New York officials examine the Trump family’s tax schemes
>> New York City officials say they have joined state regulators in examining whether President Donald Trump and his family underpaid taxes on his father’s real estate empire over several decades.
The announcement came in response to an investigation published this week in The New York Times that showed how Mr Trump had participated in dubious tax schemes during the 1990s, including instances of outright fraud, that greatly increased the fortune he received from his parents.
“We are now just starting to pore through the information,” said Dean Fuleihan, the city’s first deputy mayor. One type of tax the city will examine is the real estate transfer tax. Officials said the extremely low valuations the Trump family placed on buildings that passed from Fred C Trump to his children through trusts could have resulted in underpaid transfer taxes.
The Times reported that through several aggressive and potentially illegal manoeuvres, the Trumps claimed that 25 apartment complexes transferred to Donald Trump and his siblings from their father were worth just $41.4 million (one billion baht). The Trumps sold those buildings within a decade for more than 16 times that amount.
Mr Fuleihan said the city would also explore whether another tax avoidance maneuver by Trump and his siblings resulted in Fred Trump’s empire underpaying property taxes. That manoeuvre involved a company, created by the Trump family in 1992, called All County Building Supply & Maintenance. All County existed largely on paper, The Times found. Its work, such as it was, consisted of adding 20 percent or more to the cost of goods and services bought by Fred Trump. The padded amount was split between Donald Trump and his siblings, essentially a gift from their father that avoided the 55 percent gift tax at the time.
Mr Fuleihan said the scheme as described by The Times would have artificially driven down the profitability of Fred Trump’s buildings. And because city property taxes on rental buildings are based in part on profits reported by owners, All County would have had the effect of lowering the property tax burden. Mr Fuleihan said city and state agencies are cooperating on the effort. The state Department of Taxation and Finance announced on Wednesday that it was “pursuing appropriate avenues of investigation.”
Another state agency is looking into whether tenants in Fred Trump’s rent-regulated apartments saw their rents unduly increased because the Trumps used the padded All County invoices to apply for rent increases, as The Times found. State regulations allow owners of rent-regulated buildings to apply for increases to recover the “actual and verified cost” of some improvements to buildings, said Freeman Klopott, a spokesman for the state Division of Housing and Community Renewal. The agency can refer cases of landlords found to be submitting false receipts to the state attorney-general.
A growing number of Democrats in Congress, meanwhile, cited the article in renewing their long-standing demands for Mr Trump to release his income tax returns, something he has steadfastly declined to do, breaking with four decades of practice by previous presidents. And Sen Ron Wyden, the ranking member of the Finance Committee, asked the IRS on Wednesday to open an investigation into The Times’ findings. “It is imperative that IRS fully investigate these allegations and prosecute any violations to the fullest extent of the law,” Mr Wyden said.
Some of the Trumps’ tax evasion manoeuvres uncovered by The Times warranted investigation as potential crimes, former prosecutors said, but the statute of limitations on any such charges has long since expired. The inquiries will explore whether civil penalties and bills for back taxes are warranted. City officials said interest and penalties of up to 25 percent could be added to any unpaid taxes.