President-elect Barack Obama's choice to run the Treasury Department and lead the nation's economic rescue disclosed publicly Tuesday that he failed to pay $34,000 in taxes from 2001 to 2004, a last-minute complication that Senate Democrats tried to brush aside as a minor bump on an otherwise smooth path to confirmation.
Timothy Geithner paid most of the past-due taxes days before Obama announced his choice in November, according to materials released by the Senate Finance Committee. He had paid the remainder of the taxes in 2006, after the IRS sent him a bill.
The still-unpaid taxes were discovered by Obama's transition team while investigating Geithner's background. Obama's staff told senators about the tax issues Dec. 5.
Finance Committee Chairman Max Baucus said he still hoped Geithner could be confirmed on Inauguration Day.
"These errors were not intentional; they were honest mistakes," Baucus said after he and other committee members met with Geithner behind closed doors on Tuesday.
Republican senators, who might be expected to raise the most significant objections, did not immediately comment.
After senators met with Geithner, the panel released 30 pages of documents detailing his tax errors — and also how he came to employ a housekeeper whose legal immigrant work status had briefly lapsed in 2005.
Senate Majority Leader Harry Reid dismissed the events as "a few little hiccups," and said he was "not concerned at all" about the impact.
Obama reiterated his support.
"He's dedicated his career to our country and served with honor, intelligence and distinction," incoming White House spokesman Robert Gibbs said. "That service should not be tarnished by honest mistakes, which, upon learning of them, he quickly addressed."
Geithner, plucked from his job as president of the Federal Reserve Bank of New York to serve as Obama's treasury secretary, told transition officials and senators that he didn't know he owed self-employment taxes when he worked for the International Monetary Fund.
He failed to pay self-employment taxes for money he earned while working for IMF from 2001 to 2003, according to materials released by the Senate committee. In 2006, the IRS notified him that he owed $14,847 in self-employment taxes and $2,383 in interest from 2003 and 2004, which he paid after an audit. The IRS waived penalties for those tax years.
Transition officials discovered last fall that Geithner also had not paid the taxes in 2001 or 2002. He paid $25,970 in back taxes and interest for those years several days before Obama announced his choice, the committee documents showed.
Geithner and his supporters have said his mistake was a common one for people hired by international organizations that don't pay the employer share of Social Security taxes. Geithner told Obama's team and senators that an accountant had reviewed his tax returns after Geithner prepared them and didn't discover the problem.
But some tax experts said the problem is not that common.
Tom Ochsenschlager, vice president of tax for the American Institute of Certified Public Accountants, said it would be difficult for someone preparing a tax return for a self-employed person to skip the Social Security and Medicare tax lines.
"It's such a basic mistake that I kind of wonder if we know all the facts," Ochsenschlager said of Geithner's situation.
Geithner also said he didn't realize a housekeeper he paid in 2004 and 2005 did not have current employment documentation as an immigrant for the final three months she worked for him, the documents indicated.
The committee's records do not show how or when senators learned about the expiration of the housekeeper's work status. The committee reported that Geithner failed to get an I-9 form verifying legal work status for three people he employed as household help since 2004, instead jotting citizenship dates, passport numbers and relevant work status information into an address book.
One housekeeper's legal authorization to work in the United States expired on July 15, 2005 and the person continued to work for the Geithners until October of that year, the report says.
Democratic senators lined up Tuesday to offer their support for Geithner.
"Tim came to the committee, admitted he had made some mistakes, and was very contrite," New York Sen. Charles E. Schumer said in a statement. "In my opinion, these mistakes were not at all disqualifying."
Geithner is the second Obama Cabinet choice to face controversy. New Mexico Gov. Bill Richardson withdrew his name on Jan. 4 as Obama's commerce secretary after questions surfaced about a federal investigation concerning contributions and a state contract.
Geithner's tax problem was at least the second time such a situation has touched an Obama appointee. Nancy Killefer, the management consultant selected last week to become the new administration's chief performance officer, failed to pay unemployment compensation taxes, apparently on household employees. In 2005, the District of Columbia placed a $946.69 tax lien on her home over the unpaid taxes. Over a year and a half, she had failed to pay $298 in taxes plus the rest in interest and penalties, and she cleared up the debt within a few months.