Trump used accountants and the IRS was lenient with Trump’s tax returns, congressional report states.
House Democrats scrutinizing The Internal Revenue Service did not fully audit Donald Trump’s tax returns during his time in the White House despite a policy that required such an inspection.
A Tuesday report from the Joint Committee on Taxation, a bipartisan congressional committee that reviewed Trump’s tax returns for 2015-20, provided some insight.
The IRS gave Trump the benefit-of-the doubt because Trump used professional accountants for his tax returns. This is a common practice among wealthy individuals.
Financial honesty is not guaranteed by using accountants. Trump’s accountants fired him this year, after questions about the accuracy of his information.
Despite a policy mandating that IRS review a sitting president’s returns, the agency did not begin to audit Trump until 2019 — two years into his presidency, and after Democrats took control of Congress.
According to the JCT, report this week that it was not able to interview any IRS agents directly, but its review of the audit materials show that the agent who did a “preliminary risk analysis to determine the scope of the examination” of Trump’s 2015 return supported a “limited scope.”
“As additional support for a limited examination, the agent noted that the taxpayer hires a professional accounting firm and counsel to prepare and file his tax returns, and those parties perform the necessary activities to ensure the taxpayer properly reports all income and deduction items correctly,” the report said.
The JCT then asked the IRS agent that reviewed the return why he gave so much weight to accountants.
“We also fail to understand why the fact that counsel and an accounting firm participated in tax preparation ensures the accuracy of the returns,” the report said. “We would assume this fact would be true of most, if not all, returns of high-net worth individuals, and do not believe such individuals should be subject to limited scope audits on this basis.”
“It does seem inequitable,” said Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, a Washington think tank, who previously practiced tax law.
He added that the IRS’s over-reliance on, and deference to, professional accountants “illustrates how outgunned the IRS is.”
ProPublica reported The IRS will audit the working poor in 2019, at about the same rate as the wealthiest 1%This is due in part to the fact that audits of wealthy Americans take more time and require more resources.
Rosenthal said what troubled him the most was information in the report that indicated the IRS may have limited its inquiry into Trump’s taxes because of “case sensitivity.”
The agent acknowledged the “complexity” of the review due to the fact that the return was tied to previous returns from Trump entities. However, the agent “decided to not utilize the Specialist Referral System within the practice network (due to case sensitive); therefore, no specialists were assigned,” according to the JCT report.
According to JCT analysis, there were other options for the agent who was assigned to the 2015 review to deal with Trump’s complex taxes.
The audit of Trump’s 2015 taxes was not part of the mandatory presidential review, the JCT report said, but a review of Trump’s 2016 taxes opened later in 2019 was.
The audit was more thorough and contained more documentation than the 2015 one, but the JCT still found a dozen additional avenues that the agency could have used to get more information. This included $40 million in deductions.
JTC also reproached the agent responsible for the 2016 audit, saying that he had too much faith Trump’s accountants.
“While the IRS investigated more issues in 2016 that 2015, we are not comfortable relying on professional tax preparation for accuracy. It does not appear that any specialists were called in,” the report stated. We cannot comment on the audit results because it is incomplete.
The IRS didn’t respond to my request for comment.
After the House Ways and Means Committee, Tuesday was the date that JCT released its report. voted To make Trump’s 2015-20 tax returns publicly available. Trump was the first president since the 1970s to keep his tax returns secret.
The returns had been expected to be released this week, but Ways and Means Chair Rep. Richard Neal, D-Mass., told reporters Thursday they might not be released for the “next couple of days” because staffers were still redacting sensitive personal information from the documents.
Neal is pressing for legislation This would require that the IRS publish and audit presidential tax returns.
Mazars, an accounting firm, prepared the returns. quit working for Trump After investigations by the New York Attorney General and Manhattan District Attorney raised red flags regarding information Trump’s entities had been giving Mazars for many years, the Trump Organization was ordered to turn over the data.
Letitia James, New York AG has since filed an application $250 million suit Trump and his firm are accused of inflating their net worth by billions to gain better terms with banks and insurance companies. decade of financial statements That was prepared by Mazars.
In its resignation letter to the Trump Organization in February, Mazars Group General Counsel William J. Kelly said: “We write to advise that the Statements of Financial Condition for Donald J. Trump for the years ending June 30, 2011 — June 30, 2020, should no longer be relied upon and you should inform any recipients thereof who are currently relying upon one or more of those documents that those documents should not be relied upon.”
James also sent a referral to the IRS about her criminal findings. A spokesperson for the agency’s criminal division told NBC News in September that “IRS Criminal Investigation (IRS-CI) receives tips about potential criminal activity from a variety of sources every day. Special agents review any information that is received for criminal investigation. The agency doesn’t confirm the existence of investigations until court documents are publicly available.”
Trump and his lawyer have denied any wrongdoing. Alina Habba said of James’ allegations that “we are confident that our judicial system will not stand for this unchecked abuse of authority, and we look forward to defending our client against each and every one of the Attorney General’s meritless claims.”
This article was originally published by NBCNews.com