IRS Mandatory Presidential Audit Policy in the Spotlight

WASHINGTON (AP) — An IRS policy governing audits of tax returns filed by U.S. presidents is under new scrutiny after a report released by a congressional panel found the agency did not hadn’t completed the mandatory inspection of Donald Trump’s statements until Congress pressed for information on dealing with it.

The three-point policy states that the President’s and Vice President’s individual statements are subject to mandatory review, “should always be kept in an orange folder”, should be kept out of sight of IRS employees and “should be locked in a lockable drawer or cabinet when the reviewer 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 back to 1977, was “dormant, at best” during the early years of the Trump administration. Congressional Democrats are responding by introducing legislation that would codify IRS policy into law with stricter requirements.

Tax experts say the failure to launch the audit sooner is emblematic of a broader problem with the IRS’ ability to review returns from high-income taxpayers – and a reminder of Trump as president defying the norm.

John Koskinen, who served as IRS commissioner during the Obama and Trump administrations, said the policy has been out of public view because presidents have traditionally released their tax return summaries.

“It only became a problem with a president who refused to release his tax returns,” Koskinen said. “If Trump had released his statements, no one would have raised this issue.”

Trump’s recent tax returns to Congress are the culmination of a years-long legal battle between Trump and Democratic lawmakers.

Steve Rosenthal, senior fellow at the Urban-Brookings Tax Policy Center, said the IRS’ failure to audit Trump shows “the mandatory audit program is broken, we can’t rely on the current system to audit fairly.” President, and there is a general problem of the IRS auditing sophisticated taxpayers.

Rosenthal added: “It’s a much bigger problem than Donald Trump – yes, he makes bad things worse, but it was bad to begin with.”

A new injection of $80 billion through the so-called Cut Inflation Act is meant to fix the beleaguered agency’s weak staff, outdated technology and a host of other problems . Republicans who are set to take control of the House in less than two weeks, however, have said they want to cut that funding.

Tuesday’s committee report found the IRS didn’t begin auditing Trump’s 2016 tax returns until April 3, 2019, more than two years into Trump’s presidency and just months after the Democrats took control of the House. The date coincides with Rep. Richard Neal, D-Mass., the panel’s 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 review of the president’s taxes, along with “disclosure of certain audit information and related statements in a timely manner.”

Senate Finance Committee Chairman Ron Wyden, D-Ore., said he would work to get the bill passed by the Senate. House Speaker Nancy Pelosi said the chamber would “move quickly” to move the legislation forward.

The issue highlights frustration with the so-called tax gap, which is the difference between the amount of money owed to the federal government and the amount paid. IRS data released in October projects that for 2017 to 2019, the estimated average gross tax gap will be $540 billion per year.

Treasury Secretary Janet Yellen said in August, and repeated it in various speeches, that new funds appropriated by Congress would be used to increase audits on wealthy individuals, corporations and complex intermediaries.

“It’s tough work that requires a team of sophisticated revenue officers in place to spend thousands of hours poring over complicated returns, and it’s also work that has huge earning potential,” she told former IRS commissioner Chuck Rettig in August.

In an application of the IRS policy on mandatory presidential audits, well-trained officers, forensic experts, tax attorneys and others would be required to oversee a presidential audit as complicated as Trump’s, which included hundreds companies, properties and complex business interests.

The congressional report pointed to understaffing and the availability of experts to review Trump’s taxes. The report says the IRS believed the accuracy of his returns was assured because he had legal counsel and an accounting firm representing him.

Whether presidential tax documents should be disclosed is another topic of debate among tax pundits and advocates.

Rep. Kevin Brady of Texas, the top Republican on the Ways and Means Committee, said Congress would set a “dangerous new precedent” by releasing presidential records. Koskinen said “it’s an important serious precedent for a committee to ask for returns and then release them.”

“I see two big issues here — what the IRS is going to do to make sure presidents are audited regularly, and what is the rationale for releasing these statements,” Koskinen said.

Rosenthal said he believes presidential returns should be made public to ensure proper oversight.

“When this information is made public, the President will be more careful about cheating on their taxes and going public – the results would put both the IRS and the President on their best behavior,” he said. he declares.


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