Trump’s tax returns have been released but will anything change?

Former President Donald Trump’s tax returns are now public information, despite his repeated, years-long efforts to keep them private. The House Ways and Means Committee, headed by Richard Neal (D-MA) voted to released the returns, which span from 2015 to 2020, Friday after a three-year-long effort to obtain the documents.

The documents run thousands of pages and include information about Trump’s personal finances, his many business entities, and the finances of his family members. Though many patterns of questionable accounting and business practices have already been revealed through previous reporting and investigations, the documents do bring additional information to light, like loans he gave to his children, which could potentially be monetary gifts in disguise, as well as foreign bank accounts and businesses the former president maintained while in office.

Though Trump’s finances have gotten him into trouble before, and he’s in the throes of multiple investigations at the moment, the now-public returns may not themselves spell an end to his political career or businesses. Thus far, no serious bombshells have been uncovered in the nearly 6,000 pages of documents that the Ways and Means Committee released, but they’re now subject to scrutiny by independent experts who may be able to uncover new information about Trump and his financial orbit.

The returns do demonstrate why the presidential audit process is important. That aspect of the American tax code mandates that the president and vice president’s finances should be subject to strict examination each year of their tenure in office. The Ways and Means Committee requested the tax returns as part of a presidential audit review — to determine whether the auditing process is sufficient and properly run.

Trump’s financial documents were not subject to the presidential audit until 2019, and the process seems to have been triggered by the Ways and Means Committee’s request for the tax returns. The full audits of Trump’s tax returns were not completed while he was in office, and any documentation like loan agreements or receipts might now be lost or destroyed.

To that end, the House of Representatives last week passed legislation to codify the Internal Revenue Service’s presidential audit process into law, as well as make the tax returns of the president and their spouse public. While the bill won’t pass before a new Congress is sworn in in January, Senate Democrats plan to push a vote on the issue next year, according to CQ Roll Call. However, any legislation seen as an attack on Trump will likely be difficult to pass once Republicans take back the House in January.

Vox spoke with Virginia Canter, the chief ethics counsel for Citizens for Responsibility and Ethics in Washington, about the presidential audit process, what we’re learning from Trump’s tax returns, and what we still might not know about his finances. Canter previously served as ethics counsel for the Department of the Treasury, as well as White House Associate Counsel to Presidents Bill Clinton and Barack Obama. The conversation below is lightly edited for clarity.

Ellen Ioanes

I want to start with the presidential audit process. We’re learning that Trump has somehow escaped that regular auditing process. And since there is a clear process outlining how that should go, it’s kind of hard to imagine that was just an oversight or an error on the part of the IRS.

Virginia Canter

No, this is absolutely scripture. It’s not something to be messed with; every president understands that he’s subject to audit, since President [Richard] Nixon, and for good reason. You have to make sure the president himself is in compliance with the tax law, particularly because every US person is affected by taxes.

Ellen Ioanes

It’s hard to imagine that that was just some sort of error, like there had to be some sort of interference, I would imagine.

Virginia Canter

So this is the thing. I’ve worked at Treasury and I worked in two White House Counsel’s offices and I’ll just say that if there wasn’t political interference, and we certainly can’t rule that out, because it’s such an egregious situation, that would be malpractice on the part of the IRS to audit a presidential taxpayer in this fashion.

Ellen Ioanes

Do you think that the House’s legislation to reform the presidential audit process provides the right kinds of safeguards to ensure that they’re carried out properly in the future?

Virginia Canter

I certainly think it’s historic — for one, it’s legislative. From what I understand, that was something that was definitely missing here. And, if there was political interference, they were probably relying on the fact that it wasn’t a legislative mandate.

Ellen Ioanes

Since it’s a mandatory IRS procedure and it’s taken very seriously, what’s the difference between having this be part of the tax code and a mandatory procedure versus congressionally approved legislation?

Virginia Canter

It’s just very hard to say that there was any discretion there. But in terms of the resources assigned to it, there was definite discretion, and that seems to have played a big factor in why it wasn’t an effective process. Apparently, there was one examiner assigned to it, there were no experts for what was, without a doubt, an extremely complicated portfolio. But the legislative enactment makes [a presidential audit] much more likely to be successful, and it calls for reports to be made and that we provide for accountability, which was sorely lacking. There was no accountability.

Ellen Ioanes

You mentioned that this is a very complex portfolio. Overall, how do Trump’s returns differ from other presidents’ like Obama’s or Biden’s, in terms of their complexity with all of these different entities and companies?

Virginia Canter

You’re talking about 500 companies that comprise the Trump Organization. And you’re talking about really questionable tax deductions. And you’re talking about foreign accounts. I don’t think there’s any president who’s comparable.The most significant thing? Well, there were two things. One is he kept his businesses, right. Every other president has divested his portfolio. The second thing is he had foreign businesses. So that made him much more open to foreign influence. He had foreign clients. There are a lot of factors that contributed to the complexity, and he had these carryover tax deductions — tax losses that resulted in deductions.

Ellen Ioanes

We know a lot of those questionable accountings, or at least we know about the patterns from previous reporting, and other investigations. But what kinds of additional irregularities are experts looking for in these kinds of complex returns? For example, giving loans to his children to avoid a gift tax, and maybe his charitable giving was actually to his own charities, things like that.

Virginia Canter

There will be tax experts who will go through this with a fine tooth comb, but clearly he was treating these loans to the children as loans when in fact they may have been gifts, is my understanding. He was also taking tax deductions for properties — allegedly he was putting into conservative easements when the value assigned to them was probably inflated, because they could never be used for the purposes that he ostensibly was taking the deduction for.

There was a question about whether he actually complied with his taxes. And then there were things that we [at CREW] were interested in from the get go. And that is, how successful for example, were his businesses? I mean, this suggests as most of us suspected, he was not a very good businessman, to say the least. And yet he had hundreds of millions of dollars in loans. So if you owe more than you are expected to have income coming in, it raises questions about your vulnerability in terms of blackmail, and things like that. And then also the foreign influence, can you really be committed to carrying out US public interests when you’re doing [business with] and relying on foreign entities for your personal business income? So there are real conflict of interest concerns.

Ellen Ioanes

So now we know more about his finances, there’s still information that he does not have to disclose or his businesses don’t have to disclose. So what kinds of things might we still not know about the finances? What is he still able to keep secret?

Virginia Canter

We don’t always know who his clients are. Just because we know he did extensive business overseas, and he had these [foreign] accounts, and he said the accounts were closed, when, in fact, they were still open. But even if he closed his foreign accounts, it doesn’t mean foreign money wasn’t coming into his US properties or other properties, like the UK properties.

I will say this: If there was a real audit going on, somebody should be looking at the receipts. And this is no easy task, but that’s something that needed to be done, especially for a president. I think people have to start going through this with a fine tooth comb, there needs to be a real audit. I don’t know what they call this at the IRS, but it wasn’t an audit. It was a shame is what it was.

Ellen Ioanes

In terms of releasing the actual returns, what’s the argument for that as it relates to the presidential audit? There has to be be such a narrow scope with requesting those records and making sure that what the Ways and Means Committee is doing relates to this legislative need.

Virginia Canter

They were looking to determine whether there was any legislative need to strengthen the presidential audit process. And I think, without a doubt, this shows that there needed to be more oversight and accountability with regard to the presidential audit process, and the legislation they’re proposing is a very important start to that.

Ellen Ioanes

Some Republicans are arguing that obtaining and releasing Trump’s returns means that the Ways and Means Committee and the Senate Finance Committee will have tons of power to release the returns of any private citizens, political enemies, business and labor leaders, but there’s still a really high bar to have to having the returns of private citizens released publicly. So, do these threats have any meaning? Or are they just Trump and Republicans blowing hot air?

Virginia Canter

I think that any Republican member of Congress would be appalled if Biden, or any Democratic president had not released their returns, and they would have done the exact same thing. So I don’t buy their argument that this is somehow escalating the level of privacy. Trump’s excuse that he was under audit was a complete sham when in fact in terms of the presidential audit, every president was supposed to be under audit. Trump wasn’t in some years, which is just staggering.

I just want to mention, as an aside, what was crazy is that Trump, was only under presidential audit for 2015 and 2016 in 2019, after the House Ways and Means committee asked for his return, and then for the 2017, 2018, and 2019, and I think 2020 returns, he didn’t get audited until he left office. I mean, that’s outstanding. I don’t know what the strategy is, but I guess when you don’t have any policy to run on, this is what you do, if you don’t have a real legislative agenda.

What was appalling is they didn’t even start his presidential audit until 2019, right after Ways and Means called them out. And even then they ignored those next few years of tax returns until after he left office. That shows to me that there was a real systemic issue. Like I said, if there wasn’t political interference, this is just beyond negligence.

It goes to one of the points that you had raised, and that is, as significant as his tax deficiencies were, the fact that the IRS as an institution, which is supposed to be independent, and truly has been historically after Nixon, to then see that this happened, it is just, to me really remarkable. Because I have worked at Treasury, I know how the career IRS [employees behaved], they were so protective of the institution and not wanting to be politicized, and then to see employees being put in this position — it undermines the entire institution.

Ellen Ioanes

It’s hard to see what the path forward looks like for this process, especially give the Republican House coming in.

Virginia Canter

The Senate still has responsibility here, and the Inspector General, at the IRS — an extremely important point here is that the IRS needs to look at this up and down. The question, though, is whether or not the IRS is going to be able to get the testimony. I can’t remember if the IRS IG (inspector general) has subpoena authority to get testimony from the political appointees under the Trump administration, who’ve left office, but those individuals really need to be on the record, and the IG needs to be doing a thorough investigation as to how this program just totally collapsed. And the Senate also has to get that testimony.