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First Read is an analysis of the day's political news, from the NBC News political unit. First Read is updated throughout the day, so check back often.

Chuck Todd, NBC Political Director

Mark Murray, NBC Deputy Political Director

Domenico Montanaro, NBC News Political Reporter



Geithner filed own taxes

Posted: Wednesday, January 21, 2009 12:01 PM by Domenico Montanaro

From NBC's Ken Strickland
Treasury Secretary nominee Tim Geithner, the president and chief executive officer of the Federal Reserve Bank of New York, filed his own taxes using Turbo Tax during the period he neglected to pay thousands of dollars in taxes.

Under questioning from Senate Finance Committee Republican member Chuck Grassley, Geithner was very reluctant to disclose which tax filing software he used. He quickly suggested the software wasn't the problem; he was.

Video: During opening remarks at his senate confirmation hearing, Treasury Secretary-designate Tim Geithner says that "the most prudent course, is the most forceful course," in fixing the American economy.

But Grassley pushed back, again asking what software he used. Geithner said, "Turbo Tax."  Grassley then asked if Turbo Tax has brought it to his attention that Geithner needed to pay more taxes. Geithner said, "No."

Today is the first day Geithner has publicly discussed the taxes issue. Last week, he explained himself before members of the committee in a closed session and followed up with phones calls to some Republicans on the panel.

The outlook for Geithner's nomination appears on track, with key Republicans last week calling the tax matter "troubling and serious" but not a "disqualifying factor."

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Is this news good or bad for the Turbo Tax folks?

:)
The republicans are just trying to get attention. They are such fools. This is all a power play for them, they do not care about his tax problem. The repubs will never get with it.
When I don't pay my employee taxes I get fines, nasty letters and that is usually for $2000.00 or less. I have a postage meter in my office,live in a small town where the post office doesn't post the mail and is closed on Saturdays. I mailed my tax on the 31st with my postage meter stamp, post office was closed Saturday & Sunday, the letter was posted in Tacoma, Wa. on Monday the 3rd which is 80 miles away and received on Tuesday in jefferson County and that cost me $55.00 in late fees and penalties. It's not what you know, it's who you know. If you know the right people, you can not pay your taxes and still get appointed as the Treasury Secretary to the US Gov.
THE REPUKE'S BETTER MIND THEIR MANNERS, AFTER ALL HE WILL BE RUNNING THE IRS, AND COULD MAYBE JUST SLIP AN AUDIT OR TWO THEIR WAY, TO SEE IF THE POT'S CALLING THE KETTLE BLACK.
I'm sure they are taking down the grandstands from yesterday.But some rightys still can't resist.I only wish they would have held Paulsen this accountable.
THIS MAN DID NOT "MAKE A MISTAKE".  THIS WAS INTENTIONAL AND HE SHOULD NOT BE APPROVED.  ALL OF THESE IDEAS WILL TAKE YEARS WHILE GOOD HARDWORKING PEOPLE ARE LOOSING THEIR HOMES AND FAMILIES ARE SUFFERING.  ALL OF THE POLITICIANS HAVE THEIR INCOMES.  LET'S SEE WHAT WOULD HAPPEN IF THEIR WAGES WERE GONE, NO HEALTH INSURANCE, HOMES BEING FORCLOSED ON AND THEIR FAMILIES IN CHAOS.  I BET THEY WOULD BE SAVED IMMEDIATELY.  THIS IS A DISGRACE.  WE HELP OTHER COUNTRIES FASTER THAN WE HELP OUR OWN HARD WORKING AMERICAN CITIZENS.
Grassley and others will do their grandstanding. They can't let the new Administration be approved without a few minor speed bumps. In the end they will all be approved. I wonder who and how Mr. Grassley does his taxes.
<But Grassley pushed back, again asking what software he used. Geithner said, "Turbo Tax."  >
... and the folks at TurboTax are ducking. lol. Seriously, they're grilling this guy over a few thousands in unpaid taxes that probably is not due to any fault in TurboTax software while the $700B bailout funds are not even accounted for! If people want to congregate in the Mall, I suggest the unregulated spending of $700B is as good a reason as an historic inauguration. With another $850B to come in the next two years, I shudder to think where the end of this Governmnet credit crisis will take us as a nation. Doesn't sound much like hope and change we can believe in to me. Sounds much more like deficit spending we cannot afford, with no proof of any stimulating effect, if you can judge based on other historical stimulus attempts.
I find this confirmation of him to be the head of the IRS totally wrong when he failed to file proper taxes not once but 3 times and they are all calling this a mistake on his part ! Please how is he going to save our countries finances as they are all saying in congress that they must put him in his position ASAP or we will fail! surely there are many others out there who are qualified to do this job who have not failed to file proper income taxes 3 times .
New administration same old crap !
I cannot understand how a man of his stature and position could neglect to file taxes.  I was an independent contractor for years, filed my own taxes, and knew enough to handle self employment tax. Perhaps it was an honest mistake, however can we accept that in the position he is seeking??
Um, if I was Turbo Tax, I might press ahead with my own investigation. If Geithner is scapegoating my product for an illegal tax filing, I would want to verify his assertions and correct it, or sue him if he is poormouthing my product in order to deflect blame for his own deficient actions.  Just saying.  
I bet Turb Tax headquarters hated that exchange.
Will anyone follow up to make sure Geithner pays those taxes and the same fines that citizens have to pay?
I'm not sure if the prvious post is still open, so am re-posting here with some additions:

From MSN: "He paid some of the taxes in 2006 after an audit discovered the discrepancy for the years 2003 and 2004. But it wasn't until two years later, days before Obama tapped him to head Treasury last November — that Geithner paid back taxes he owed for the years 2001 and 2002."

He worked at the IMF this whole time. Now a thinking person, after the IRS caught the error for '03-'04 would ask themselves "I wonder if I got it right in the previous years?" The salient question is not what Turbo Tax did or didn't prompt him to do, but whay he failed to review and reconcile previous tax years after the IRS showed him he was filing incorrectly.

The most likley truth is that he did check and decided to "let it ride" in the hope it would not get caught.

But since he's not going to fess up to that, there remain three options. In terms of his own taxes he acted in a way that is: clueless, careless, or fraudulent. Supporters, can you please identify the attribute that qualifies him to head the treasury?
I always wondered about the accuracy of Turbo Tax.
Turbo Tax walks you through every aspect of what you need to do for your taxes. A complete dummy can go through all the menus and have an accurate tax return generated with all the proper forms.

So why can't Geithner get it right?
Doesn't sound good for the software publisher, does it?  I guess there is something to be said for a real live accountant doing your taxes...  Or at least being able to ask one questions should you need it.
I'm a retired bank CEO and CFO, and I've paid to have my taxes done because it is soooo complicated.  His mistake was in not having an expert do his taxes - let him without sin . . .
I cannot understand how a man of his stature and position could neglect to file taxes.  I was an independent contractor for years, filed my own taxes, and knew enough to handle self employment tax. Perhaps it was an honest mistake, however can we accept that in the position he is seeking??

Thomas Drone Alabama

==============================

Same thing here. Independent contracting requires that you pay your taxes quarterly. In addition to having to pay your 15% Social Security (as an indi, you pay all of it, no company to pay 7.5% for you) you must also be accurate on your federal tax withholdings, else you get a real nasty fine at the end of the year if you come up short.

Every, and I mean every, contractor knows how to file their taxes. A miss like Geithner is nearly impossible to make, both by him, and by the IRS.
Sloppy! And the question isn't that we don't know where the first $350B went on the banking bailouts. The question is if Geithner can't even keep track of his taxes, how can he keep track of the second $350B?
This goes to show that the tax system is too complex - burdensome and full of traps for most of us and full of potential loopholes and favorable interpretations for those who want to pocket some extra money.

Why are some people the "choosen ones" given second and third chances for their actions such as responsibilities for 'paying taxes' and others just drilled for their actions (or their spouses)?  And how did he get away with ignoring warnings from the IRS without having a 'lien' placed on his home? No he should not get the position he is running for.  We do not need a person like that taking care of taxes. If he gets the position, What about US out here in the real world. Loosing our homes and jobs and relying on our 'poor credit' scores to purchase a new home for ourselves (after living in their own homes for 17 or so years) because of crooked mortgage loans, bankers knew what was happening to our mortgage loans selling them to the next bidder! Now living in a rental at a HIGHER RENT then we had before, what was really fair - helping home owners for two to three months or booting them out on their fannies and allowing others to bleed them to death with higher rents than their own mortgage payment was??  And by the way, we were able to purchase our home and had no problems.  The enconomy hit us, Oh, and also my husband (an 8 YEAR NAVY MAN) was diagnosed with Lung Cancer (agent orange) at the same time of our loss. Do you know we could not find anyone to help us and we fenned for ourselves!  His cancer was spotted in 2004 but he was never told about it till 2007!! What do you do about a situation like no home to call our own, higher rent which we can handle, paying our taxes, and knowing a DOCTOR knew Jeff was sick and never told us???? Question is "Second Chances", Can we get a home back to call our own (even though we lost of DREAM home to strangers)- the home my Grand Kids talk about excesively and what can you do about Doctors not contacting a patient about their health and we still pay taxes and doctors fee's???  So, no Mr. Geithner avoiding his responsibilities for years should not get the position.
If he was sec of commerce this may not be a big deal but I sure don't see how a tax cheat can be put in charge of the IRS and the rest of treasury. I'd have to pay penalties and interest and likely be put on a short leash by the IRS for future tax deposits if I pulled this act...how short of a leash will timmy give himself?
I find this confirmation of him to be the head of the IRS totally wrong when he failed to file proper taxes not once but 3 times and they are all calling this a mistake on his part ! Please how is he going to save our countries finances as they are all saying in congress that they must put him in his position ASAP or we will fail! surely there are many others out there who are qualified to do this job who have not failed to file proper income taxes 3 times .
New administration same old crap !

Tim N , Cedar Rapids Iowa (Sent Wednesday, January 21, 2009 12:47 PM)

He is not seeking to be appointed as head of the IRS.  He is seeking to be appointed as Secretary of the Treasury.  While the IRS is housed within the Treasury, the secretary need not know, nor is expected to know, the myriad rules and regulations of the Internal Revenue Code.
Thomas Drone ~ (I'm assuming that you're republican.  If not, then never mind. ;)) What about Joe the Plumber?  HE's God-fearing, law-abiding republican.  In my own state, we had a former republican congressman with big unpaid tax problems, too.  After all, isn't the republican philosophy that all taxes are evil?    

No taxation unless I want to be taxed.  Like the Boston Tea Party, you know?  

You ought to be applauding his cleverness.
I would be a little cautious about assigning any blame to Turbo Tax.  As with most other pieces of software, the results are only as good as the quality of the input data.  If a "smart" man tried to beat the system, then shame on him.  If he made an honest mistake, then shame on the system.

If anything, this whole incident speaks volumes about the complexity of our entire Tax Code.  Time for a Flat Tax - and retire thousands of IRS accountants and lawyers.
As a bookkeeper who uses Turbo Tax, I would like to weigh in on this.  The question is whether the IMF provided Geithner with a 1099 form.  Social Security Tax must be paid on any income for which you receive a 1099.  If he was not provided with a 1099, and the income was from another country (which I have heard IMF compensation is) he could very well have been unaware that he was required to pay Social security tax on that money.  The question asked by Turbo Tax to determine your tax liability on any non employee compensation is whether you received income for which you received a 1099.  If he did receive a 1099, then the Social Security administration received a copy of it, and they should have notified him the they had record of income for him for which he owed Social Security Tax.  The questions should be if he received 1099's and if he received notification of taxes due?  If he did, then there is a problem.
Regardless of if it was an intentional foul up or an honest mistake, it should remind us of how complex filing our taxes are.  We need a flat tax rate and everybody pays the same---no questions asked!!!!
I think it’s unfair that people are trying to make light of Geithner’s tax evasion. Why is he not being sent to prison? I mean, we’re talking about $34K over 3 years. Sure he paid it back along with the associated interest, but why should that matter. Wesley Snipes is in jail for 3 yrs for a $15K discrepancy that his CPA messed up, and he paid the money back with interest as well. Snipes at least could say that he’s a movie star and relied on someone else’s work. Geithner on the other hand, being a financial person, did his taxes himself. I find it hard to believe that “it was an honest mistake” and he didn’t avoid paying those taxes on purpose. He may be “the best person for the job” but even the best can be corrupt (cue Madoff comment). I, for one, do not think he should be confirmed for this position.
As someone who does his own taxes, as well as the forms etc. for his wife's self-employment and who has never failed to pay the self-employment tax (both halves with no reimbursement from the government) on time over a period of over 20 years, you'll have to pardon me for thinking Geithner is full of crap on this one issue.  If he had the time to do his own taxes, there is no excuse for any of the problems.

Nevertheless, confirm him and move on.

I'm amazed that the wacko conspiracy theorists haven't jumped all over this guy.  Check his Wikipedia bio. "The Group of Thirty"?  "The Council on Foreign Relations"? Geithner's father's connection to Obama's mother?

Not that I really care.  He seems as qualified as the next guy.  I'm not sure he's the only one out there who can do the job, but maybe no one else wants the job.  I think if you liked Hank Paulson, you'll like this guy, too.
I DO NOT TRUST TURBO TAX.  They messed me up once on my state taxes to the point where I wound up owing money back.  And they don't notify you either.  You should always go over the paper copy before hitting the SEND button.  I haven't used them since.

That being said, he should know better.

Prosecute Bush/Cheney for war crimes!
http://jawillie.blog.com
If you or I used Turbo Tax and didn't disclose everything, it would work.  Turbo Tax is only as good as the person entering (the honest) information.

I am a tax preparer and I ask questions, if my customers don't give me the answers or lie about them, it is them the IRS fines not me.  

Mr. Geithner admitted to congress that the fault was not that of the software.  Translation...it is my fault!  Is this really the man to run the Treasury Department?  I think not!
Some of the absolute bitterness in these comments is ridiculous.  Look Turbo Tax didn't know that his international employer didn't pay their portion of payroll taxes (not income taxes).  Turbo tax obviously isn't set up to catch this non-typical situation.  I do however agree that Geither should have easily figured out after the audit of the 2 years, that the previous 2 were wrong too.  But how many people in this country after they go through an audit and have to pay back taxes and penalties are also going to offer the info that they owe even more?  I don't think very many would.  That isn't really how the real world works.  People don't admit to mistakes unless they have to, but that doesn't mean he meant to cheat.  I believe that this gentlemen needs to be confirmed because many people believe he can do a godd job. And this job is too important to not hire the most qualified because they aren't a boyscott.
choujin- Wesly Snipes didn't file taxes for several years and didn't pay taxes on several million dollars.  I'm sure the IRS offered some sort of deal before prosecuting but it would have required him to pay what is owed and he refused.
I use TurboTax Home and Business to report regular wages and consulting income.  TurboTax correctly tags me for self-employment tax.

The bottom line is that this guy is either a crook, an idiot or extremely sloppy, any of which would not be good qualities for a Secretary of the Treasury.
I think it’s unfair that people are trying to make light of Geithner’s tax evasion. Why is he not being sent to prison? I mean, we’re talking about $34K over 3 years. Sure he paid it back along with the associated interest, but why should that matter. Wesley Snipes is in jail for 3 yrs for a $15K discrepancy that his CPA messed up, and he paid the money back with interest as well. Snipes at least could say that he’s a movie star and relied on someone else’s work. Geithner on the other hand, being a financial person, did his taxes himself. I find it hard to believe that “it was an honest mistake” and he didn’t avoid paying those taxes on purpose. He may be “the best person for the job” but even the best can be corrupt (cue Madoff comment). I, for one, do not think he should be confirmed for this position.
choujin (Sent Wednesday, January 21, 2009 2:32 PM)

In order to commit tax evasion, there has to be present an intent to evade taxes.  Making a mistake in your filing does not equal such an intent.  Wesley Snipes is an entirely different matter.
The audacity of the Republican party to play this out this way.  I blame the Republican party for such enormous degregulation and millions of tax payers money(those retired) is gone-I trust Geithner more than I would ever trust the Republican party-ummm...
let see   millions of dollars lost to the taxpapers by the Government or a trickle from Geithner?  At least with Geithner it is out in the open-We have been lied to for the last 8 years by our government-at least this had some truth to it-

I have used Turbo Tax in the past for some friends taxes and was very unimpressed.  I am a CPA who uses a professional software program in our office and there is no comparison.  It doesn't surprise me in the least that there was no prompt.  It does surprise me that a man of his stature didn't use a better tax software.

They say ignorance is bliss and that only an ignorant would be proud of this fact.  

However, their are those who are worse than a proud ignorant,  they are the "Fanatics", those who know enough to escape the clutches of ignorance but are too stupid to know the meaning of the word "Just".

Judging a person based solely by "your interpretation" of "their intentions" and then having the nerve to pubically hang that person; their honor no less, forever stored within the confines of the internet and available for perusal by their future heirs...

Fanatics, you live up to your name.  It's a shame we don't know their true name's.  Hiding behind psuedo names while dishonoring another man's- it lacks honor, almost as bad as short changing the government.
 
Unless you've researched the taxation of int'l organization employees, you may want to withhold judgment.  Not the usual Selfemployment tax calculated from a sch C as any other contractor or self-employed. There are very specific rules and in many cases you have to circumvent the software so that the SE tax is treated correctly.  I've prepared many a 1040X for those that have initially used other tax software, including TurboTax, and not included SE tax.  Not a TurboTax problem, but a complication of the tax rules for int'l org employees.  The man paid his taxes when he received a notice.
A lot of people who are commenting don't seem to know any of the details about Mr. Geithner's tax situation even though these details are available on the web.

1. Mr. Geithner did not get a 1099 tax form from the IMF.  He got a W-2 form.

2. Box 3 on his W-2, Social Security wages, and Box 5, Medicare wages, both contained NO entries.

3. This W-2 form was correct.  Even though he was an EMPLOYEE of the International Monetary Fund, the IMF is, by law, not responsible for paying any of their employees' Social Security or Medicare taxes.

I am a volunteer (uncompensated) treasurer for a very small church, and the same thing is true for ordained ministers.  Ordained ministers in our denomination are considered by the IRS to be employees of the congregation, BUT, for Social Security and Medicare taxes (but not income taxes) they are considered, by law, to be self-employed!

So when I prepare the minister's W-2 form, the IRS examples show that I am to leave the Social Security wages and Medicare wages blank!  The pastor has to pay the full taxes himself quarterly.

Our denomination requires that congregations pay their ministers a "SECA Allowance," which is to be about half of their Social Security and Medicare taxes.

The pastor not only must pay all of his Social Security taxes and Medicare taxes himself, the SECA allowance must be added to the normal salary and reported in Box 1 of his W-2.  He has to pay income taxes on his SECA allowance, and he also has to pay Social Security taxes and Medicare taxes on the allowance paid to him to pay those taxes!

It is complicated.  And I can see why TurboTax might get it wrong, since Mr. Geithner was an employee who was issued a W-2.  But if the federal government expects volunteer church treasurers and pastors to get it right, Mr. Geithner should certainly be held to the same standard.
Come on, people!  Self employment tax isn't a "complex" part of the tax code.  You owe 15%--either you or your employer has to pay it.  He's a financial wizard, not a HS dropout, for heaven's sake.  And, even if he didn't know up front he needed to pay the tax, why didn't he fess up after he was caught and made to pay for two other years?   I like our new President, and I'm hopeful for his administration, but appointing a cheat (and a liar) as the highest financial executive in America isn't really too good a start on the whole Change thing, is it?
The fact that Geithner has been nominated to fill the Sec. of Treasury position and the fact he is supposed to be quite intelligent on economic issues, and the fact he had to know that one must file and pay self-employment taxes all tell me I would not judge Congress harshly, Republican or Dem, if they were to reject his nomination. Something just does not smell right.

In the case of Hillary I am glad she was accepted and approved. Unless one could without a doubt prove that she herself benefited personally from any shady dealings her husband may have been involved in regarding his Library donations, I would not hold her responsible for her husband's failings (if in fact he were involved in the same) that might have been used to deny her the Secretary of State position. I cannot in good conscious regarding Obama's call for transperency and honesty give Geither the same pass.
President Obama has indicated there is a strong need for nonpartisan cooperation to straighten out the problems and he seems totally sincere in reaching across the isle to accomplish just that.  Common sense says though that it just can’t be one way.  Today I was watching the senate interviewing of Geithner, Obama’s nominee, and Senator Jon Kyl (R AZ) was being real aggressive and extremely critical when questioning Geithner about the value of the Tax Cuts in the Obama Stimulus package.  Now what makes that so noteworthy is that in contrast Senator Kyl simply had been completely and strongly supportive of Bush’s Tax Cuts for the wealthy, seeing them as totally valuable and productive.  I even have a letter from Kyl where he offered that the Bush Tax Cuts were so beneficial because they benefited over 400,000 Arizonians (less than 10% of his constituents) but he still refused to identify who benefited, in what amount, by income brackets.  This is not untypical behavior for Senator Kyl but it is also an example of the difficulty in getting representatives to drop their political gamesmanship and to start cooperating with the country’s best interest in mind.  The current problems are significant and the timing is critical and when a representative puts his politics before his constituents interests, it is disgusting and irresponsible and I think the voters should hold him accountable.
Utter nonsense by Geithner. First, he is obviously a tax cheat. Second, if not, he is an incompetent who cannot be trusted either at the Fed or Treasury. Now we'll have an incompetent tax cheat in charge of TARP. Thank you!!!
Geither is either stupid or a crook - there is no other possibility.  In either case, he is unfit to lead in any capacity at Treasury.  
So let me get this straight:  Geitner is, per the Dems, the only man UNIQUELY qualified for this position, even though he flubbed his own tax paying.  No one with a smigeon less experience will do....
unless they are looking after our national security, in which case experience doesn't matter.

I see.

Meet the culture of corruption.
Just perfect. A thief and a liar. What a perfect combo...just the man to be secretary of the treasury and in charge of the IRS. There obviously has been no change in D.C. Should we all forget to pay taxes for a few years?
I totally get it.
Geithner is who the President wants. Congress will approve him. He will do what ever he wants to do.
And just like always - the average taxpayer will pony up his share of the bill. That's the way it works.

These days our congress and other government leaders only have to give lip service to doing what is right. With so much power and resources in the hands of relatively few persons, the average Joe has a tougher time making it. It doesn't mean he can't make it - it's just tougher.  That's the way it is - it's who you are AND who you know.

I don't care what they say about me, as long as they spell my name right.


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