Trump paid no federal income taxes in his final year as president

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It will take time for lawmakers and the public to digest the documents regarding former President Donald Trump’s tax returns released Tuesday night by the House Roads and Means Committee.

Trump has repeatedly defied tradition and, both as a presidential candidate and incumbent president, has refused to disclose his tax returns.

The committee responsible for IRS auditing and tax policy writing has long searched for Trump’s 2015 to 2020 tax returns and finally got it a few weeks ago. Its stated purpose is to “ensure the compliance of the IRS with federal tax laws, and a president.”

Here are some of the most important takeaways from the committee’s report, which includes both the IRS presidential audit program analysis and the analysis of Trump’s returns by the nonpartisan Joint Taxation Committee.

The Ways and Means Committee alleges that the IRS presidential audit program has been “inactive” during Trump’s tenure.

The report revealed that during Trump’s tenure, the IRS only initiated one “mandatory” audit of his 2016 tax returns. And that didn’t happen until the fall of 2019, after President Neal sent a letter from the IRS asking for Trump’s returns and tax information.

He also notes that the agency initiated an audit for the 2015 return earlier that year, but this was not mandated.

Meanwhile, the 2017 tax return is marked “assessed and, if necessary, taken for review.”

It remains unclear why the IRS was not more active in overseeing Trump’s extraditions while he was president.

“Despite an ongoing Congressional investigation and Handbook information, no priority was given to the mandatory audit program by the previous Administration,” the report claims.

Senator Ron Wyden, who chairs the Senate tax writing committee, said on Wednesday, “The IRS was sleeping behind the wheel, and the presidential audit program was broken. There is no justification for not conducting the necessary presidential audits until a congressional investigation is done. I have additional questions about the extent to which resource problems or the fear of political retaliation from the White House contribute to the shortcomings here.

Many Democrats and tax policy experts, including those on the committee, suggest that a lack of resources, including manpower, to run highly complex audits like Trump’s, may also be a factor.

“It’s easy to find what the IRS is missing. They were desperate for resources. “Rich men can benefit from tax law because the IRS doesn’t have the resources to go after them,” said Steven M. Rosenthal of the Urban-Brookings Center for Tax Policy at the Urban Institute.

CNN reached out to the IRS with no immediate comment.

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‘Millions of unfounded deductions’: MP on Trump’s tax returns

According to the charts in the JCT report, Trump reported a significant tax bill in the middle of his presidency after years of pushing forward massive losses to drastically reduce, if not reset, his federal income tax liability.

Trump paid a combined $1.1 million in federal income taxes in 2018 and 2019, in stark contrast to the $750 he paid in 2017 and $0 in 2020.

Its taxable income in 2018 was close to $23 million, including $22 million in capital gains.

The following year, it reported close to $3 million in taxable income, with $9 million in capital gains.

However, in 2020, Trump reported losses of over $16 million, which was large enough to reduce that year’s federal income tax bill to $0.

For many years before he ran for president, a New York Times investigation showed that Trump had claimed massive net operating losses that drastically reduced or simply deleted his annual income tax, which he was allowed to carry forward and apply to future tax years. obligation.

“The 2,000-pound gorilla. … It still uses net operating losses to reduce its tax liability,” Rosenthal said.

For example, JCT noted that Trump incurred losses of $105 million in 2015, $73 million in 2016, $45 million in 2017 and $23 million in 2018.

The JCT report raises questions about the veracity of some of the major charitable cuts that Trump has claimed on several tax returns. Deductions can limit the amount of income tax payable.

In 2015, Trump demanded a $21.1 million deduction for donating 158 acres of his 212-acre property called Seven Springs in North Castle, New York. The donation to a land trust is the focus of the Manhattan district attorney’s criminal investigation into the Trump Organization’s finances.

The IRS allows an income tax deduction for owners who give up their land rights for protection, but the IRS has raised questions about whether the value of Trump’s land donation was inflated.

The JCT report noted that an IRS agent tasked with overseeing Trump’s taxes recommended that the entire $21.1 million deduction be denied because Trump had not received a qualified appraisal for the land. As an alternative, the representative suggested reducing the value of the deduction by more than half and said the appraiser could be fined for potentially misrepresenting the value of the land.

The deduction was limited as Trump had no taxable income in 2015, but can be carried forward and deducted in future years.

The IRS audit of the Seven Springs donation continues. According to the JCT report, a site visit took place in January and the agents met with valuation experts in November.

The report also raised questions about cash donations that Trump claims were charitable cuts.

In 2016 and 2017, Trump solicited approximately $1.2 million and $1.9 million, respectively, in charitable contributions, mostly in cash. Again, Trump had no taxable income in both years, but he was able to carry the cut into future years and further limit the amount of federal income tax he had to pay. JCT said large cash contributions need to be reviewed.

Trump had taxable income in 2018 and 2019 and reportedly donates just over $500,000 in cash each year. This means that he was able to claim a charitable contribution deduction in those years. JCT suggested that Trump should be asked to verify these large cash donations.

The authors of the JCT report wrote that while they identified a number of items worth examining, they “express no opinion as to whether examining these items would result in any proposed tax increases.”

Shortly after The New York Times published a blockbuster story detailing Trump’s tax returns on September 27, 2020, the IRS met internally to discuss how to manage the then-president’s tax review.

According to JCT’s report, the meeting talked about “a history of difficult negotiations” between IRS staff and Trump’s lawyers.

IRS regulators also outlined a strategy for assessing Trump’s finances at that meeting and set criteria to make the process manageable given the large number of pass-through agencies. Trump’s trust is owned by various pass-through entities whose revenues and deductions flow into Trump’s federal income tax return.

In March 2021, the IRS contacted Trump’s representatives to report that an audit had begun for 2017 and 2018 tax returns.

Around this time, Trump’s team called the IRS to discuss the size of the team evaluating their tax returns. Three agents are assigned compared to the typical single agent.

The IRS team manager explained to Trump’s representatives that the agency deemed the 2017 tax return “high risk” and required additional team members to review more than 400 streaming agencies. The examination represents most or all of the caseload of the three IRS representatives.

Trump’s team also expressed concern about the extent of the review, which stretched back to 2014 due to the cuts Trump requested that year, which reduced the tax burden in subsequent years.

The Roads and Means Committee said in its report that it plans to release the Trump tax returns in question.

The release could arrive in a few days. Neal said that sensitive personal information such as Social Security numbers and account numbers must first be rearranged.

Meanwhile, Neal proposed legislation that would codify the mandatory inspection program to “require the IRS to conduct mandatory inspections and publicly disclose relevant returns and returns information while a President is in office.”

House Speaker Nancy Pelosi said the House would “advance rapidly” this bill.

Quickness will be required for the bill to become law and become law. Democrats hand over control of the House to Republicans on January 3.

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