IRS MANDATORY PRESIDENTIAL AUDIT UNDER SCRUTINY
Report finds agency failed to perform required inspection of Trump’s taxes until Congress asked for information
WASHINGTON — An IRS policy governing the audits of tax returns filed by U.S. presidents is under new scrutiny after a report published by a congressional panel found the agency failed to perform the mandatory inspection of Donald Trump’s returns until Congress pressed for information about the process.
The three-point policy states that individual returns for the president and the vice president are subject to mandatory review, “should always be kept in an orange folder,” should be kept from the eyes of IRS employees and “should be locked in a secure drawer or cabinet when the examiner or reviewer is away from the work area.”
The report released Tuesday by the Democratic majority on the House Ways and Means Committee said the process, which dates to 1977, was “dormant, at best” during the early years of the Trump administration.
By comparison, there were audits of President Joe Biden for the 2020 and 2021 tax years, said Andrew Bates, a White House spokesman. The first determined the Bidens were due an additional federal income tax refund, Bates said by emails. The second, for 2021, “found that they owed an additional $13, which could have been waived under IRS policy but they chose to pay.”
A spokesperson for former President Barack Obama said Obama was audited in each of his eight years in office.
The Democrat-led House on Thursday passed a bill that would require audits of any president’s income tax filings. The vote was 222201, mostly along party lines.
The legislation faced staunch opposition from Republicans and has little chance of becoming law in the final days of this Congress. But it is seen as a starting point for future efforts to bolster oversight of the presidency.
John Koskinen, who served as IRS commissioner during both the Obama and Trump administrations, said the audit policy has been out of the public eye because presidents have traditionally released their taxreturn summaries to the public.
“It only became an issue with a president who refused to release his tax returns,” Koskinen said. “If Trump had been releasing his returns, nobody would have raised this issue.”
Steve Rosenthal, senior fellow at the Urban-Brookings Tax Policy Center, said the IRS’ failure to audit Trump shows that “the mandatory auditing program is broken, we cannot rely on the current system to fairly audit the president, and there’s a general problem of the IRS auditing sophisticated taxpayers.”
Rosenthal added: “This is a much larger problem than Donald Trump — yes, he makes bad things worse, but the situation was bad to begin with.”
A new $80 billion infusion of funds through the so-called Inflation Reduction Act is supposed to remedy the beleaguered agency’s low staffing levels, outdated technology and host of other issues. Republicans who are poised to take control of the House in less than two weeks, however, have said they want to cut that funding.
Tuesday’s committee report revealed that the IRS only began to audit Trump’s 2016 tax filings on April 3, 2019, more than two years into Trump’s presidency and just months after Democrats took control of the House. That date coincides with Rep. Richard Neal, D-Mass., the panel chairman, asking the IRS for information related to Trump’s tax returns.
The report’s findings prompted lawmakers to recommend a statutory requirement for the mandatory examination of the president’s taxes, with “disclosure of certain audit information and related returns in a timely manner.”
The congressional report highlighted the lack of staffing and availability of experts to examine Trump’s taxes. The report states that the IRS believed that accuracy of his filings was ensured because he had legal counsel and an accounting firm representing him.
The question of whether presidential tax documents should be disclosed is another matter of debate among tax experts and advocates.
Rep. Kevin Brady of Texas, the top Republican on the Ways and Means Committee, said Congress would be setting a “dangerous new precedent” by releasing the presidential records. Koskinen said that “it’s a significant serious precedent for a committee to seek returns and then release them.”
“I see two big issues here — what is the IRS going to do to ensure presidents are audited regularly, and what’s the rationale for releasing these returns,” Koskinen said.
Rosenthal said he thinks presidential returns should be publicly disclosed to ensure proper oversight.
“When this information is made public, the president is going to be more wary about cheating on their taxes and making them public — the results would put both the IRS and president on their best behavior,” he said.