The moment I heard the nature of Timothy Geithner’s tax issue explained, I felt like I knew something about the man. James Fallows explains:
I do not believe, and will never believe, that his failure to pay his own self-employment tax while at the IMF was an “oversight” or a “mistake.” I have many many friends who have worked for this and similar organizations.
[ . . . ]
I could go on with details but I’ll just say: if this were a situation more average Americans had experienced personally, he would not dare make his “mistake” excuse because everyone would say, “Are you kidding me???”
This tracks perfectly with my own reaction, based on my experience in a town full of people who have similar employment.  It seems clear that this issue isn’t going to derail him, and maybe that’s okay:
I accept the argument that he is a necessary part of what has to be the best possible team America can assemble at this moment. But I don’t like the fact that he is obviously dissembling on this point, and that he obviously was not playing it straight over a long period of years.
Keep that in mind, in the coming years.
tx2vadem
Amen! How can you miss not having OASDI and Medicare not deducted from your paycheck? I guess if your paycheck is so huge to begin with and you don’t bother reviewing them. But still, as someone in finance/accounting, how do you not look at your paychecks if that is your background? It just doesn’t make sense and I can’t remember whether it was Grassley or another Republican who kept hammering on this, but it couldn’t be an oversight. He prepares his own taxes and a part of that would be using the information on a W-2 or 1099 to report income. If he was getting a 1099-MISC, it would be inconceivable that he missed that. The only reason you get a 1099-MISC is if you are an independent contractor. If you are an employee, you get a W-2. And the W-2 reports OASDI and Medicare withheld, so also inconceivable that he could have missed that. That doesn’t seem like it is in the realm of an unintentional mistakes. And he said he was using TurboTax, again the software specifically asks you the question, so how is that a casual mistake?
MB
Sort of. It’s different (worse, I think) than missing deductions. As a general rule, int’l NGOs like the World Bank, IMF, etc., are exempt from paying taxes for their US-based employees (whether US citizens or not). US citizens working for the IMF don’t get W2s or anything deducted from paychecks – it’s up to them to pay that on their own. Because this results in a bit of an extra tax burden (i.e., the employer side of taxes), the US citizens working for these orgs actually get a supplement intended to cover that amount. Let’s say that it’s not entirely unheard of to just consider that supplement additional income.
tx2vadem
Right, but he still should have received a 1099-MISC unless the IMF is exempt from having to file informational documents all together. And even if he didn’t, still paychecks, tax software, and regular reminders from the IMF about his tax obligations and he still overlooked this. The fact that on all these documents (and maybe a 1099-MISC if he got one) all showed no withholding should have been a red flag. He was preparing his own taxes and would have had to file a Schedule C, it isn’t just something you inadvertently miss. And when he was audited by the IRS and they picked up the error in 2003-2004, he didn’t think to go back and correct his 2001 and 2002 returns until he was selected for Treasury Secretary? Fishy, fishy, fishy.