The Senate finance committee postponed Treasury Secretary nominee Timothy Geithner's confirmation hearing until next week after reports emerged of problems with Geithner's federal tax return payments. A Wall Street Journal reporter details the latest.
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When president-elect Obama began selecting his economic team, his choice of Tim Geithner for treasury secretary was among the first he announced. But Geithner has run into a sudden flap over new disclosures about unpaid taxes and a former housekeeper.
For more, we turn to Jonathan Weisman, who broke the story for The Wall Street Journal.
Thank for joining us.
And let's take the taxes issue first. What exactly is it that Mr. Geithner is accused of having done?
JONATHAN WEISMAN, The Wall Street Journal:
Yes, the tax issue is really the crux of the issue.
Between 2001 and 2004, Mr. Geithner worked at the International Monetary Fund or had income from the IMF. During that time, he did not pay payroll taxes, Social Security and Medicare taxes. And under a weird quirk in the rules, if you're a U.S. employee of the IMF, you are considered an independent contractor, and you are obliged to pay both the employer and the employee part of your Social Security and Medicare taxes, what we call your FICA taxes.
Well, in 2006, Mr. Geithner was audited by the IRS. At that time, he was the president of the New York Fed. And the IRS discovered that he did not pay these taxes. At that time, he said, "OK, I'm going to pay my back taxes." There were quite a few of them. I think it was about $23,000 in back FICA taxes at that point.
He then says that his accountant said he was fine. He didn't pay anything — he didn't owe anything more. But, during the vetting process, after he was chosen for treasury secretary, the vetters discovered that he actually owed money. He should have paid Social Security and Medicare taxes also in 2001 and 2002.
He did pay those taxes after he was selected for treasury secretary. And that is now before the Senate Finance Committee. Basically, he had $34,000 in taxes that he did not pay when he was supposed to.