IRS failed to audit Trump’s tax returns during first two years in White House, House committee says

Former IRS commissioner says tax agency was ‘simply outgunned’ and didn’t have resources to review president’s returns

The IRS didn’t audit Donald Trump during his first two years in the White House, failing to follow its own policy, the House Ways and Means Committee has said.

The panel voted to release six years of the former president’s tax returns on Tuesday as members of the committee revealed that the tax agency disregarded its own programme which makes it mandatory to audit sitting presidents, The New York Times reported.

In 2017, Mr Trump filed his taxes for the previous two years, but the Internal Revenue Service didn’t start to audit those returns until 2019.

A report from the House Ways and Means Committee states that the IRS began their audit of Mr Trump’s filings on the same April day that the panel requested to be given access to the then-president’s taxes and related audits.

The tax agency hasn’t yet finished those audits, the IRS said. The service began its audits of the filings related to Mr Trump’s income during his time as president after he left the White House.

Democrats have said that it will likely take a number of days before the filings are released to the public as sensitive information, such as addresses and account numbers, has to be redacted.

A staff report by the Joint Committee on Taxation published on Tuesday included some information regarding Mr Trump’s taxes.

The report and previously published tax information revealed that Mr Trump had positive taxable income for the first time in over ten years in 2018, according to The Times.

That was largely due to Mr Trump selling off properties and investments to the tune of a $22m gain. He also seems to have finished off the business losses that he had been rolling over year after year.

He reportedly paid $999,466 in federal income taxes in 2018, but by 2020, he was back to reporting negative income, meaning he paid no federal income taxes.

The vote to release the tax information was along party lines as Democrats are set to lose control of the House in January following a narrow Republican victory in the midterms last month. Mr Trump refused to follow precedent and release his tax information as a candidate for the White House and as a sitting president.

Panel chairman Richard Neal, a Massachusetts Democrat, said “this was not about being punitive”.

“This was not about being malicious,” he added, according to The Times. “And there were no leaks from the committee. We adhered carefully to the law.”

But committee Republicans blasted the move, arguing that it was damaging to the norm against publicising private taxpayer information.

The ranking member on the committee, Texas Republican Kevin Brady, said “regrettably, the deed is done”.

“What was clear today is that public disclosure of President Trump’s private tax returns has nothing to do with the stated purpose of reviewing the IRS presidential audit process,” he claimed.

It remains unclear why the IRS delayed the auditing of Mr Trump’s taxes. Following a scandal during the administration of President Richard Nixon, the IRS put in place a new programme during the presidency of Jimmy Carter.

“Individual tax returns for the president and the vice president are subject to mandatory review,” the policy states.

John Koskinen, who was the IRS commissioner during Mr Trump’s first year in the White House, told The Times that he wasn’t involved in the work concerning auditing the sitting president and didn’t know why it didn’t happen at the time.

“It does seem to me to be a legitimate question – if the IRS had the responsibility and wasn’t auditing, what’s the explanation?” he said.

From 2018, the IRS was run by Charles Rettig, who was appointed by Mr Trump. He left the job in November of this year. He defended Mr Trump’s decision not to release his taxes as a candidate in a 2016 Forbes column.

Mr Neal said that “Rettig said at different points that they were simply outgunned” and that the agency didn’t have the resources needed to properly review Mr Trump’s taxes.

The chairman first requested access to Mr Trump’s taxes in 2019, following the Democrats’ 2018 midterm House win. The Trump White House blocked the Treasury department from complying with the request for access.

The panel filed a lawsuit, prompting a years-long legal fight. Both a federal District Court judge and a federal appeals court ruled in the panel’s favour and the Supreme Court chose to not block the release of the taxes in November of this year.

“The Ways and Means Committee’s solemn oversight work 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,” outgoing Speaker Nancy Pelosi said in a statement. “The American people deserve to know without question that no one is above the law.”

New York prosecutors have already gained access to some tax information related to Mr Trump and last month, the Trump Organization was convicted of tax fraud.

Letitia James, the New York attorney general, has sued Mr Trump and three of his children, alleging that they lied to lenders and insurers by overstating the worth of their assets.

In 11 of 18 years previously probed by The Times, Mr Trump paid no federal income taxes, and as of 2020, a $72.9m tax refund was being audited by the IRS.

The committee’s efforts to gain access to Mr Trump’s taxes were slow-walked by a Trump appointee on the Federal District Court for the District of Columbia, Judge Trevor McFadden, who waited for two and a half years before issuing a ruling on the suit.

Late last year, he ruled that the law was in favour of the panel, but he added that he believed that making Mr Trump’s taxes public would be a bad decision.