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Former President Donald Trump's tax records are expected to reveal many "complicated" layers when his tax returns are released in the coming days.
The information could expose how vastly understaffed and ill-prepared the Internal Revenue Service (IRS) is when auditing complex financial records such as Trump's, according to Len Burman, a co-founder of the Tax Policy Center and a fellow at the Urban Institute. Since 1977, the IRS has been required to audit each president's taxes.
Burman said Trump's taxes are likely the most complex of any president, leading to a situation in which the IRS didn't begin the audit until two years into his presidency.
The level of complexity is expected to be revealed in the coming days, after the House Ways and Means Committee voted this week to release years of Trump's tax returns.
During his first campaign and continuing through his presidency, Trump refused to release his tax records, citing an ongoing IRS audit. But the IRS didn't audit Trump until 2019 when Ways and Means Committee Chairman Richard Neal, a Democrat, requested the returns.
"It's not surprising that they could audit President Obama and President Biden's tax returns because they are a lot simpler," Burman told Newsweek.
Burman said presidents tend to be richer than most people and career politicians often invest in corporate stock or mutual funds. Sometimes they have other avenues of income, such as book royalties. Each is much easier to monitor than a self-employed president investing in partnerships.
"Even if President Trump was complying with the law, his tax returns would be really complicated," Burman said.
Burman said Trump's tax returns are so complex because they had many partnership interests reported. A partnership consists of a group of people who share the ownership of a business enterprise. It's difficult for the IRS to track ownership with partnerships, and Burman said some are designed to avoid taxation.
"It would be really challenging to audit those kinds of returns," he said.
Burman said the IRS has been "vastly underfunded" since the 1990s and that it was "alarming" that the organization lacks the resources to employ staff with strong technical skills needed to audit multi-layer partnerships such as Trump's.
Trump's tax returns included 500 LLCs, and Burman said hundreds of those were partnerships.
Urban-Brookings Tax Policy Center Senior Fellow Steven Rosenthal told Newsweek that the IRS struggles to audit sophisticated taxpayers such as Trump. In addition to the lack of funding and resources, Rosenthal said the IRS could have faced other challenges, too. He questioned whether the IRS' failure was specific to Trump.
"Were IRS employees at the bottom or the top concerned about challenging Trump?" he said. "Did they delay audits for fear of retaliation? To what extent did the president put pressure on the process directly?
"Trump is a master manipulator. He delays and delays. The fact the system broke down with him was unsurprising to me."
About the writer
Anna Skinner is a Newsweek senior reporter based in Indianapolis. Her focus is reporting on the climate, environment and weather ... Read more