Michelle Malkin » Geithner’s tax reimbursements for taxes he didn’t pay

Geithner’s tax reimbursements for taxes he didn’t pay

By Michelle Malkin • January 14, 2009 06:42 PM

Er, Tim, I need to lighten my bus…

A former IMF employee e-mailed me yesterday when news of Obama Treasury Secretary nominee Tim Geithner’s tax troubles came to light.

He wrote:

[H]aving worked at the World Bank/IMF I can tell you that as an American working there, they REIMBURSE you for the self-employment taxes! The idea is that American’s get paid “on par” with all the foreigners i.e. NO taxes are withheld. The compromise is that American’s pay the “self-employment” tax but you get a CHECK from the Bank/IMF to pay them with. When I worked there in the mid-70s the reimbursement was one-half of the total self-employment tax. So I think the standard rate was about 6% and normal self-employment was twice that. The reimbursement was about 9% and you filed a special form with the IRS as a US citizen working for an international organization. The bank gave you the check for the 9% at the end of the year. You did not owe anything above the 9%. I can’t remember all that well but I believe you also got a 1099 for the reimbursement. If you know anybody that works there or the UN or the OAS they can tell you how it works now.

Well, guess what? My reader’s story checks out. And now it has come to light that Geithner did in fact get reimbursements for taxes he didn’t pay.

Byron York has the story:

The tax allowance has turned out to be a key part of the Geithner situation. This is how it worked. IMF employees were expected to pay their taxes out of their own money. But the IMF then gave them an extra allowance, known as a “gross-up,” to cover those tax payments. This was done in the Annual Tax Allowance Request, in which the employee filled out some basic information — marital status, dependent children, etc. — and the IMF then estimated the amount of taxes the employee would owe and gave the employee a corresponding allowance.

At the end of the tax allowance form were the words, “I hereby certify that all the information contained herein is true to the best of my knowledge and belief and that I will pay the taxes for which I have received tax allowance payments from the Fund.” Geithner signed the form. He accepted the allowance payment. He didn’t pay the tax. For several years in a row.

According to an analysis released by the Senate Finance Committee, Geithner “wrote contemporaneous checks to the IRS and the State of Maryland for estimated [income] tax payments” that jibed exactly with his IMF statements. But he didn’t write checks for the self-employment tax allowance. Then, according to the committee analysis, “he filled out, signed and submitted an annual tax allowance request worksheet with the IMF that states, ‘I wish to apply for tax allowance of U.S. Federal and State income taxes and the difference between the “self-employed” and “employed” obligation of the U.S. Social Security tax which I will pay on my Fund income.”

In a conversation today with sources on Capitol Hill who are familiar with the situation, I asked, “Was Geithner made whole for tax payments that he didn’t make?”

“Yes,” one source answered. “He was getting the money. He was being paid a tax allowance to pay him for tax payments that he should have made but had not.”

Is this what Geithner supporter Sen. Orrin Hatch means by “very competent?”

***

Time for the Geithner withdrawal betting pool. My guess? Friday 6:45pm Eastern.

The wheels on the bus go thump, thump, thump…

***

Reader David e-mails:

Michelle,

I just wanted to chime in on the real world application of Tim Geithner’s non-payment of taxes. Most US employees who work abroad usually have a gross up in wages similar to what Geithner got. They get it for the imposition of the income tax of the country they are performing work in. The “crisis of conscience” as it is with Geithner isn’t that he got a gross up. It’s that he received notifications of the tax treatment of the income from his employer and neither he nor his tax advisor (I assume he didn’t prepare his own returns) didn’t question either the documentation IMF gave him or why box 2 and 4 of his W-2 was zero.

As a pretty skilled and experienced tax advisor, I profess to having never heard of the FICA treatment of IMF wages, but I assure you I would have found out when I saw a W-2 with $100k of wages and no FICA withholdings.

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#591780

On January 15th, 2009 at 12:01 pm, Ed Mahmoud abu al-Kahoul said:

Guy feeling, this own’t be the top story on the news tonight.

59 Dems + 2 Maine Democrat in all But Name, no way to filibuster the tax cheat, he is our next Treasury Secretary.

People only went under the bus before the election. It won’t be until late 2011 that Obama starts casting off his dirty laundry again.
#591785

On January 15th, 2009 at 12:04 pm, Ed Mahmoud abu al-Kahoul said:

GOP opponents of Geithner should “think this through,” said Sen. Orrin G. Hatch, Rino-Utah., a member of the Senate Finance Committee that’s considering his nomination. “They’re not going to get anybody better than him from this administration for treasury secretary.”

Gack!
#591879

On January 15th, 2009 at 12:55 pm, MrOlympia said:

Prosecute this guy and stick him in prison. Then he can pay his “back” taxes to the gangs! hehe
#591888

On January 15th, 2009 at 1:02 pm, tiredofit08 said:

On January 14th, 2009 at 6:51 pm, AlohaGuy said:

Is this what Geithner supporter Sen. Orrin Hatch means by “very competent?”

Perhaps the Senator needs a vacation…a long vacation…

more like a permanent vacation from any gooberment service…..
#591896

On January 15th, 2009 at 1:07 pm, CJ said:

The problem with this plan is that most of us pay taxes through our employer which means we don’t pay them, they are taken.

Well, you could always “mistakenly” take a few more deductions than you legally qualify for. Mistakenly, of course.

And should the IRS catch the “mistake,” I’m sure they won’t assess penalties on those back taxes — just like they didn’t on Geithner, right???
#591934

On January 15th, 2009 at 1:26 pm, WisCon said:

All this is happening in plain daylight, and nobody in our government seems to care…
#591949

On January 15th, 2009 at 1:31 pm, twofoot said:

I am currently stocking up on ammo. I suggest the rest of you do the same. You’re going to need it before it’s over.
#591954

On January 15th, 2009 at 1:33 pm, rambler said:

I have had the IRS contact me a few times to clarify my tax returns. I had to waste my time gathering and xeroxing papers to send to them, confirming that my returns were indeed correct, while Geithner gets to to say “oops”.
Change we can believe it… just makes me sick!
#591981

On January 15th, 2009 at 1:48 pm, md1964 said:

I suppose Obama wants all these corrupt people around him in Washington….so Washington will feel just like home (Chicago).
#591988

On January 15th, 2009 at 1:51 pm, Flyoverman said:

On January 15th, 2009 at 1:31 pm, twofoot said:

I am currently stocking up on ammo. I suggest the rest of you do the same. You’re going to need it before it’s over.

I take the CSM Plumbley approach from “We Were Soliers.”

Lt. Colonel Hal Moore: I think you oughta get yourself an M-16.

Sergeant Major Basil Plumley: Sir, if the time comes I need one, there’ll be plenty lying on the ground.
#592043

On January 15th, 2009 at 2:46 pm, Richard Romano said:

This is pathetic — if he removes himself from the nomination process, will that finally stimulate the dingbat media to criticize the One’s judgement?

Sad, just sad. A bunch of corruptocrats.
#592045

On January 15th, 2009 at 2:47 pm, Misscheryl said:

This is one of the coolest pictures I’ve seen lately…

http://fatherstephen.wordpress.com/
#592066

On January 15th, 2009 at 3:05 pm, e-DigitalCameras said:

I pretty much gave up on the country the day Barry was elected, but am I the only one who’s jaw continues to drop as you watch every associate and appointment of this mean be revealed to either be a crook, terrorist, otherwise scandalized individual, or just a straight up Washington insider (which goes against “change we can believe in”).

Can you imagine if Obama had an (R) next to his name? Not only would he have never made it through the campaign, but if by some miracle he had, there’s be riots in the streets and he’d have to resign to save the country from the division he caused. Instead we’re all just watching Obama call in his own “Plumber” (not our Joe, but someone who likely studied at Berkley) to ensure he can flush this country down the toilet once and for all.
#592072

On January 15th, 2009 at 3:09 pm, RabbidSquirrel said:

Why do I feel that his defense will be that he likes gay sex in various aiport restrooms and since he will be checking into rehab soon, that we have no right to question his personal life?
#592085

On January 15th, 2009 at 3:20 pm, MarcoPolo said:

Misscheryl said: This is one of the coolest pictures I’ve seen lately…
http://fatherstephen.wordpress.com/

It is very cool, but I have to admit the first thought that crossed my mind was,”God hates trailer parks?”
#592094

On January 15th, 2009 at 3:29 pm, Freddy said:

It seems to me that this has happened before, and that the reason that the IMF passes out those ‘clarifications’ on a regular basis is because the IRS was demanding that the IMF pay for their ‘employees’ who did not.

There must be some record of my recollection of this somewhere. Seems hard to find – hmmmm ….
#592105

On January 15th, 2009 at 3:34 pm, Kevin K. said:

sonofdy said: (#66)

[Marco Polo (#65)] The fact that we have czars and czarinas in our republic’s administration at all indicates that the socialists have already won. This is only making it official.

Well technically that would be monarchists since czars were kings, but I get your point.

Actually, these people would have to be commissars, not czars, under the Soviet model; nor are we a monarchy.