Questioning Geithner (Updated) Posted by: MichaelW
on Thursday, January 22, 2009
Treasury Secretary nominee, Timothy Geithner, faced questioning from the Senate Finance Committee yesterday, but other than the grilling from Sen. Jon Kyl it was little distinguishable from slow-pitch softball practice.
Geithner came in with a carefully prepared confession of error. “These were careless mistakes,” he told the committee. “They were avoidable mistakes. But they were unintentional.” Geithner explained that when he first went to the IMF in 2001, he somehow believed — he didn’t explain exactly how — that he was not required to file those Social Security and Medicare taxes. As he thinks about it today, he said, he realizes that the IMF informed him repeatedly, and precisely, about his obligation. But back then, he just didn’t get it. “Looking back, it was very clear,” Geithner said. “If I had thought about it more carefully at the time, and I’d asked more questions — I would have gone back and asked a bunch more questions about that, and I would have approached it differently.”
As the hearing went on, Geithner repeated that explanation several times, whether it answered the question he had been asked or not.
What questions Geithner would have asked to convince himself that he owed the taxes was never made clear, but Kyl was rather upfront with how he saw things:
The IRS has a three-year statute of limitations on offenses such as Geithner’s, Kyl said, which meant that, after that 2006 audit, Geithner was obligated to pay for 2003 and 2004 but not for ’01 and ’02, which were too distant in time. Kyl wanted to know whether Geithner, when he paid for ’03 and ’04, knew that he also would have owed for ’01 and ’02 were it not for the statute.
“When you found out what you had done wrong, it is incomprehensible to me that you did not immediately realize that you had done it wrong for the entire time that you had been at the IMF,” Kyl told Geithner.
Geithner continued to evade the questions like they were his taxes:
Geithner simply wasn’t going to answer. “Senator, again, as I said, the IRS told me what my obligations were,” he said. “I met the obligations…”
Kyl became visibly frustrated. “Would you answer my question rather than dancing around it, please?” he asked.
Kyl’s demand forced Geithner to open up, just a little. “Senator, I did not believe when I settled that audit and paid what they said I owed that I had obligations to go back,” he began. “I did not think about that until I was going through the vetting process…I had not thought about it in the intervening years. No occasion to think about it. And I might not have thought about it unless I had gone through the process.”
“Okay, that’s a relatively clear answer,” Kyl said, “the answer being no, you didn’t think about it until it became important in connection with your nomination.”
Kyl then basically called Geithner a liar and issued a veiled threat:
“Okay,” Kyl concluded. “Rather than me asking for any additional testimony, review carefully what you said, and if you think it needs to be modified — because you’re under oath here — if it needs to be modified in any way, please provide that for the record.” The message could not have been clearer: Kyl simply didn’t believe Geithner’s story and was giving him one last opportunity to change it.
Judging by Geithner's answers to the effect that he admits being told by the IMF that he owed the taxes, and that he was reimbursed for taxes that he did not pay, I have only one question. Who did you think you were screwing, Mr. Geithner, the IMF or the IRS?
The Senate Finance Committee on Thursday approved the nomination of Timothy Geithner as secretary of the Treasury on an 18-5 vote, despite lingering doubts from Republicans on the panel over irregularities in the nominee's tax records.
Mr. Geithner, president of the Federal Reserve's New York regional bank, is expected to win quick confirmation by the full Senate, with lawmakers from both parties saying the critical Treasury post should not be left vacant as the nation confronts a severe financial crisis and a deepening recession.
Geithner is apparently too important to fail.
For more on that reasoning for confirming Geithner, see Capt. Ed.
"I did not think about that until I was going through the vetting process.I had not thought about it in the intervening years. No occasion to think about it. And I might not have thought about it unless I had gone through the process."
I certainly believe that. As far as he was concerned, he had gotten away with it.
1. The three-year rule does not apply to the assessment of taxes (and associated interest and penalties) attributable to a false or fraudulent return. IRC 6501(c)(2).
2. In 1995 the Tax Court held that IRS could assess tax, penalty, and interest for the years 1964 to 1970 because taxpayer had filed false or fraudulent returns for those years. Levitt v. Commissioner, T.C. Memo 1995-464 (1995).
3. Filing of non-fraudulent amended return does not eliminate fraud exception to three-year rule. Badaracco v. Commissioner, 464 U.S. 386 (1984).
4. IRS has burden of proving fraud before fraud exception to three-year rule can be applied.
I think it is funny that when Joe the plummer had a small tax bill, it was a sign of character most foul. I remember David Corn talking make a very public point of the issue of paying ones taxes and what a bad character flaw it showed in Joe that he did not.
Now apparently serial tax cheating and evasion or far larger amounts are no big deal. Oh wait, he’s a Democrat. Oh well then, never mind.