WASHINGTON — The IRS subjected both President Donald J. Trump’s predecessor and his successor to annual audits of their tax returns once they took office, spokesmen for Barack Obama and President Biden said Wednesday, intensifying questions about how Mr. escaped until Democrats in the House began making inquiries.
Late Tuesday, a House of Representatives committee revealed that the IRS failed to audit Mr. Trump during his first two years in office, despite a rule stating that “the individual tax returns for the president and vice president are subject to mandatory review ”. But the report left it unclear whether that attrition reflected general dysfunction or whether Mr. Trump received special treatment.
The revelation of routine audits of Mr. Obama and Mr. Biden during their tenure suggested that the agency’s treatment of Mr. Trump was an anomaly.
“I’m absolutely flabbergasted,” said Nina E. Olson, the national taxpayer from 2001 to 2019. “It’s disturbing. You have a process where you control the president, you better control the president.
Reports from the Ways and Means Committee, which obtained Trump’s tax records last month after a year-long legal battle, said the IRS began its first audit of one of his returns as president in April 2019, the same day Representative Richard E. Neal, Democrat of Massachusetts and the chairman of the committee, had inquired about the matter.
The IRS has yet to complete that audit, the report added, and the agency only began reviewing records of Trump’s income while he was president after he left office. Even after the agency belatedly started its search, it assigned only one agent to investigate Mr Trump’s charges, only to run into a large team of attorneys and accountants who objected when the IRS added two more people to help .
The commission’s discovery that the IRS has violated its rules brings fresh focus to concerns about possible politicization at the IRS during the Trump administration and calls for the inspector general overseeing the agency to investigate what went wrong went. It has also raised questions about why the IRS spent so few resources auditing Mr. Trump, who, as a business magnate, had far more complicated tax returns than any previous president.
Under Trump, the IRS was run for most of 2017 by an Obama-appointed commissioner, John Koskinen, and — after about 11 months overseen by an acting head, David J. Kautter — appointed a successor. by Mr. Trump, Charles P. Rettig. None made sure the agency followed its rules requiring presidential audits.
Neither Mr Kautter nor Mr Rettig, who left in October, have responded to a request for comment. Mr Koskinen said his only involvement with Mr Trump’s tax returns was to ensure they were kept in a safe place.
“The good thing about being a commissioner is you never know who is being monitored,” Koskinen said, adding that it would have been inappropriate to ask about the status of an investigation.
The commission’s reports left many questions unanswered as they had little time to act: While Mr Neal had sought Mr Trump’s tax records since 2019, Mr Trump fought that request for nearly four years. The Ways and Means Committee only gained access to the information last month, and Republicans were set to take control of the House in January.
Spokesmen and aides for several other former presidents over the past three decades did not respond Wednesday to questions about whether those presidents had been audited every year they were in office, or said they could not remember.
Senator Ron Wyden, a Democrat of Oregon and the chairman of the Senate Treasury Committee, called the House panel’s findings Wednesday a “blockbuster” that required further attention.
“The IRS was asleep at the wheel and the presidential audit program is broken,” he said. “There is no justification for not conducting the required presidential audits until a congressional inquiry is made.”
The Tax and Customs Administration has repeatedly been the subject of controversy.
The New York Times reported this year that the IRS had initiated particularly invasive audits of two of Trump’s alleged enemies, former FBI director James B. Comey and his deputy, Andrew G. McCabe. Mr. Trump also repeatedly told his chief of staff that he wanted his alleged rivals, including those two, to face tax investigations.
Despite the slim chance of either being singled out, an inspector general’s report concluded that both were randomly selected for the initial pools the agency drew from to conduct its investigations. But it’s unclear how the IRS made the final selections from those pools.
In 2019, Mr. Trump raised his eyebrows by telling Sen. Mitch McConnell, the Majority Leader, to prioritize a confirmation vote for a longtime associate, Michael J. Desmond, as IRS General Counsel over the nomination of William P. Barr as Attorney General. Mr. Desmond had advised a subsidiary of the Trump Organization and was working with two of its tax attorneys.
And in 2018, Mr. Trump appointed as Commissioner Mr. Rettig, who had written a 2016 Forbes column defending Mr. Trump’s refusal to release his taxes as a candidate and portraying the IRS as fully engaged in scrutinizing very rich people.
“During Trump’s career, teams of experienced tax advisors were likely employed to ensure there was no ‘bomb’ in the returns,” Mr. Rettig. “His returns may be a bit inconspicuous, but they are Donald Trump’s returns.”
In fact, the few glimpses of Mr. Trump’s taxes have provided a lot to talk about. The Trump Organization was convicted this month of tax fraud. The New York Attorney General has sued and charged Mr. Trump and three of his children with fraudulently overvaluing his assets.
The Times accessed years of his tax information and published a report in September 2020 that raised numerous questions about the legality of debits and deductions he had used to avoid paying taxes for most years. The article prompted the IRS to consider reviewing Trump’s 2017 tax returns, the commission report said.
The IRS has had few resources for years as Republicans have tried to cut funding. The report highlighted the agency’s broader struggles in dealing with complicated tax returns filed by wealthy people and criticized its willingness to rely on returns filed by major accounting firms to contain accurate information.
Congress has approved an $80 billion overhaul of the IRS, intended in part to hire more specialists capable of auditing high-income files.
The commission issued the reports following a party-line vote, exercising a rarely used power to obtain and disclose private U.S. taxpayer information.
Congress invoked it in 1974, when a committee issued a report on President Richard M. Nixon’s taxes following a scandal over whether he underpaid what he owed. That scandal led the IRS in 1977 to create its rule mandating audits of presidents and vice presidents, to ensure agency officials aren’t in the awkward position of deciding whether to audit their boss.
The Ways and Means Committee used that authority again in 2014, when Republicans accused the IRS of political discrimination because it used conservative terms like “tea party” when selecting groups to monitor for political activity that would make them ineligible for tax deductible donations. But an inspector general found that the agency had also used liberal terms such as “progressive” and “occupy” for the same purpose.
Agency commissioners are political appointees of presidents. Mr. Koskinen — who also led the agency for several years to routinely audit Mr. Obama — was not alone in saying he avoided involvement in presidential audits.
Charles O. Rossotti, who served as IRS commissioner from 1997 to 2002, said he knew presidents were routinely checked, but he played no part in the process.
“I stayed away from that with a 10-foot pole,” said Mr Rossotti.
The requirement that presidential returns be audited is contained in the IRS’s Internal Review Manual, which provides few details. A 2019 IRS document accompanying the commission’s report stated that the investigations were conducted by experienced tax agents.
“The IRS is not aware of any reports of improper bias or bias in conducting an officeholder’s investigation in the more than 40-year history of the mandatory proceedings,” it said.
The House Committee report also documented an extraordinary lack of resources the IRS devoted to auditing Mr Trump’s returns when it started doing so late, initially assigning only one member of staff to the case, despite the unusual complexity of its business entities and partnerships.
The committee cited IRS internal memos stating that “it is not possible to obtain the available resources to investigate all possible issues,” which have been put forward by the more than 400 transfer entities named in the state’s taxes. Mr Trump.
“To look at these returns in depth, we need a team much larger than the current team,” the company said.
