House Democrats are examining why the Internal Revenue Service did not fully audit Donald Trump’s tax returns while in the White House, despite an agency policy mandating such a review.
Some insight into the jump came in a report Tuesday by the Joint Committee on Taxation (JCT), a bipartisan congressional panel that examines Trump’s 2015-20 tax returns.
The report suggests that one reason the IRS gave Trump the benefit of the doubt was that he used professional accountants for his returns, a practice commonly used by wealthy individuals.
Using accountants is not a guarantee of financial integrity. In fact, Trump’s own accountants dumped him this year after questions arose about the accuracy of the information he gave them.
Despite a policy that mandates the IRS to review the statements of the incumbent president, the agency did not begin scrutiny of Trump until 2019 – two years after his presidency and after Democrats took control of Congress.
JCT said it could not speak directly to any IRS representative in its report this week, but its review of audit materials indicated Trump’s return in 2015, the representative who performed “preliminary risk analysis to determine the scope of the review.” supported a “limited scope”.
“As additional support for a limited review, the agent noted that the taxpayer has hired a professional accounting firm and consultant to prepare and file tax returns, and these parties take the necessary actions to ensure that the taxpayer accurately reports all items of income and deductions. said the report.
In the conclusion, JCT questioned why the IRS representative reviewing the return placed so much weight on accountants’ involvement.
“We also do not understand why the involvement of a lawyer and an accounting firm in tax preparation ensures the accuracy of the returns,” the report said. “We assume that this fact will apply to most, if not all, of the returns of high-net-worth individuals, and we do not believe that such individuals should be subject to limited audits on this basis.”
“It seems unfair,” said Steven Rosenthal, a senior researcher at the Urban-Brookings Center for Tax Policy, a Washington think tank and formerly practicing tax law.
He added that the IRS’s over-reliance and respect for professional accountants “shows how unarmed the IRS is.”
ProPublica reported in 2019 that the IRS audited the working poor at about the same rate as the richest 1%, in part because audits of wealthier Americans take more time and require more resources.
Rosenthal said that what bothered him most was the information in the report that suggested the IRS may have limited his investigation into Trump’s taxes due to “case sensitivity”.
The representative noted the “complexity” of the review, given how the turnaround is tied to previous returns and many other Trump organizations, but “decided not to use the Expert Referral System in the practice network unless absolutely necessary (due to case sensitivity)”. No experts were appointed,” he said.
In other words, the representative assigned to the 2015 review had other options to deal with the massive and complex nature of Trump’s taxes, according to the JCT analysis.
According to the JCT report, Trump’s 2015 tax audit was not part of the mandatory presidential review, but Trump’s 2016 tax audit was opened in late 2019.
This audit listed more concerns and requested more documents than the 2015 audit, but JCT noted a dozen more ways the agency needed to press for more information, including $40 million in deductions.
The JTC also scolded the broker who conducted the 2016 audit for relying too much on Trump’s accountants.
“While the IRS is investigating more issues in 2016 than in 2015, we are not comfortable relying on professional tax preparation to ensure accuracy, and it doesn’t seem like any experts have been called in to assist,” the report states. “We cannot comment on the results of the audit because the audit was not completed.”
The IRS did not respond to a request for comment.
The JCT report was released Tuesday after the House Roads and Means Committee voted to make Trump’s 2015-20 tax returns public. Trump was the first president since the 1970s to not make his tax returns public.
Returns were expected to be announced this week, but Representative of the President of Ways and Means, D-Mass. from documents.
Neal is pushing for legislation that would require the IRS to publish and audit presidential tax returns.
The returns were prepared by accounting firm Mazars, which stopped working for Trump and the Trump Organization this year after investigations by the New York attorney general and the Manhattan district attorney raised red flags about information Trump’s organizations had provided to Mazars for years.
Letitia James of New York AG has since filed a $250 million lawsuit against Trump and his company, alleging that they inflated the company’s net worth by billions of dollars to get more favorable terms from banks and insurance companies. Prepared by Mazars.
William J. Kelly, Mazars Group General Counsel, said in his letter of resignation to the Trump Organization in February: “For the years ended June 30, 2011 to June 30, 2020, Donald J. should no longer be trusted and recipients who currently rely on one or more of these documents. , you should inform that these documents should not be trusted.
James also sent a criminal complaint to the IRS about his findings. A spokesperson for the agency’s crime division told NBC News in September: “Every day, the IRS Criminal Investigation (IRS-CI) receives clues about possible criminal activity from a variety of sources. Special agents review the information received for further criminal investigation. The agency does not confirm the existence of investigations until court documents are available to the public.”
Trump denied any charges, and his lawyer, Alina Habba, said of James’ allegations: “We are confident that our judicial system will not stand up to this uncontrolled abuse of power, and we look forward to defending our client against each and every one of the Attorney General’s baseless allegations.”