For Donald Trump, the presidency offers no escape from tax audits — raising the chance that the public might never see his returns.
As a candidate, Trump cited more than a decade's worth of audits by the Internal Revenue Service as he refused to release any of his personal tax information. As president, he'll be subject to IRS administrative procedures that call for mandatory examinations of the chief executive's tax returns.
That continued scrutiny raises questions about whether Trump will ever make his tax returns public. By tradition, sitting presidents release their returns annually, but there's no law requiring the president to do so. And there's no indication that Trump — fresh from an unorthodox campaign — plans to embrace that tradition.
"What Trump showed was that nobody really cared about his returns," said Stephen Moore, an economist who advised the billionaire businessman on tax and economic policy. "At this point, I don't think it matters in his mind." Spokeswomen for Trump didn't respond to e-mailed requests for comment.
Federal ethics rules require the president to file annual financial disclosures detailing assets, liabilities and income within ranges, along with a list of entities in which he holds an interest. But that form doesn't detail the taxes an individual has paid.
Trump's taxes dogged him during the campaign, as Democrat Hillary Clinton cited media reports to allege that he hadn't paid federal income taxes for years. "That makes me smart," Trump responded.
Now, though, a lack of transparency on the new president's taxes might damage the public's regard for the IRS, which is already one of the federal government's most lambasted agencies, tax specialists say. Trump will have the authority to appoint the agency's head and recommend its annual budget for approval by Congress.
"Trump would be the boss over the agency reviewing him, so isn't that a lot of pressure for them to do the audit in a certain way?" asked Richard Schickel, who spent more than three decades as a senior IRS revenue officer handling high-priority, delinquent accounts before retiring in 2013.
Schickel, who now runs RMS Consulting LLC, a tax-consulting firm in Tucson, Arizona, also said that "whatever the White House wants from the IRS they get, because that's where the funding comes from."
The agency's own rules, designed to protect taxpayers, will leave it up to Trump to permit any public scrutiny. Federal law prohibits IRS officials from discussing specific taxpayers, but in an e-mailed statement, the agency stressed that its audits are "handled by career, non-partisan civil servants, and the IRS has processes in place to safeguard the exam process."
"The IRS has procedures in place that adhere to internal control standards, which help ensure fairness and integrity in the return selection process," according to the statement.
After Trump cited audits in declining to release his tax returns, various commentators said there's no rule or law preventing people from releasing their returns, even if they're under audit. Nonetheless, tax advisers have said that a release might have enabled members of the public to find deficiencies auditors missed — adding to any potential tax liability.
Since the 1970s, when then-President Richard Nixon ran into personal tax trouble, the IRS has had a formal administrative procedure that says in part: "The individual income tax returns for the president and vice president are subject to mandatory examinations."
Trump said in February that he had been under continuous audit for the past 12 years; his lawyers released an unusual letter in March that said the years 2009 forward remained under review.
Trump filed the annual financial disclosures that are required of candidates; his most recent one, in May, listed ownership interests in more than 500 entities, such as limited liabilities and partnerships.
His campaign said at the time that the form reflected $557 million in income, mainly from real estate, licensing golf resorts, casinos, hotels and rentals since January 2015. But the form appears to have conflated net income and gross revenue for some of his largest properties.
While federal law prohibits any executive-branch officer from requesting that the IRS begin or end any investigations of a particular taxpayer, the president has the right to seek the resignation of the agency's head. IRS commissioner John Koskinen, whose term expires in November 2017, has said he'd resign immediately if the next president asks him to.
Some House Republicans have called for Koskinen's impeachment over his handling of the agency's response to revelations that it targeted conservative groups for additional scrutiny over their applications for non-profit status before he took office.
Regardless of who's in charge, the tax agency can't escape showing a certain amount deference to the White House, said David Herzig, a tax law professor at Valparaiso University.
"The IRS is supposed to be neutral, but clearly as an executive agency, they have to take a cue from the chief executive," Herzig said.
Joseph Thorndike, a tax historian who writes about presidents' taxes for the trade publication Tax Analysts, said a lack of disclosure would mean the public will simply have to have faith in its tax agency.
"We will have to trust the IRS to do its job," he said, "and most people don't trust the IRS."
© Copyright 2021 Bloomberg News. All rights reserved.