Jodi Liss: The Woes of Timothy Geithner

By Jodi Liss

This may sound peculiar coming from someone in a job with no security and that pays about a fifth of what he earns, but I feel sorry for future Treasury Secretary Timothy Geithner and his tax problems over his past employment with the International Monetary Fund (IMF). Actually, I would more surprised if he hadn’t had problems.

I, too, have worked for international organizations (in my case, the UN, UNDP, and UNICEF) and I too know what it is like to try to deal with the arcane rules that seem to be tailor-made for each individual short–term hire at these places.

At the UN, and apparently at similar places, what you pay in taxes depends on not only your nationality but on the kind of contract you have and its terms for the individual position. It is so convoluted that one of the first decisions you make at the start is to find a good accountant. No matter how clever you think you are, you immediately discover that you are but a babe in the woods.

For example, at the UN, some countries have arrangements that allow the regular employees of the organization not to pay taxes at all. I always heard—and this was confirmed by several colleagues in the UN—in many cases, the home country’s government itself covers the individual’s tax burden.

This does not apply to the United States. When I first started at UNICEF, I was told that under the contract I had just signed that I was responsible for all my own taxes; however, the American woman who processed my form told me this was not universally true. Under her contract, she was only responsible for her Social Security.

Each type of short-term contract is different in different ways: there are SSAs, Ls, ALDs, and several others. And that’s not counting those working in the field. Each contract runs for a different length of time, so a person can hardly figure out a normal estimated withholding. Some contracts have required time-off within the terms, but said terms can be extended, so there’s uncertainty again. For example, one colleague told me that, in her situation, she could work at the same position indefinitely 11 months at a time if she then took one month off—or she could work for four years straight but then would have to leave permanently.

The American tax payments were strictly on the honor system—as far as I know, the UN does not, or at least did not, bother to regularly hand over these financial records to the Internal Revenue Service (IRS)—and I am sure there were those working who either deliberately paid too little or nothing at all. Recently, in an effort to deal with this, the IRS offered a limited amnesty to American UN employees to get them to pay up. I do not know how successful it was; no one is talking.

Since I had never worked for an IGO (international governmental organization) before, the first year I worked with the UN, I dutifully set aside enough money to cover what I estimated my taxes would be. Miraculously, I was within $300. But my accountant reported the IRS was none too pleased that I had not sent in quarterly estimated taxes and set up a payment plan according to my income that year.

Imagine my surprise—maybe disbelief would be a better word—the following year when, after making a bit less the second year and dutifully having sent in the quarterly payments, I was told I still owed over $3000!

You might think I would blame my accountant, but I don’t. (Normally, she’s great.) The rules that govern this sort of employment situation don’t seem to be on any IRS form I have seen and I doubt many CPAs have much experience with or normal need for mastering such picayune stuff. Friends did tell me there was a guy at the UN who was really good at doing their taxes. But since they weren’t Americans and neither was he, I didn’t see how he could master a tax code so detailed and trivia-laden that even normal Americans familiar with the tax system rip out their hair while attempting it, much less that he could know all the rules for all the other countries as well.

By all reports, accountant malfunction is what happened to Geithner. Given my experience, I don’t believe he should be held responsible for the confusion of his accountants or their faulty advice—after all, this is what can happen even when, as H&R Block says, “you’ve got people.”

So, I say, let’s confirm Tim Geithner for treasury secretary. At least one thing is certain: he’ll make sure that this part of the tax code gets fixed pronto.

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