House passes bill that would reform presidential tax audits

WHAT YOU NEED TO KNOW:

• The House passed legislation on Thursday to require the IRS to publicly release U.S. presidents’ tax returns and audit their filings.
• The passage comes following reports that the IRS failed to audit former President Donald Trump.
• Tax filings released on Tuesday showed the former president paid no income tax in 2020 despite earning millions of dollars from his business empire.

The Democratic-led House of Representatives on Thursday passed legislation that would require the Internal Revenue Service to audit presidents’ tax filings. The passage comes after lawmakers discovered the IRS did not properly audit former President Donald Trump’s returns while he was in office.

The legislation passed on a largely party-line vote of 222 to 201. However, it faces difficulty in passing the Senate and becoming law in the final days that Democrats control both chambers of Congress. The Republicans are due to take control of the House in January.

On Tuesday, Trump’s tax filings released showed that he paid no income tax in 2020, while he was still in office, despite earning millions of dollars from his massive business empire.

The House Ways and Means Committee also said the revenue service did not properly audit Trump’s returns while he was still president.

Trump’s tax records show that his income and tax liability fluctuated significantly between 2015 and 2020. They reveal that the former president and his wife Melanie minimized their tax liability by large deductions and losses and paid little or no income tax in several of those years.

The IRS, which was supposed to audit presidents’ tax returns each year, failed to do so until Democrats asserted action in 2019. The law would make that IRS policy a legal requirement.

The panel found that the IRS assigned only one agent to those audits most of the time and did not examine many of the complex deductions claimed by Trump.

The IRS has declined to comment as of publication.

The passage of the legislation would require the IRS to examine presidential tax returns every year and report on the status of those audits.

Ways and Means Committee Chairman Richard Neal, a Democrat, said the legislation’s goal is to strengthen presidential oversight, and not target Trump.

“This is not about a president; this is about the presidency going forward,” Neal said.

Republicans warn the legislation would set a critical precedent by making it easier for lawmakers to release private citizens’ tax information.

“This will provide a dangerous new political weapon that invites political retribution,” said Representative Kevin Brady, the panel’s top Republican.

Source: POLITICO