Thu 22 Jan 2009
I’m sure you’ve heard about the new nominee for Treasury Secretary, Timothy Geithner and his apparent IRS oversights… here are a few choice quotes from a WSJ op-ed:
Did Geithner have an incompetent accountant? Maybe. A Senate Finance Committee statement reports that he prepared his own returns for 2000, 2001, 2002 and 2005.
We’re tempted to say America needs a Treasury secretary who is smart enough to figure out his own taxes. But such a cheap shot would be beneath us. Instead, we are going to make a serious point: America needs a tax code simple enough for the Treasury secretary to figure out.
Then there’s this explanation of how the taxes got paid (or not):
The IRS audited Geithner in 2006 and discovered the problem for his 2003 and 2004 returns. Geithner paid just under $17,000 at the time, and the IRS waived any possible penalties.
So far, so good. But then there’s this: “A three-year statute of limitations had precluded the agency from auditing the 2001 and 2002 tax returns, a committee aide said.”
So, what can we learn from Geithner’s little tax trouble?
The guy is not as good at finances as he should be. But then again, apparently we don’t really care about our Treasury Department keeping the books straight, so maybe this isn’t such a big deal.
The other thing worth learning — the IRS is serious about it’s 3 year statute of limitations on audits. So, you really can shred all those old tax returns and forget about it… at least until you are nominated to a top-ranking position in the federal government.
Note: The IRS actually has an exception to the 3 year rule for a “false or fraudulent” return. Unlike other tax law, the IRS actually has the burden of proving fraud before the fraud exception can be applied.