Some Democrats want more than just Trump’s personal tax returns Trump’s business returns could reveal much, much more By Brian Faler
Top Democratic lawmakers are preparing to request President Donald Trump’s personal tax returns, but some liberal lawmakers say they should also demand his business tax filings.
The business returns are much more likely to indicate conflicts of interest and other possible malfeasance Democrats hope to uncover, such as suspicious ties to Russian interests and whether he took aggressive steps to avoid paying taxes.
Trump’s financial disclosures show he has more than 500 partnerships and other types of businesses, and each of those would generally have its own tax return.
There are other types of returns Democrats could seek as well. They could demand returns from his trusts — a check from Trump’s former lawyer Michael Cohen released earlier this month, that he said reimbursed him for hush payments to Stormy Daniels, was written out of the account of a revocable trust. Democrats might want First Lady Melania Trump’s returns, because if she and her husband file separately yet own a business together they could allocate income from it to her and not him.
Trump’s recently dissolved foundation, which New York’s attorney general said had engaged in a “shocking pattern of illegality,” would have its own filings too, though much, if not all, of those are already publicly available.
On top of all that, there is the tricky question of how many years back Democrats want to investigate.
Some liberals want House Ways and Means Chairman Richard Neal, who has the power to seize Trump’s returns under an arcane statute, to investigate everything with the president’s name on it, hoping to find criminal bombshells. They will likely jump on the Massachusetts Democrat if they believe he’s not giving them an adequate scrubbing.
But that threatens to bury lawmakers in thousands of returns, and Democrats are working under time constraints; they want to have something to show the public before next year’s elections. It will take time to digest Trump’s returns and there will likely be a big court fight before the administration hands anything over. The tax panel also has other priorities in addition to investigating Trump’s taxes.
Some say Democrats ought to take a more incremental approach by requesting a sample of Trump’s returns, with a promise to follow up on any leads they present. That would be more manageable and also help Democrats fend off complaints they are on a “fishing expedition,” said John Buckley, a former longtime Democratic tax aide on the Ways and Means Committee.
“Strategically, you’re better off with a narrow, well-targeted first request,” he said. “The first request doesn’t mean that’s all you’re ever going to ask for.”
“‘We’re going to get there, we’re just not going to get there in one step’ — that’s what Neal needs to say,” Buckley said.
But Steve Rosenthal, a senior fellow at the Tax Policy Center, said Democrats should pursue a broader investigation, and downplayed the amount of time that will be needed to parse the president’s returns.
“Five thousand pages is nothing,” he said. “Even 20,000 pieces of paper” is a “minor cost.”
“This is a pretty significant issue for the country,” he added.
The debate over the seemingly simple question of what to ask for is an indication of how Trump’s surely complicated taxes, thanks to his wealth and his career in business, pose a unique challenge to lawmakers trying to vet his finances.
Democrats are preparing to employ a little-used law to try to seize Trump’s tax returns, which he’s steadfastly refused to disclose. A nearly century-old statute allows the heads of Congress’ tax committees to examine anyone’s private tax information. Experts say lawmakers can vote to make that information public. The administration has signaled it will fight the request.
Neal has said little about what he plans to demand, while his colleagues on the panel have given conflicting accounts of their intentions. Last week, Rep. John Larson (D-Conn.) said he expects Neal to request both Trump’s personal and business returns. The week before that, Rep. Bill Pascrell (D-N.J.), another tax writer, said Neal would request ten years’ worth of personal returns, but not his business ones.
Trump’s personal returns would include basic information like how much he earns, how much he pays in taxes and what, if anything, he gives to charity. It would also include summary information about his businesses, such as how much he earned from them.
But the details of those businesses — like whom he is working with, whom he owes money to and whether he is taking aggressive steps to avoid paying taxes on them — would show up in separate returns.
“If you start with the personal returns, what you’ll run into pretty quickly is a lot of references to investments that don’t tell you very much about what it is,” said former IRS Commissioner John Koskinen. “It’s going to drive you to the business return.”
But those filings could not only be voluminous, they could also be quite complicated.
There could also potentially be collateral damage if Democrats make his partnership filings public because they would likely reveal private information about not just Trump but other people in business with him. That could be important if they showed Trump is in business with prominent Russians, for example, but it could also violate the privacy of other people who are of little interest to Congress unless lawmakers take special steps to protect them.
How many years to look at is another potentially difficult issue.
House Democrats passed legislation earlier this month demanding a decade’s worth of returns from Trump, but that wouldn’t answer questions raised, for example, by a 1995 return leaked to The New York Times showing Trump took a $916 million loss that year.
But it’s not clear how many of Trump’s old returns the government still has on file.
The IRS has a policy of disposing of filings after a certain number of years, though the standard depends on the type of return and it doesn’t apply in cases where someone is under audit or owes the agency money. The agency generally dumps individual returns after six years, while it keeps corporate returns for 50 years and hangs onto estate tax filings for 75 years.
Lawmakers are unlikely to get Trump’s 2018 returns anytime soon. He probably won’t file those until later this year — wealthy people often wait until October to do their taxes because it takes a while to collect tax information from business partnerships. So Democrats likely won’t be able to determine if Trump benefited from the GOP tax rewrite that took effect in 2018 or if he made any moves in response to the law.
Many expect lawmakers to turn over Trump’s returns, should they get them, to Congress’ Joint Committee on Taxation to analyze. The agency is comprised of tax lawyers, accountants and economists who serve as nonpartisan technical advisers to lawmakers — and it has done this sort of thing before.
President Richard Nixon faced questions over whether he had cheated on his taxes and, in a bid to clear the air, he asked JCT in December 1973 to audit his returns from 1969 through 1972. Though his finances were less complicated than Trump’s likely are — the main issues for Nixon had to do with charitable deductions he had claimed as well as whether he paid enough in capital gains taxes on an apartment and land sale — it still took JCT four months to analyze the filings.
In April 1974, the agency produced a 1,000-page report finding that Nixon owed $475,431 in unpaid taxes and penalties.
Source:Politico.com