Trump tax audits required by law were delayed, panel says

By Josh Boak, Brian Slodysko, Lisa Mascaro And Meg Kinnard, The Associated Press on December 20, 2022.

WASHINGTON (AP) – A report issued Tuesday by the Democratic-controlled House Ways and Means Committee found that required IRS audits of Donald Trump were delayed, and committee members voted along party lines to also release tax filings of the former president who broke political norms by refusing to release the information on his own.

The full level of detail that will be revealed is uncertain, but lawmakers said they expect to release six years of tax returns for Trump and eight affiliated companies. Some sensitive personal information would be redacted. While the 29-page report summarizing the committee’s work was issued later Tuesday night, the tax returns themselves may not be released for several more days.

The report indicates that the Trump administration may have disregarded an IRS requirement dating back to 1977 that mandates audits of a president’s tax filings. The IRS only began to audit his 2015 tax filings on April 3, 2019, a date more than two years into Trump’s presidency. That date also coincides with committee Chairman Richard Neal, D-Mass., making an “initial request to the IRS for the former President’s return information and related tax returns.”

It wasn’t until September 2019 that the IRS began to audit Trump’s 2016 tax filings. Audits were on a lag for his 2017, 2018 and 2019 filings and never even began for his 2020 submission.

A separate report released by the Joint Committee on Taxation, detailing Trump’s reported income and taxes owed, suggested he paid a relatively modest share of his income to the federal government.

The release is the culmination of a yearslong fight between Trump and Democrats that has played out everywhere from the campaign trail to the halls of Congress and the Supreme Court. Democrats on the tax-writing Ways and Means Committee argued that transparency and the rule of law were at stake by voting to issue a report that legally rests on questions about how the IRS monitors U.S. presidents. Republicans countered that the release would set a dangerous precedent with regard to the loss of privacy protections.

“This is about the presidency, not the president,” committee Chairman Richard Neal, D-Mass., told reporters.

Texas Rep. Kevin Brady, the panel’s top GOP member, said, “Regrettably, the deed is done.”

“Over our objections in opposition, Democrats in the Ways and Means Committee have unleashed a dangerous new political weapon that overturns decades of privacy protections,” he told reporters. “The era of political targeting, and of Congress’s enemies list, is back and every American, every American taxpayer, who may get on the wrong side of the majority in Congress is now at risk.”

The report raised multiple red flags about aspects of Trump’s tax filings, including his carryover losses, deductions tied to conservation and charitable donations, and loans to his children that could be taxable gifts.

The committee led by Neal is proposing legislation to beef up the IRS’ approach, requiring an initial report no later than 90 days from the filing of a president’s tax returns.

The bill, which could be considered in the waning days of the Congress, comes as Republicans vow to cut funding for more IRS agents as the first bill they will consider taking over the House majority in the new year.

Trump has long had a complicated relationship with his personal income taxes.

As a presidential candidate in 2016, he broke decades of precedent by refusing to release his tax forms to the public. He bragged during a presidential debate that year that he was “smart” because he paid no federal taxes and later claimed he wouldn’t personally benefit from the 2017 tax cuts he signed into law that favored people with extreme wealth, asking Americans to simply take him at his word.

Tax records would have been a useful metric for judging his success in business. The image of a savvy businessman was key to a political brand honed during his years as a tabloid magnet and star of “The Apprentice” television show. They also could reveal any financial obligations – including foreign debts – that could influence how he governed.

But Americans were largely in the dark about Trump’s relationship with the IRS until October 2018 and September 2020, when The New York Times published two separate series based on leaked tax records.

The Pulitzer Prize-winning 2018 articles showed how Trump received a modern equivalent of at least $413 million from his father’s real estate holdings, with much of that money coming from what the Times called “tax dodges” in the 1990s. Trump sued the Times and his niece, Mary Trump, in 2021 for providing the records to the newspaper. In November, Mary Trump asked an appeals court to overturn a judge’s decision to reject her claims that her uncle and two of his siblings defrauded her of millions of dollars in a 2001 family settlement.

The 2020 articles showed that Trump paid just $750 in federal income taxes in 2017 and 2018. Trump paid no income taxes at all in 10 of the past 15 years because he generally lost more money than he made.

The articles exposed deep inequities in the U.S. tax code as Trump, a reputed multi-billionaire, paid little in federal income taxes. IRS figures indicate that the average tax filer paid roughly $12,200 in 2017, about 16 times more than the former president paid.

Details about Trump’s income from foreign operations and debt levels were also contained in the tax filings, which the former president derided as “fake news.”

At the time of the 2020 articles, Neal said he saw an ethical problem in Trump overseeing a federal agency that he has also battled with legal filings.

“Now, Donald Trump is the boss of the agency he considers an adversary,” Neal said in 2020. “It is essential that the IRS’s presidential audit program remain free of interference.”

The Manhattan district attorney’s office also obtained copies of Trump’s tax records in February 2021 after a protracted legal fight that included two trips to the Supreme Court.

The office, then led by District Attorney Cyrus Vance Jr., had subpoenaed Trump’s accounting firm in 2019, seeking access to eight years of Trump’s tax returns and related documents.

The DA’s office issued the subpoena after Trump’s former personal lawyer Michael Cohen told Congress that Trump had misled tax officials, insurers and business associates about the value of his assets. Those allegations are the subject of a fraud lawsuit that New York Attorney General Letitia James filed against Trump and his company in September.

Trump’s longtime accountant, Donald Bender, testified at the Trump Organization’s recent criminal trial that Trump reported losses on his tax returns every year for a decade, including nearly $700 million in 2009 and $200 million in 2010.

Bender, a partner at Mazars USA LLP who spent years preparing Trump’s personal tax returns, said Trump’s reported losses from 2009 to 2018 included net operating losses from some of the many businesses he owns through his Trump Organization.

The Trump Organization was convicted earlier this month on tax fraud charges for helping some executives dodge taxes on company-paid perks such as apartments and luxury cars.

The current Manhattan district attorney, Alvin Bragg, told The Associated Press in an interview last week that his office’s investigation into Trump and his businesses continues.

“We’re going to follow the facts and continue to do our job,” Bragg said.

Trump, who refused to release his returns during his 2016 presidential campaign and his four years in the White House while claiming that he was under IRS audit, has argued there is little to be gleaned from the tax returns even as he has fought to keep them private.

“You can’t learn much from tax returns, but it is illegal to release them if they are not yours!” he complained on his social media network last weekend.

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Kinnard reported from Columbia, South Carolina. Associated Press writers Michael R. Sisak and Jill Colvin in New York contributed this report.