Geithner’s IRS woes irk taxpayers

McClatchy Tribune

WASHINGTON — The Treasury Secretary, who oversees the IRS, didn’t pay all his taxes. Neither did five other top nominees for the Obama administration.

Now, as today’s tax deadline looms, some Americans are asking: Why should we comply with the arcane requirements of the IRS when top administration officials failed to do the same?

The harsh reaction to such disclosures resonates not just among the anti-tax people organizing protests around the country this week, but in low-income neighborhoods of cities such as Los Angeles — and is even discussed in the hushed hallways of the Internal Revenue Service.

The most criticized example of nominees with tax problems has been Treasury Secretary Timothy Geithner, who admitted not paying $34,000 in payroll and Social Security taxes. But five other nominees had similar tax issues, including as recently as two weeks ago when Kathleen Sebelius, Obama’s pick to run head Health and Human Services, admitted she didn’t pay $7,070.

“Our members are upset and angry,” said Colleen Kelley, president of the National Treasury Employees Union, referring to concern bubbling up inside the IRS over unusually strict rules that can cost IRS agents their jobs if they make a mistake, while Geithner and others are treated with relative leniency. In addition, the Geithner case is making the work of IRS compliance agents a bit harder, she said.

The biggest factor affecting tax compliance this year may be taxpayers’ inability to pay due to the poor economy, but the repeated problems of the Obama team adds another layer of complaint to the grumbling of taxpayers who are already feeling stretched, said tax professionals.

Robert Schriebman, a Palos Verde, Calif., tax attorney who has testified before Congress, said his clients are seething over the tough treatment they get from the IRS, while a chunk of the president’s Cabinet were able to duck paying their taxes.

A small concrete contractor who is being hounded by the IRS after he failed to make timely payments of payroll taxes asked how Geithner can get away without paying his taxes when the IRS is on his case every week, Schriebman recalled.

“Politically powerful people are less likely to get bothered by the IRS,” Schriebman said. “It is more than a question of fairness. Not only is the IRS looking away from confronting influential people, the IRS is getting a lot tougher and nastier toward the little guy.”

Geithner told a Senate hearing in February that his failure to pay $34,000 in Medicare and Social Security taxes between 2001 and 2004 was an oversight.

Kelley pointed out in an interview Tuesday that a similar “mistake” by one of Geithner’s subordinates at the IRS would likely result in swift termination, with no right of appeal.

In some cases, IRS employees have lost their jobs for simply filing a late return or failing to report a few hundred dollars of interest income. Kelley said that Geithner’s case underlines the need for a change of the rules governing IRS employees.