Columnist

Well that’s a new one.

Lawyers for former Trump campaign chairman Paul Manafort have apparently argued that he must be innocent of tax fraud because hey, he wasn’t ever audited by the Internal Revenue Service. Via CNN:

In his opening statement Tuesday, defense lawyer Tom Zehnle told the jury they should expect to hear how Manafort never faced a federal inquiry about his taxes, making it suspicious that prosecutors brought this case.

Special counsel Robert Mueller’s team, however, said in a court filing after midnight Thursday morning that the point about whether Manafort faced an inquiry about his taxes shouldn’t matter. An IRS audit is a civil procedure and not part of the criminal inquiry, prosecutors say.

Manafort is currently fighting in court charges of 18 financial crimes, including submitting false income tax returns to the IRS.

“None of my allegedly fake tax returns ever got audited by the IRS” is a peculiar defense. Absence of prior audits is not evidence of absence of fraud, after all. Maybe it just means you were really good at committing fraud!

Or more likely, it reflects the fact that the IRS has been strapped for cash and has had to dramatically scale back enforcement. That’s thanks to both Congress’s draconian budget cuts and the massive new responsibilities that have been dumped on the IRS in the last decade. As a result, audit rates have fallen sharply.

Audit rates are now at their lowest level in at least 15 years, in fact.


(Source: Internal Revenue Service Data Book, Table 9a.)

Among the groups facing the biggest decline in audits? The ultra-wealthy. That is, people like Manafort.

They still get audited more often than other income groups, but enforcement has nonetheless plummeted compared with years past. In fiscal 2011, among individual tax returns showing positive income of at least $1 million, 12.5 percent got audited by the IRS; by fiscal 2017, the share had fallen to 4.4 percent.

No surprise, given that the IRS has lost a third of its enforcement agents since 2010. Which, by the way, is not exactly good news given the gigantic new loophole President Trump and Republican lawmakers plowed into the tax code, ripe for abuse by the wealthiest Americans.