White House press secretary Sarah Huckabee Sanders claimed, again, on Tuesday the Republican tax overhaul “could cost the president a lot of money.” Skeptical reporters asked the White House to prove it.
“For 2016, the president can release his taxes,” NBC News's Hallie Jackson said. “Why won't he do that and put all of these questions away, back up what you're saying, prove that what you're saying is correct?”
“As we've said many, many times before, the president's taxes are still under audit,” Sanders replied. “And until that is completed, then we wouldn't move forward on putting his taxes out.”
President Trump's 2016 tax return is already under audit? Really? He just filed in October.
“Is it possible for the IRS to open an audit of a tax return as soon as it's been filed?” former IRS official Marcus S. Owens asked rhetorically when I spoke with him on Wednesday. “Two months, really, in tax time, is essentially the same as when it was filed. It takes about that long for the return to work its way through the service center and actually be available for a revenue agent.”
An audit within two months would be awfully fast — but not impossible, said Owens, who directed the IRS's Tax-Exempt and Government Entities Division before becoming a partner at Loeb & Loeb in Washington.
“I guess the least likely possibility is that Trump is under a sort of permanent audit,” Owens said. “Mega corporations — ExxonMobil and organizations of that magnitude — are essentially under a constant level of IRS audit activity . . . I don't think Trump's enterprise is like that at all. It's big, it's complex, but I think there's a certain level of consistency, I would guess, in his filings. It's not the same as dealing with a really heavy-duty economic engine.”
Another possibility, which Owens considers more likely, is the IRS flagged something while auditing one of Trump's previous filings and decided in advance of his 2016 filing that it would review the new document as soon as it arrived, to determine whether Trump continues to employ whatever tax strategy the IRS might be scrutinizing.
“They want to make sure that as the case, or cases, move through IRS appeals, if they ever come out in favor of the revenue agent — that is that Trump owes more tax than he paid — the IRS is going to want to get every year in which that same sort of scenario appears,” Owens said. “The first years that were under audit, then everything moving forward. I think that's what's going on here.”
“Now,” Owens added, “none of this, in any way, precludes Trump making his returns public. The problem with making them public, if you are someone in the business Trump is in, is you're immediately going to have a whole battalion of tax lawyers and accountants who are not representing Donald Trump looking over those same documents and starting to shoot holes in the reporting Trump does. Trump's real danger here, from a practical standpoint, is suddenly the IRS lawyers and accountants are going to have a lot of backup — and a lot of backup that is aggressive and antagonistic toward Trump.”
Trump's reason for not releasing tax returns has shifted over time. He has cited audits as a reason, as Sanders did Tuesday. He has set conditions for releasing the returns, such as Hillary Clinton releasing emails deleted from her private server. He has claimed, as he did in January, “the only one that cares about my tax returns are the reporters.”
The most candid explanation — the one that matches Owens's — came from Donald Trump Jr., the president's son, who told the Pittbsurgh Tribune-Review last year his father does not want to release his returns “because he's got a 12,000-page tax return that would create . . . financial auditors out of every person in the country.”
The president's 2016 tax return could be under audit already, but that alone is not a reason to keep the document out of view. A more plausible reason is Trump has determined it is better to endure questions about his lack of disclosure than to allow the public to pick through his filings.