Trump Claims ‘No Bombshell’ in Tax Returns, Promises Release After Audits

WASHINGTON (AP) — Donald Trump is sticking to his new explanation for why he can’t yet release copies of his recent tax returns: The IRS is auditing him, as Trump says it has for the past 12 years.

“No lawyer would ever allow you to release a tax return while you’re being audited,” the front-runner to be the Republican presidential nominee said in an interview Saturday on Fox News Channel. “As soon as the audits are finished, I have no problem. There is no bombshell whatsoever.”

(AP/David Goldman)
(AP/David Goldman)

Tax experts say that explanation has them scratching their heads — emboldening Trump critics who argue that the celebrity businessman-turned-candidate’s personal finances remain unexamined.

The odds of being randomly audited every year for a decade is vanishingly small — and Trump’s statement that “four or five” years of his tax returns are actively being audited raised even more questions.

The IRS’s normal statute of limitations for an audit is three years — though that time frame is extended in instances of substantial underreporting and there is no time limit on reviews in the event of fraud.

The Trump campaign did not respond to questions from the AP about why the IRS would be auditing his tax returns past the normal three-year period.

At the campaign event Friday where he won the endorsement of former rival Chris Christie, Trump ignored questions from a reporter on why he would keep private earlier returns not at risk of audit.

Candidates Ted Cruz and Marco Rubio have pledged to release their own returns — an invariably unpleasant rite of passage for every major party nominee since 1976. When that time comes, Trump will stand alone among the major Republican candidates in having not yet produced them.

Despite Trump’s claims to the contrary, the last Republican nominee — Mitt Romney — had long since released two years of tax returns by this time in the 2012 cycle.

(Getty Images)
(Getty Images)

Romney has speculated that a “bombshell” is lurking in Trump’s returns — perhaps indications of trouble in his business empire. Trump scoffed at Romney’s suggestion.

Cruz, who normally boasts of his plans to dismantle the IRS, said “the voters need to know” if the government is homing in on possible wrongdoing.

Given the complex matrix of partnerships and business structures disclosed on Trump’s filings with the Federal Election Commission, the scope of information available through Trump’s personal tax returns is difficult to predict.

But the nature of Trump’s charitable endeavors, his effective tax rate and the underlying profitability of his business operations would all likely loom large. Similar questions dogged Romney until late in the general election, suggesting that the focus on Trump’s taxes may not quickly abate.

“If you are not prepared for this level of scrutiny of your financial affairs, you should rethink your vocational choice,” said Joseph Thorndike, a tax historian and contributing editor to Tax Analysts, an accounting trade publication. “This one doesn’t go away.”

If Trump has been audited for a dozen years straight, he certainly would be right to think the process isn’t random. According to statistics published by the IRS, between 2005 and 2013, audit rates for earners bringing in more than $1 million ranged between 5 percent and 12 percent a year.

“I’ve been audited for many years. It’s very unfair. The IRS always audits, eventually I settle it out,” he said in the broadcast interview Saturday. “I have friends that are very rich, they don’t even know what I’m talking about. They’ve never been audited.”

But regular audits wouldn’t necessarily be a sign of anything more than the complexity of Trump’s tax returns, Thorndike said. “No one claims it’s a lottery.”

There is no way to independently verify if Trump is in fact the subject of numerous active audits. But Thorndike said tax attorneys he’s spoken with are generally sympathetic to the desire not to make tax returns public while they’re being audited.

“If the returns are out there, then no one can hide — the taxpayer can’t hide, and the authorities can’t hide,” Thorndike said.

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