Why Trump Wanted Immunity from Audits

The New York Times explained why Trump wanted immunity from audits by the IRS. Before his first presidency, Trump appears to have had a tax liability of nearly $80 million. The IRS claimed that he used the same business failure twice to decrease his tax debt.

The new exemption from audits that he gave himself saves him what he owed, which would now be nearly $100 million. It’s not clear whether he will ever again be audited by the IRS.

The Times reported:

A tax audit that President Trump has been fighting since his peak earning days as a television celebrity was most likely wiped away in this week’s settlement with the Justice and Treasury Departments.

The agreement, part of a resolution to an unusual lawsuit that Mr. Trump and his sons filed against the Internal Revenue Service, frees the president from a potential adverse ruling that could have cost him more than $100 million, according to an analysis of his tax returns in 2020 by The New York Times.

Two years ago, Mr. Trump’s middle son, Eric Trump, acknowledged to The Times that the audit remained active. During his father’s first term in office, the matter was put on hold, records obtained by The Times showed.

It is unclear whether the matter was placed on hold again during the president’s current term or was resolved. If it was still pending until this week, the increased interest and penalties would have grown significantly.

Mr. Trump has always argued that he did nothing wrong in the way he filed his tax returns.

The audit dated back to a $72.9 million tax refund that Mr. Trump claimed, and received, starting in about 2010. The total reflected all the federal income tax he had paid, plus interest, for 2005 through 2008, his greatest earning years as the star of his reality show, “The Apprentice.”

Mr. Trump justified the refund claim by declaring huge business losses — a total of $1.4 billion from his core businesses for 2008 and 2009 — that tax laws had prevented him from using in prior years, The Times previously reported.

Records obtained by The Times did not itemize the business losses. But two of the largest-scale projects of Mr. Trump’s career — his long-failing casinos and his money-losing tower in Chicago — appeared to be behind the biggest numbers. In both cases, Mr. Trump made the argument that his interest in those projects met the tax code definition of worthlessness.

In 2008, with sales on his new Chicago condo-hotel tower lagging far behind projections, Mr. Trump claimed that he had so much debt on the project that he would never see a profit. That move resulted in Mr. Trump reporting losses as high as $651 million for the year, The Times and ProPublica found.

The I.R.S. has argued that he, in effect, tried to write off the same losses on the Chicago tower twice.

During his first campaign, Trump contended that it was “smart” to avoid taxes. He may be the first billionaire to skip them altogether.