IRS mandatory presidential audit policy scrutinized
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 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.
• 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 incometax 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 House on Thursday passed a bill that would require audits of any president’s income tax filings.
The bill would require an initial IRS report on a president’s tax returns no later than 90 days from the time they were filed. It would require an updated report on the president’s filings in six months.
‘Refused’
Tax experts say the failure to launch the audit earlier is emblematic of a larger problem regarding the IRS’ capacity to examine high-income taxpayers’ returns, and a reminder of Trump as a norm-defying president.
John Koskinen, who served as IRS commissioner during the Obama and Trump administrations, said the policy has been out of the public eye because presidents have traditionally released their tax-return 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.”
Trump’s tax returns being handed over to Congress recently is the culmination of a yearslong legal fight between Trump and Democratic lawmakers.
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.
“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 months after Democrats took control of the House. That date coincides with Rep. Richard Neal, DMass., the panel chairman, asking the IRS for information related to Trump’s tax returns.