Calls for investigation after Trump tax returns expose 'audit' lie — and years of 'negative income'

The House Ways and Means Committee on Tuesday voted to release years of former President Donald Trump's tax returns and revealed that the IRS did not perform mandatory audits during his first two years in office.

The panel voted to release Trump's tax returns from his years in office after winning a yearslong court battle to obtain them even though the IRS was required to turn over the information to the committee by law. The committee said it discovered that the IRS failed to carry out mandatory audits of the former president's taxes until the same day that Ways and Means Chairman Richie Neal, D-Mass., sent a written request in April 2019 for the information. Trump, who defied decades of tradition by refusing to release his tax returns, had repeatedly falsely claimed that he could not release his tax returns himself because he was under audit.

The IRS failed to act even as Trump's tax forms raised questions about how he used tax deductions to reduce his tax liability, according to a separate report from the Joint Committee on Taxation.

The tax returns themselves are expected to be released publicly in the coming days after certain information is redacted.

"The research that was done as it relates to the mandatory audit program was nonexistent," Neal told reporters after Tuesday's hearing.

Rep. Lloyd Doggett, D-Texas, who sits on the committee, told CNN that the returns showed that there were "tens of millions of dollars in these returns that were claimed without adequate substantiation."

Former IRS Commissioner Josh Koskinen told The New York Times that "it does seem me to be a legitimate question: If the IRS had the responsibility and wasn't auditing, what's the explanation?"

After the IRS finally launched its first audit in 2019, Trump used Freedom of Information Act requests to delay the probe and failed to "provide all the facts needed," among other delay tactics, according to the committee's report. The agency only assigned a single agent to the task, which further slowed down the audit.

A Wall Street Journal analysis of the tax data released by the committee showed that Trump and his wife Melania declared "negative income" in four of the six years between 2015 and 2020. The Trumps paid $750 or less in income taxes in three of those years. In all, their total net tax liability over the six years was $1.8 million, including self-employment taxes and household employment taxes.

The tax data showed the Trumps' income fluctuating wildly, rising to as high as $24 million in 2018 after selling properties and investments before falling to $4.4 million in 2019, the only other year they reported positive income.

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Earlier tax documents obtained by The New York Times showed that Trump paid no income taxes at all in 10 of the previous 15 years before taking office because he reported losing more than he earned.

The new tax data shows that Trump reported $60 million in losses during his presidency.

The Times also previously reported that Trump used so-called land donations as charitable contributions to reduce his tax burden, writing off property taxes on his Westchester County Seven Springs estate by reclassifying it from a personal residence to an investment property. Trump has written off $2.2 million in property taxes as a business expense on the property even though the law only allows individuals to write off up to $10,000 per year.

The committee said Trump also made charitable contributions in cash, which warrants additional investigation.

"We would have inquired as to whether the large cash contributions were supported by required substantiation," the report said, adding that the IRS is looking into the tax scheme.

Legal experts urged further investigation into the IRS' failure to audit Trump's tax returns.

"The IRS dereliction of duty is sadly in line with Secret Service, FBI and DHS subservience to Trump when in office. Disgraceful," tweeted former federal prosecutor Andrew Weissmann, who served on special counsel Bob Mueller's team.

"Investigations need to take place, and that can happen internally at the agency or the Justice Department might decide to step in to figure out what went wrong," former U.S. Attorney Joyce White Vance told MSNBC. "It's tough not to see some form of corruption lurking in the wings here, but we do need to find out what precisely those facts are," she added.

House Speaker Nancy Pelosi, D-Calif., said after the vote on Tuesday that the House will "swiftly" take up Neal's new legislation requiring the IRS to conduct an audit of the president's finances.

Trump's campaign slammed the committee over the release, falsely describing it as a "leak."

"This unprecedented leak by lameduck Democrats is proof they are playing a political game they are losing," a campaign spokesperson said in a statement. "If this injustice can happen to President Trump, it can happen to all Americans without cause."

Republicans on the committee also accused Democrats of weaponizing the tax returns.

"Let me be clear: Our concern is not whether the president should have made his tax returns public, as is traditional, nor about the accuracy of his tax returns," Rep. Kevin Brady, R-Texas, said Tuesday, according to the Post. "Our concern is that, if taken, this committee action will set a terrible precedent that unleashes a dangerous new political weapon that reaches far beyond the former president."

Neal defended the release in a press conference.

"This was not about being punitive. This was not about being malicious," he said, citing the IRS' failure to perform its responsibility.

"It's about one office: The presidency," added Rep. Judy Chu, D-Calif., who sits on the committee. "It's about making sure there are checks and balances for the presidency."

Trump's tax returns, meanwhile, have quickly become cable news fodder.

"It proves that Hillary Clinton was right all along. Nancy Pelosi was right all along; Chuck Schumer was right all along. The Democrats were right all along. Reporting from the New York Times was right all along; Washington Post, too, was 100 percent correct all along. Donald Trump was not under audit. Donald Trump was lying," MSNBC host Mike Brzezinski said Wednesday.

"He was desperate to hide the truth from Americans," she continued. "That truth, that far from being a shrewd businessman, he was, in fact, the biggest loser out of the 300 million Americans who filed their taxes with the IRS. The man lost more money than any other American, at a time when he was writing 'The Art of the Deal.'"