mrkelley23 wrote:If Geitner's story is true, and he can produce a written statement from his tax-preparer for those two years saying he did not owe the employment tax, then okay. Otherwise, troubling.
SecTreas should not be a guy who does, or even feel like he has to, cheat on his taxes
As I understand it, his story is that there are four years at issue. The first two years, he did his own taxes. The second two years, an accountant assisted him. No one has suggested that he did this deliberately.
The issue is a little complex. Apparently, he was subject to a weird tax treatment as an employee of the IMF. He was getting W-2s, just like an employee, and "ordinary" income tax was withheld, again just like an employee. On the other hand, he was responsible for paying FICA (social security and Medicare) taxes, and (unlike an employee) none of those were withheld from his paycheck, so he was supposed to pay them as self-employment taxes. That's what he missed. Contributing to the problem, apparently U.S. employees of the IMF have their income "grossed up" to compensate for income taxes, but this process does not compensate employees for FICA. In other words, it's a natural (and common assumption to make that the additional money that's intended for taxes takes care of all of the federal taxes, when in fact it leaves out FICA.
If you're truly an employee but the employer fails to withhold the employer's share of FICA taxes, then under the law, it's the employer's problem, not yours. Apparently, though, that's not the case for IMF employees. I've now seen multiple sources say that Geithner's mistake is quite common among U.S. employees of the IMF. That's probably why the IRS didn't charge him any penalty (just interest). --Bob
"Question with boldness even the existence of a God; because, if there be one, he must more approve of the homage of reason than that of blindfolded fear." Thomas Jefferson