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Records show IRS ignored rule, delayed audit of Trump’s finances

After taking office, Donald Trump said he’d keep his tax turns secret because of an audit. We now know he was lying — but that wasn’t the only problem.


UPDATE (Dec. 30, 2022, 9:55 a.m. EST): On Friday, after years of legal battles, a House committee finally released former President Donald Trump’s tax returns to the public.

The process began in earnest nearly four years ago. Under existing law, a limited number of congressional leaders have the authority to access individual tax returns from the Treasury Department, and in April 2019, Rep. Richard Neal, the Democratic chairman of the Ways and Means Committee, decided to exercise that power, directing officials from the Treasury Department to turn over Donald Trump’s tax records.

As regular readers know, a lengthy legal fight followed, culminating in the U.S. Supreme Court last month rejecting a last-ditch plea from the former president. The committee, which has jurisdiction over tax laws, soon after obtained six years’ worth of tax materials that the Republican had desperately tried to keep hidden.

Last night, the House Ways and Means Committee voted along party lines to make the documents public.

Before going further, let’s make one thing clear: This will not be a one-day story. There will be a great many documents to review in detail, and the revelations — to the extent that there’s anything important to be learned from the materials — will take time to evaluate and assess.

In fact, as of this morning, we don’t yet have the tax returns themselves. After the committee vote, the Democratic-led panel said the records would be fully released in the coming days, and members instead released a 29-page report on its investigation.

My expectation ahead of last night’s vote was that the powerful committee might’ve uncovered evidence of wrongdoing from the former president. In an unexpected twist, congressional investigators apparently exposed a different kind of problem. The New York Times reported:

The Internal Revenue Service failed to audit former President Donald J. Trump during his first two years in office despite a program that makes the auditing of sitting presidents mandatory, a House committee revealed on Tuesday after an extraordinary vote to make public six years of his tax returns. Mr. Trump filed returns in 2017 for the two previous tax years, but the I.R.S. began auditing those filings only in 2019 — the first on the same day in April the Ways and Means Committee requested access to his taxes and any associated audits, a report by the panel said.

Let’s pause to review a little history.

In late 1973, Richard Nixon faced a tax audit that determined that the then-president owed quite a bit in back taxes. (As we’ve discussed, all of this coincided with the Watergate scandal, but the competing controversies were not directly related.)

“The people have to know whether or not their president is a crook,” Nixon told reporters at the time. “Well, I am not a crook. I have earned everything I’ve got.”

In the wake of Nixon’s resignation, a series of ethics reforms were created, including an automatic audit of every sitting president’s taxes, every year, regardless of circumstances. A president need not be suspected of any wrongdoing; the reform was simply created to help bolster public confidence.

Most modern presidents, eager to appear forthcoming, released their tax returns to the public anyway. Trump — the only modern major-party presidential nominee to refuse to disclose his tax returns — used the post-Watergate reform as an excuse to justify secrecy.

Indeed, even after taking office in 2017, the Republican refused to release the materials, insisting that he couldn’t because he was under audit. Even at the time, the argument didn’t make sense: Trump was free to release the documents anyway, as other modern presidents from both parties had done.

But we now know that the underlying assumption was also wrong: The automatic, mandatory audit didn’t happen.

This is important for a variety of reasons. For one thing, Trump lied. For another, there was an apparent breakdown in the system that warrants additional scrutiny: If the IRS was required to audit the then-president as a matter of course, there should be some kind of explanation as to why this didn’t happen.

But let’s also not miss the forest for the trees: The whole point of the congressional exercise, the foundational basis for Neal’s initial outreach to the Treasury Department nearly four years ago, was a Ways and Means Committee investigation into the IRS’s mandatory presidential audit program.

The former president, his lawyers, and his GOP allies insisted that there was no “legislative purpose” to the inquiry, and the committee’s work on the issue was little more than a political fishing expedition.

Those complaints have now collapsed. The committee set out to scrutinize the IRS’s presidential audit program and it found a problem with the IRS’s presidential audit program.

“The tax forms were really never audited,” Neal said during a news conference after the vote, “and only my sending a letter at one point, prompted sort of a rear-view response."

As an NBC News report added, the Massachusetts Democrat has proposed legislation to codify the mandatory audit policy into law, and House Speaker Nancy Pelosi praised the idea late yesterday in a statement.

The political conversation about Trump’s secrecy has been going on for years. The policy conversation about the IRS and presidential tax returns is just getting started.