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Geithner failed to pay self-employment taxes

THE ASSOCIATED PRESS

8:00 AM EST, January 14, 2009

WASHINGTON - President-elect Barack Obama's choice to run the Treasury Department and lead the nation's economic rescue disclosed publicly yesterday that he failed to pay $34,000 in taxes from 2001 to 2004, a last-minute complication that Senate Democrats tried to brush aside as a minor bump on an otherwise smooth path to confirmation.

Timothy Geithner paid most of the past-due taxes days before Obama announced his choice in November, according to materials released by the Senate Finance Committee. He had paid some when the IRS sent him a bill in 2006.

The still-unpaid taxes were discovered by Obama's transition team while investigating Geithner's background. Obama's staff told senators about the tax issues Dec. 5.

Finance Committee Chairman Max Baucus (D-Mont.) said he still hoped Geithner could be confirmed on Inauguration Day. "These errors were not intentional; they were honest mistakes," Baucus said after he and other committee members met with Geithner behind closed doors Tuesday.

But the committee's ranking Republican, Iowa Sen. Chuck Grassley, hasn't conceded to Baucus' request for a quick hearing.

Grassley believes the revelations are "serious, and whether or not it's disqualifying is to be determined," spokeswoman Jill Kozeny said.

Sen. Orrin Hatch (R- Utah) said he was satisfied with Geithner's answer during a private meeting in Baucus' office.

Geithner, plucked from his job as president of the Federal Reserve Bank of New York to serve as Obama's treasury secretary, told transition officials and senators he didn't know he owed self-employment taxes when he worked for the International Monetary Fund.

Geithner told Obama's team and senators that an accountant had reviewed his tax returns after Geithner prepared them and didn't discover the problem.