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Trump pays IRS a penalty for his foundation violating rules with gift to aid Florida attorney general

By David A. Fahrenthold

September 1, 2016 at 2:23 PM

Donald Trump is greeted by Florida Attorney General Pam Bondi at a March 14 campaign event in Tampa. (Gerald Herbert/AP)

Donald Trump paid the IRS a $2,500 penalty this year, an official at Trump's company said, after it was revealed that Trump's charitable foundation had violated tax laws by giving a political contribution to a campaign group connected to Florida's attorney general.

The improper donation, a $25,000 gift from the Donald J. Trump Foundation, was made in 2013. At the time, Attorney General Pam Bondi was considering whether to investigate fraud allegations against Trump University. She decided not to pursue the case.

Earlier this year, The Washington Post and a liberal watchdog group raised new questions about the three-year-old gift. The watchdog group, Citizens for Responsibility and Ethics in Washington, filed a complaint with the IRS — noting that, as a registered nonprofit, the Trump Foundation was not allowed to make political donations.

The Post reported another error, which had the effect of obscuring the political gift from the IRS.

In that year's tax filings, The Post reported, the Trump Foundation did not notify the IRS of this political donation. Instead, Trump's foundation listed a donation — also for $25,000 — to a Kansas charity with a name similar to that of Bondi's political group. In fact, Trump's foundation had not given the Kansas group any money.

The prohibited gift was, in effect, replaced with an innocent-sounding but nonexistent donation.

Trump's business said it was unaware of any of these mistakes until March, when it heard from the watchdog group and The Post.

On Thursday, Jeffrey McConney — senior vice president and controller at the Trump Organization — said that after being notified, Trump filed paperwork informing the IRS of the political gift and paid an excise tax equal to 10 percent of its value.

McConney said that Trump had also personally reimbursed the Trump Foundation for $25,000, covering the full value of the improper gift. McConney blamed a series of mistakes, all of them unintentional. McConney said there had been no attempt to deceive.

"It was just an honest mistake," McConney said. He added: "It wasn't done intentionally to hide a political donation, it was just an error."

McConney said that he believed Trump had now done everything necessary to rectify the error. "We've done what [we] were instructed to do," he said.

Related: [Inside The Post's search for evidence that Donald Trump gives his own money to charity]

Trump started the Donald J. Trump Foundation in the late 1980s, to give away proceeds from his book, "The Art of the Deal." He remains the foundation's president, but — in recent years — Trump has stopped putting his own money into its coffers. Tax records show no gifts from Trump himself to the foundation since 2008; it has instead received donations from a smattering of Trump's friends and business associates.

The Trump Foundation has no paid staff and relatively little money for a superwealthy man's personal charity: At the end of 2014, it had $1.3 million in the bank. The foundation's giving is small and scattershot, with its gifts often sent to people whom Trump knows, or charities that hold their galas at his properties in New York and Florida.

In this case, Trump staffers said that a series of unusual — and unrelated — errors by people working for Trump had led to both the improper donation and to the omission of that donation from the foundation's tax filings.

The sequence began when Bondi herself solicited a donation from Trump. That solicitation was reported this year by the Associated Press. That request came as Bondi was considering allegations that Trump University — a real estate seminar business — had defrauded customers in Florida.

Trump decided to give to the group connected to Bondi, called "And Justice for All."

Then, a request for a check was sent to an accounts-payable clerk at Trump's headquarters. This clerk was empowered to cut checks from both Trump's personal account and from the Trump Foundation.

In most cases, political contributions were paid out of Trump's own account. But, in this case, that didn't happen.

In March, Trump's chief financial officer told The Post that a mistake occurred when an accounting clerk — following office protocol — looked in a book that contained a list of all official charities. The clerk's standing order from Trump was that, if the payee was listed in this book of charities, the check should be paid from the Trump Foundation, not from Trump's own account.

The clerk found a group called "And Justice for All" listed in the book.

The clerk cut the check from the Trump Foundation.

But that was wrong.

Trump's chief financial officer, Allen Weisselberg, told The Post that the charity in the book was actually from Utah, and unconnected to Bondi. If the clerk had known that the check was meant for a political group, Weisselberg said, "we would have taken it out of [Trump's] own personal account."

After that, a check from the foundation went out. It did not go to Utah but to Bondi's group in Florida, and was deposited.

Then, when the Trump Foundation sent in its tax filings that year, it compounded the original error by leaving out any mention of a political gift. When the IRS form asked if the Trump Foundation had spent money for political purposes that year, the foundation wrote "No."

A section of the Trump Foundation's 2013 tax filing, in which the foundation said it had not engaged in political activity. In fact, it had sent a check to a political group in Florida, in violation of IRS rules.

Then, the Trump Foundation told the IRS about a gift that did not exist.

The foundation told the IRS that it had given $25,000 to a third group, a charity in Kansas with a similar name, "Justice for All." In fact, the Trump Foundation had not actually sent the Kansas group any money.

This new, incorrect listing had the effect of camouflaging the prohibited gift. Trump's CFO said that the listing of the Kansas group was another mistake, made by the foundation's accountants.

An excerpt from the 2013 tax filings of the Donald J. Trump Foundation. The $25,000 gift to "Justice for All" did not exist. It took the place of a real $25,000 gift that had violated IRS rules, because it went to a campaign group in Florida. The name of the group that got the prohibited gift: "And Justice for All."

The Post asked McConney, the Trump Organization controller, for a copy of the IRS form that Trump had filed along with his $2,500 penalty tax. McConney said he would check to see if it could be released.

The IRS declined to comment about the situation.

But on Thursday, the liberal watchdog group said that the Trump Foundation needs to do more that it has. Under IRS rules, it appears that the Trump Foundation must seek to get the money back from the political group.

Although Trump has apparently reimbursed the foundation, "that's not the same," said Jordan Libowitz, of Citizens for Responsibility and Ethics in Washington. "It's about getting the money back from the organization that wasn't allowed to have it in the first place."

So far, that hasn't happened.

In fact, the treasurer of Bondi's political group said that she had actually tried to send the money back, without success.

"I wrote a check, sent it via FedEx. I received a call from the Trump Foundation, saying that they had declined to accept the refund," said Nancy Watkins in an interview with The Post. She said this had happened in the spring, after she learned that the Trump Foundation was not allowed to make political gifts.

Watkins said she was told, "Mr. Trump had reimbursed the foundation with a personal check. And that was the end of it."

Editor's note: An earlier version of this post said tax records show no gifts from Trump himself to his foundation since 1988. It should have been 2008. This version has been corrected.


David A. Fahrenthold is a reporter covering the Trump family and their business interests. He has been at the Post since 2000, and previously covered Congress, the federal bureaucracy, the environment, and the D.C. police.

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