Trump: Tax story ‘hit piece’
He doesn’t deny report of schemes, origin of his wealth
WASHINGTON — President Donald Trump on Wednesday criticized a New York Times investigation into his and his family’s use of dubious tax schemes over the years and the origins of his own wealth, calling the article an “old, boring and often told hit piece.”
He wrote: “The Failing New York Times did something I have never seen done before. They used the concept of “time value of money” in doing a very old, boring and often told hit piece on me. Added up, this means that 97% of their stories on me are bad. Never recovered from bad election call!”
Trump did not offer an outright denial of the facts in the Times report, such as that the money he made during his decades in real estate came from tax schemes of dubious legality, the existence of records of deception in documenting the family’s financial assets, and that the beginning of the president’s so-called self-made fortune dates back to his toddler years when, by the time he was 3 years old, Trump earned $200,000 a year in today’s dollars from his father.
Sarah Huckabee Sanders, the White House press secretary, on Wednesday called
the Times report a “totally false attack.” She referred reporters with specific questions about what the administration considers inaccurate to a statement from Trump’s lawyer. “I won’t go through every line of a very boring 14,000-word story.”
Sanders said the article accurately portrayed the confidence Trump’s father had in him, and she quoted a sentence that was included in the Times report, which originated in a 1976 Times article about Trump. “Everything he touches seems to turn to gold,” Trump’s father, Fred Trump, is quoted as saying at the time for a profile on Donald Trump.
“One thing the article did get right was that it showed that the president’s father actually had a great deal of confidence in him,” Sanders said. “In fact, the president brought his father into a lot of deals and they made a lot of money together, so much so that his father went on to say that ‘everything he touched turned to gold.’”
Sanders said there are no immediate plans to release any of Trump’s tax returns, something Democrats have long said would help answer questions about the propriety of his business dealings.
Sanders said she would have to check to see whether Trump’s tax returns were still being audited. Trump campaign and White House officials have repeatedly cited audits as the reason Trump didn’t release his returns. Candidates’ release of their tax returns has become custom in presidential races.
That has left questions about his personal finances, business practices and taxes paid to the federal government. The 18-month Times investigation was based on
reams of records and documents about the Trump family empire, though it did not unearth the president’s tax returns.
In the Twitter post, Trump singled out the notion of “time value of money,” an economic concept about how the value of one dollar today is worth more than the value of one dollar tomorrow. Among the Times’ findings was that Trump received today’s equivalent of $413 million from his father’s real estate empire, far more than a $1 million loan, to be repaid with interest, that Trump has regularly cited as the one-time loan that he used to amass his eventual wealth and success.
The Times found that the original loan from his father was a series of loans totaling $60.7 million, today’s equivalent of $140 million.
The Times report also showed how Trump and his family took part in fraudulent schemes, such as how Trump and his siblings set up fake corporations to disguise millions of dollars’ worth of gifts from their parents, in order to evade taxes.
On Monday, the president declined to comment on the article, despite several attempts over a period of weeks to get him to comment. A lawyer for Trump, Charles Harder, provided a statement with broad denials for the investigation’s findings.
“The New York Times’ allegations of fraud and tax evasion are 100 percent false, and highly defamatory,” Harder said. “There was no fraud or tax evasion by anyone. The facts upon which the Times bases its false allegations are extremely inaccurate.”
The Times defended the reporting and findings in the article. “This is a powerful piece of investigative journalism, the result of 18 months of inquiry and a review of over 100,000 pages of records,” said Eileen Murphy, a New York Times spokesman. “It is accurate and fair and we stand behind it.”
CIVIL FINES
Though Trump insists that he did nothing wrong on his taxes, experts say he could be on the hook for tens of millions of dollars in civil fines if state and federal authorities substantiate the New York Times report.
The statute of limitations for filing criminal charges has long run out, but civil cases have no such limits, and the financial penalties could be staggering. Civil fraud charges for intentionally underpaying taxes, as the Times alleged the Trump family did, could include a penalty of up to 75 percent of the unpaid federal taxes and double the unpaid state amount, experts said.
The penalties “could be substantial, and if the allegations are proven in court, they should be levied,” said Norman Eisen, chairman of Citizens for Responsibility and Ethics in Washington and former chief ethics counsel in President Barack Obama’s administration.
The New York tax department said it is studying the Times’ report and “vigorously pursuing all appropriate avenues of investigation.” New York City also said it would investigate. A spokesman for the Internal Revenue Service declined to comment.
Tax law experts expressed skepticism that the IRS would mount any civil investigation. The main reason, they said, is that the Times account says IRS officials have already conducted extensive audits of the estate left by Trump’s parents.
“That ship has sailed,” said Mark Everson, who was IRS commissioner during President George W. Bush’s second term and is now vice chairman of AlliantGroup, a Houston-based corporate tax advisory firm. He added: “I would be concerned were the service to reach back that far in time, given that it could only be doing so because of the person’s current position.”
In addition to maneuvers aimed at avoiding estate taxes, the Times reported that the president’s father paid no federal gift taxes on seven buildings that were transferred to Trump and his siblings.
That opens another possible avenue of investigation, said Beth Shapiro Kaufman, a Caplin & Drysdale tax lawyer and a former Treasury official.
There is typically a threeyear statute of limitations on federal gift inquiries, but that doesn’t apply when a gift is made without being reported to the government. And if the donor is dead, the IRS would have the ability to go after the beneficiary of the gift for unpaid taxes, Kaufman said.
In New York, tax officials had already been looking into whether Trump or his charitable foundation misrepresented their tax liability. State law would allow them to seek civil penalties if they can show that someone intentionally sought to evade taxes, even decades ago. Those who lose such cases are often required to pay their back taxes along with penalties.
In August, the state subpoenaed former Trump attorney and “fixer” Michael Cohen as part of the probe.
The state investigation follows Democratic state Attorney General Barbara Underwood’s lawsuit alleging that Trump illegally tapped his Trump Foundation to settle legal disputes, help his campaign for president, and cover personal and business expenses, including the purchase of a 6-foot portrait of himself for $10,000.
Eisen said that if Democrats win the House in November, they will have the investigative muscle and subpoena power to scour Trump’s latter-day tax records and see whether the tax schemes alleged by the Times have continued.
Former IRS Deputy Commissioner Mark Matthews cautioned that the IRS would not be obligated to conduct an investigation if Congress turned up new evidence of continuing tax maneuvers. But he added: “The agency knows where its bread is buttered. If it gets to the point of a full committee report with new evidence, somebody at the IRS will take a hard look. But there’s no guarantee they’d go beyond a look.”
The federal tax code’s statute of limitations for criminal cases is typically no more than six years, legal experts said. To file criminal charges, investigators would have to find a continuing tax fraud conspiracy that stretched into recent years, they said.
Building such a case — similar to the charges that former Trump presidential campaign chairman Paul Manafort pleaded guilty to last month — would require overwhelming recent evidence, buttressed by new documents and strong testimony from Trump insiders, the experts said.
Information for this article was contributed by Eileen Sullivan of The New York Times; by John Wagner and David Fahrenthold of The Washington Post; and by Bernard Condon, Stephen Braun, David Klepper, Michael Sisak and Marcy Gordon of The Associated Press.