think of looking back prior to the audit period and see whether, maybe, I owed for the earlier years that I'd also missed, so could so august a personage as Hr Geithner.

That he claims he's so intellectually bankrupt [sic.], that such a thought didn't occur to him is just a little suspicious. He's a Fed Bank Governor. He's not intellectually bankrupt. He just thinks we are, that we'd believe such a line. It's clear that he paid, through whatever mechanism, for political reasons, not ethical ones. Good for the US Treasury, bad for him, and worse for us.

Eric Hines
Print the post Back To Top
No. of Recommendations: 0
OCD: ...although the situation is unusual, the error is also unusual...
Print the post Back To Top
No. of Recommendations: 1
Yeserday one of the news reports included a reading of the text of a document from his accountant. Clearly and in plain language the accountant told him he did not have to pay the tax. When I pay a professional to do something for me, I generally accept his advice. Otherwise why hire the guy in the first place?
Print the post Back To Top
No. of Recommendations: 8
During the years I was free-lancing I paid the S/E taxes -- It's quite straight forward, there's nothing fancy or complicated or esoteric about it. H&R Block was doing my taxes during those years and there was no discussion or uncertainty about whether or not I had to pay.

Geithner signed a statement each year when the IMF "grossed-up" his salary to cover the S/E taxes -- He confirmed with his signature that he understood what the gross-up was for and he confirmed his obligation to pay these taxes. I am confident that if he didn't understand what he was signing, the HR folks at IMF would have explained it to him.

He never should have made it through the vetting process. Whether he's a liar or dunce doesn't matter -- what matters is that he's not qualified to be Treasury Secretary.
Print the post Back To Top
No. of Recommendations: 1
Clearly and in plain language the accountant told him he did not have to pay the tax.

Unless they've changed the guidelines, IRS will accept erroneous professional advice as a defense to civil penalties. This is not "My accountant was supposed to do it," which is no defense. Rather, it's "My accountant told me I didn't have to."

Phil
Print the post Back To Top
No. of Recommendations: 1
"Unless they've changed the guidelines, IRS will accept erroneous professional advice as a defense to civil penalties. This is not "My accountant was supposed to do it," which is no defense. Rather, it's "My accountant told me I didn't have to."

Phil"

That would explain why he paid interest but no penalties.
Print the post Back To Top
No. of Recommendations: 1
That would explain why he paid interest but no penalties.

Actually, there is no penalty that's routinely added to deficiencies. The late payment penalty doesn't start running until 10 (might be more now) days after it's assessed, unlike failure to pay the balance shown on the original return, which runs from the due date.

There are "accuracy-related" penalties, such as substantial understatement, that are assessed, but they have a fairly high bar of applicability.

Phil
Print the post Back To Top
No. of Recommendations: 2
Peter said..
...But don't confuse that position with my thinking he's the right man for the job. He has been chair of a Fed bank (NY, was it?) during the biggest banking crisis of my lifetime. And he did nothing to improve the situation. I see him as part of the problem, not part of the solution. That alone disqualifies him for the job....


Peter, you must be forgetting the American CEO (Big Bozo) mentality... if my company is going into bankruptcy, my Board of Directors should offer me a special retention bonus since I (the CEO) best understand the problems of our company... I (the CEO) would be best at understanding how to drive us out of bankruptcy since I'm the person who drove us into it. :P

Gromit
Print the post Back To Top
No. of Recommendations: 0
Peter, you must be forgetting the American CEO (Big Bozo) mentality... if my company is going into bankruptcy, my Board of Directors should offer me a special retention bonus since I (the CEO) best understand the problems of our company... I (the CEO) would be best at understanding how to drive us out of bankruptcy since I'm the person who drove us into it. :P

.
.
TRUE,TRUE - I remember in the 1980's when all the banks failed in Alaska, FDIC hired the out of work loan officers to work on th ebad loans they had made.
Print the post Back To Top
No. of Recommendations: 0
TMFPMarti writes (in part):

http://www.washingtonpost.com/wp-dyn/content/article/2009/01......

Either he was flat-out lying or he lacks the intellectual curiousity to be fit for the job. Read the whole article and you'll also be treated to his explanation that he didn't closely review the return he prepared himself and the incredible FU hubris of saying that it really doesn't matter because of the economic crisis.


I reply:

I've now read the linked article twice, and I don't see either of the "explanation[s]" that you have attributed to Geithner. --Bob
Print the post Back To Top
No. of Recommendations: 2
I've now read the linked article twice, and I don't see either of the "explanation[s]" that you have attributed to Geithner.

Probably the filters each of us applies to everything accounts for a lot of it. (I don't recall whether it was here or in another forum, but I know for sure that I said "I'm so mad I could scream!")

The rest, I have no doubt, is because you're just a more understanding and forgiving person than I.

Phil
Print the post Back To Top