IRS failed to conduct timely mandatory audits of Trump’s taxes while president

Internal Revenue Service only began audit after prompting from Congress in 2019, House ways and means committee indicates

US tax authorities failed to audit Donald Trump for two years while he was in the White House, Democratic lawmakers said, despite a program that makes tax review of sitting presidents compulsory.

The claim, in a report issued by Democrats on the House ways and means committee voting to release six years of Trump’s tax returns, raises questions over statements made by Trump and members of his administration that he could not release his tax returns, a convention for aspiring and sitting presidents, because he was undergoing an Internal Revenue Service audit.

The new report suggests US tax authorities only began to audit Trump’s 2016 tax filings in 2019, more than two years into his presidency. The audit, a requirement dating back to the Nixon administration, came only after Democrats took control of the House and requested Trump’s tax information.

“This a major failure of the IRS under the prior administration and certainly not what we had hoped to find,” said Richard Neal, the Democratic ways and means chairman.

Nancy Pelosi, the outgoing House speaker, praised the committee’s work. She said it revealed an “urgent need” for legislation to ensure accountability and transparency during the audit of a sitting president’s tax returns, “not only in the case of President Trump, but for any president”.

Despite a six-year, cat-and-mouse dispute over Trump’s taxes, an issue that reached the supreme court, the committee made no suggestion that Trump sought to lean on the IRS or discourage it from reviewing his paperwork.

“What happened?” Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, told the Associated Press. “If it was not resolved, the IRS stalled. If it was resolved in Trump’s favor, then maybe the IRS rolled over and played dead. That’s what we have to find out.”

The 29-page report, which found that the audit process was “dormant at best”, was published hours after the committee voted to release Trump’s returns, which are now being examined.

Democrats argue that transparency and the rule of law are at stake. Republicans maintain that the release of Trump’s records sets a dangerous precedent.

“Over our objections in opposition, Democrats have unleashed a dangerous new political weapon that overturns decades of privacy protections,” said Kevin Brady, the top Republican on the ways and means committee.

“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.”

Trump has had a bad week. On Monday, the bipartisan January 6 committee voted to make a criminal referral to the justice department for Trump’s role in inciting the Capitol attack and attempting to overturn the election. The referral is not binding on prosecutors, who are conducting their own investigation.

Earlier this month, the Trump Organization was convicted on tax fraud charges related to helping senior executives dodge income taxes on perks. The Manhattan district attorney, Alvin Bragg, has said Trump and his business are still under investigation.

Trump’s tax records amount to thousands of pages and may take days to be made public as the committee works to redacted sensitive details.

Publication may not answer the question of why Trump fought vigorously not to release his returns.

The New York Times reporter Maggie Haberman has reported that Trump simply made up his audit claim while on his campaign plane in 2016. The same paper found that Trump was facing an audit potentially tied to a $72.9m tax refund arising from $700m in losses he claimed in 2009 and that he had rolled over those losses to collect tax benefits on income for the subsequent nine years.

The dispute over Trump’s tax returns speaks to a larger fight over the IRS. Democrats argue it is ill-equipped to audit high-income, complex tax returns, and instead targets filers in lower-income brackets.

Democrats on the House ways and means committee are proposing legislation to beef up the IRS and to require a report no later three months from the filing of any president’s tax returns.

Republicans plan to cut recent increases in funding to the IRS when they take the House majority in January.


Edward Helmore in New York and agencies

The GuardianTramp

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