Nicole Narea covers state politics and policy for Vox, focusing on personalities, conversations, and political battles happening in state capitals and why they matter to the entire country. She first joined Vox in 2019, and her work has also appeared in Politico, Washington Monthly, and the New Republic.
Several years’ worth of former President Donald Trump’s tax returns are finally being made public after years of legal battles and congressional inquiries, suggesting that it will become more difficult for him to shield his business dealings from scrutiny after evading mandatory audits for years.
The House Ways and Means Committee voted along party lines Tuesday to release Trump’s tax returns for 2015 through 2020. It will likely be a few days before the full records are released, since lawmakers have to redact personal information such as Social Security numbers from the documents. But reports published Tuesday by the Ways and Means Committee and the Joint Committee on Taxation provide a glimpse at the most troubling parts of Trump’s tax returns — and at the IRS’s failure to hold him to account.
The IRS has had an agency policy of auditing individual tax returns for presidents and vice presidents every year dating back to the Nixon era. But under Trump — who was the first president to refuse to publicly release his tax returns on the premise that he was under audit, even though there was nothing to legally prevent him from doing so — the program went dark.
“We anticipated the IRS would expand the mandatory audit program to account for the complex nature of the former president’s financial situation yet found no evidence of that,” Ways and Means Committee Chair Richard Neal (D-MA) said during a hearing Tuesday. “This is a major failure of the IRS under the prior administration, and certainly not what we had hoped to find.”
According to the committee’s report, it wasn’t until 2019, two years into Trump’s presidency, that the IRS initiated an audit of his tax returns. The agency did so on the same day the committee asked for copies of Trump’s tax returns and related audits, and it didn’t begin its audits of tax returns filed during his presidency until after he had left office. None of the audits have been completed yet.
The IRS is severely underresourced, and House Democrats have suggested that it doesn’t have the capability to handle complex tax cases. However, some government observers have also expressed concern that the Trump administration improperly influenced the agency.
“It suggests that this was another example of the federal government being politicized by Donald Trump’s administration and misused for his benefit,” said Noah Bookbinder, president and CEO of the watchdog organization Citizens for Responsibility and Ethics in Washington (CREW). “That’s something that I would say Congress would want to investigate.”
The IRS failed to audit, and Democrats want to ensure it won’t happen again
The reports provide some explanations for why the IRS failed to audit on time. They note that Trump took actions to draw out the audits, including filing Freedom of Information Act requests that tied up IRS resources and failing to provide all the necessary information to resolve certain issues.
At the time, the agency was run by Trump appointee Charles Rettig, who received hundreds of thousands of dollars for leasing Trump properties while in office, according to an investigation by CREW. That has raised questions about the agency’s impartiality.
There was also some concern by Democratic members of the Ways and Means Committee, among others, that the IRS wasn’t equipped to handle what was thought to be an enormous and complex case.
It’s true that the agency has been beleaguered by staffing shortages, and, according to the report, Trump was being represented by a heavyweight legal team well versed in tax law, including the former IRS chief legal counsel and partners in a multinational law firm. But the committee did not find the kind of “large volume of tax returns and massive audit files related to the returns” that they had expected — just three bankers boxes and some electronic files, including many one-page documents and duplicates, according to the report. That suggests that the audits didn’t represent an insurmountable task that would have warranted the kind of egregious delays that have occurred.
“It is hard for me to believe that it was a resource or a priority issue, because it’s not that they didn’t finish the investigations — it’s that they didn’t even start,” Bookbinder said. “It’s hard to believe that it was anything other than a decision to steer clear of doing the kind of review of the president that is required.”
House Speaker Nancy Pelosi tweeted on Tuesday that the committee’s investigation has “revealed the urgent need for legislation to ensure the public can trust in real 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.”
She added that House Democrats would “move swiftly” to advance legislation requiring the IRS to conduct an annual audit of the president’s finances. Still, that legislation is not likely to pass in the Senate, where Democrats would need 10 Republicans to sign on before Congress adjourns for the year.
It’s not likely that Republicans, who will control the House come January, will be inclined to investigate the IRS’s failure to comply with its own policy. But exactly what happened at the IRS could be the subject of further inquiries by the Democratic-controlled Senate Finance Committee or entities within the executive branch, such as inspectors general.
What Trump’s tax returns show us so far
The reports released Tuesday provide new information about Trump’s finances throughout his presidency. He paid $1.1 million in federal income taxes between 2016 and 2019, but none in 2020 after his businesses reported big losses amid the pandemic. He also earned a total of $38.1 million in interest during his time in the White House, the source of which is not yet known.
The New York Times previously obtained two decades of Trump’s tax returns, ending in 2017, which showed a long history of claiming large losses to offset his federal income tax liability. In 10 of the 15 years before he became president, he didn’t pay a single dollar in taxes as a result, according to the Times’s analysis.
The reports also show that he wrote off significant charitable contributions. He primarily donated land, which he claimed was for conservation purposes so as to qualify for a deduction, but it’s not clear if those donations actually qualified for a deduction.
There’s a lot more that the entire redacted returns can tell us once they’re released about Trump’s business dealings, fortune, tax strategies, and philanthropic efforts. Bookbinder, for instance, will be looking for any information that can be gleaned about potential conflicts of interest between Trump’s businesses and his responsibilities as president. That includes information on whether his income came from foreign governments or businesses that could have had a stake in his policy decisions.
“That’s going to be really important in terms of trying to understand the extent to which Donald Trump’s policy decisions and his decisions as to what he did as president may have been affected by his financial interests,” Bookbinder said.
Sourse: vox.com
