Thursday, January 15, 2009

A Geithner Tax Amnesty

For the most part, Opinion Journal has it right about Treasury Secretary-designate Timothy Geithner's $34,000 self-employment tax "mistake." But there's room to quibble:

He's no different from those people -- you know who you are -- who overestimated their charitable contributions or "forgot" about that $500 cash payment they received when it came time to do their taxes. Even after the IRS audited him in 2006, Mr. Geithner paid back taxes only for the two years -- 2003 and 2004 -- for which he had been audited. He did not bother to amend his 2001 and 2002 returns until late last year, when the tax issue came up during the Obama vetting process.

It's likely the two years prior to the audit were beyond the assessment statute and, thus, Geithner had no legal requirement to amend those years. Of course, once his nomination was known, he'd want to clear up those years but he shouldn't be hammered because he followed the law to his advantage.

Let's have an amnesty -- with penalties waived, as they were for Mr. Geithner -- for all those Americans who somehow "forgot" to pay their taxes but are now willing to fess up or are audited. If forgiveness is to be the order of the day for the man who may soon be responsible for the IRS, American taxpayers deserve a similar reprieve.

Great idea but there's no evidence Geithner had his penalties waived because of who he was. I don't know if he represented himself but it sounds like they were waived as part of a settlement process, a process available to all taxpayers.

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