Robert McKenzie, a tax partner at Saul Ewing Arnstein & Lehr, said any probe of the gift tax returns could affect the current audits of Trump himself. If the IRS claimed fraud related to understated valuations of property, the agency could pursue what’s known as a “transferee liability” against Trump. If the president didn’t “pick up proper basis for the properties he took from his dad, and if the properties are still around and he still has them, then that could be a problem,” McKenzie said.
Audit in 2000
The Times also reported that the IRS completed an audit in 2000 of the combined estates for Trump’s parents, concluding they were worth $51.8 million, or 23 percent more than Donald Trump and his siblings claimed. (More than three years later, though, Fred Trump’s heirs sold 37 apartment complexes and several shopping centers for more than $700 million, according to the paper’s report.)
If the agency were to now reach a civil finding of fraud, that would be “kind of embarrassing for the IRS,” given that it had already examined the estates years ago, Kaufman said.
No matter what, the agency can be expected to proceed with caution. As IRS commissioner, Rettig holds a five-year term, but serves at the president’s pleasure, said Mario Fazio, the chair of the tax group at Meyers, Roman, Friedberg & Lewis and a former lawyer in the agency’s chief counsel office. Still, he added, firing “is not the norm.”
Of course, nothing about this situation is the norm.
“Everyone is going to cover their a-- on this one,” said Michael Sullivan, a former IRS auditor. “It’s a hot potato.”
This article was provided by Bloomberg News.