Donald Trump is getting a lot of heat right now over a pretty dry topic: his U.S. tax returns. Mitt Romney, who has been making the TV news rounds, claimed this week that he expects to see a “bombshell” in Trump’s tax returns, if only the candidate would release them.
Not missing a beat, Trump, in turn, raised eyebrows at the Republican presidential debate on Thursday when he said that he can’t release his tax returns yet because he is in the midst of an audit. He also added this claim, a different sort of bombshell: “I’ve been audited every year. Twelve years or something like that.”
Could that be true?
The odds of getting audited 12 years in a row are pretty slim, but according to experts, not impossible.
With less than 1% of Americans getting audited every year, and that number shrinking each year as the IRS workforce and budget has slimmed down, it seems like that’s a bit of a stretch. However among “high net-worth individuals,” the rate is higher for audit: Nearly 7% get audited. And Trump would certainly qualify as a high net-worth individual.
Honestly, if the government is going to audit someone, it makes sense for the IRS going to spend time and money and resources auditing somebody who makes billions rather than someone who make $30,000.
Most don’t know that the IRS actually has a rule in its agent manual, that if a person is audited and receives an assessment of zero (that is, does not owe additional money), the IRS cannot audit them again for two years.
That means if Trump is telling the truth, then the IRS has repeatedly found discrepancies in his returns. Which should be a read flag to more than the IRS.
Until recent years, it was typical for big corporations to get audited every year. This was called the Coordinated Examination Program. Most big public corporations even had rooms that are designed specifically for use by visiting IRS agents.
But as the IRS’s budget has been slashed, it has shrunk the program. So this does not happen as much as it used to.
Another reason Trump is more prone to tax audits because of his wealth in general. When Trump says he has been audited, he is likely referring to both himself, as an individual, and to his companies, or companies in which he has a stake. This would make sense because that’s a lot of money going in and out of multiple businesses.
Trump also has money invested all over the world. Trump owns golf courses and resorts in places like Scotland, Ireland and Dubai. So the IRS is definitely paying closer attention to people who have money abroad.
It isn’t just about his money abroad, either, but the complexity of his business empire. Trump has partnerships, trusts, subsidiaries, and all manner of entities in which he has full or partial ownership. That means his return isn’t as simple as just earnings from a single corporation.
How long will it take?
What about Trump’s excuse that he can’t yet release his tax returns because he is in the midst of an audit? Mitt Romney didn’t buy it, and tweeted during the debate: “No legit reason [Trump] can’t release returns while being audited, but if scared, release earlier returns no longer under audit.” Then the IRS said the same thing, telling USA Today that while the agency cannot discuss the status of anyone’s returns, “nothing prevents individuals from sharing their own tax information.”
Trump indicated that he would release the returns as soon as the audit is complete, but that he can’t be sure it will be complete by November. Whether this is a good excuse or not, could it really take that long?
Whether or not his current active audits are complete, Trump won’t get to hold out forever: If he makes it to the general election, there will be major pressure on him to release his returns. While not required to release them by law, presidential candidates have a long history of doing so by choice.