Uh oh: Obama Treasury nominee had “undocumented” housekeeper; Update: Whose taxes?

posted at 4:33 pm on January 13, 2009 by Allahpundit
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Temporarily undocumented, that is: Her papers expired, then she got a green card.

Oh, and he forgot to pay his self-employment taxes for a few years. But other than that, everything’s cool.

An emergency meeting of the Senate Finance Committee’s happening as we speak.

According to people familiar with the matter, Mr. Geithner employed a housekeeper whose immigration papers expired during her tenure with Mr. Geithner, currently president of the Federal Reserve Bank of New York. The woman went on to get a green card to work legally in the country and federal immigration authorities didn’t press charges against her, these people said.

The second issue involved taxes due while Mr. Geithner worked for the International Monetary Fund between 2001 and 2004. As an employee, Mr. Geithner was technically considered self-employed and was required to pay Social Security and Medicare taxes for himself as both an employer and an employee.

He apparently failed to do so, resulting in Internal Revenue Service audits his last two years at the IMF. As soon as the IRS brought the issue to his attention, he paid the taxes with interest, these people said…

On the tax front, Mr. Geithner’s oversight is not uncommon. The IRS has mandated loose rules for U.S.-born IMF employees unaware of their obligations to pay payroll taxes.

Tapper adds an interesting wrinkle to the timeline that the Journal doesn’t: Geithner paid his back taxes for 2003 and 2004 when the IRS notified him (in 2006), but not until November 21 of this past year — coincidentally, the very day he was named Treasury appointee — did he pay them for 2001 and 2002. Frankly, I like the idea of a tax cheat as Treasury Secretary in this environment; it makes the thought of him spending trillions of taxpayer dollars on new stimulus bills and bailouts that much sweeter.

Somehow these missteps are supposed to threaten his appointment but not the fact that, as president of the New York Federal Reserve, he oversaw the meltdown on Wall Street. Exit question: With Congress already sufficiently terrified by the economy to cut The One a stimulus check for $775 billion plus another $350 billion from the second half of TARP (forcibly, if need be), what are the odds that they’re going to reject his handpicked economic guru — especially given the potential headache of immigration politics becoming involved? No wonder Obama’s not backing down.

Update: Here’s the answer to Tapper’s question. The back taxes for 2003 and 2004 were his own personal self-employment taxes; the ones for 2001 and 2002 were withholding taxes for the housekeeper. Which, supposedly, he didn’t have to pay.

But as Geithner was being vetted for the Treasury post, Obama transition officials also realized that he had also failed to pay all his withholding taxes for his housekeeper from 2001-02. Although he was not legally required to, Geithner paid those back taxes as well, according to a transition official.

Orrin Hatch says full speed ahead on the confirmation!

Update: Now I’m confused. This PDF of the Obama team’s memo on Geithner suggests that the 2001-02 tax problems also had to do mainly with his own self-employment taxes, not the housekeeper’s withholding.

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