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A history of presidential tax audits

As the April 18 deadline looms, taxpayers are putting the finishing touches on their returns. Yet, no matter how much attention they pay to every detail, they still fear the possibility of a looming audit.

Statistics say that the concern is somewhat misguided. The average taxpayer has a 0.7% chance of being audited by the Internal Revenue Service.

That number jumps to 100% for a less-than average job: President of the United States.

The moment President Donald Trump’s tax returns are submitted, they will be immediately under audit. The decision is not politically motivated nor is it a reflection of his largesse in net worth and more than 500 partnerships. For more than forty years, all presidents are required to be audited.

Referred to as the “orange-folder treatment,” an obscure IRS rule mandates that the tax returns of the president and vice president are automatically audited every year with no exceptions. The detailed language in the Internal Revenue Manual Section 4.2.1.11 explains the process for auditing presidential tax returns. Mired in minutia, it even requires a specifically colored folder.

The regulation started 40 years ago during the Nixon administration. The significance of this year has not gone unnoticed. Trump’s tax returns will be the most complicated out of any of his predecessors. Not to mention that he is the first president since Gerald Ford to refuse to publicly release copies of his returns.

Trump’s repudiation stems from his claims involving an unfinished, multi-year audit, a claim that started during the Republican debates. What opponents see as an opening could be immediately closed down by an arcane IRS requirement involving these select returns:

  • Tax returns are given a full audit, not just a pre-audit survey regardless of any red flags
  • Audits are fast-tracked and assigned within 10 business days of receipt
  • Documents are carefully guarded and locked away when not being actively examined

In other words, Trump’s 2016 returns are unlikely to be fodder for an upcoming episode of The Rachel Maddow Show.

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William T. Peckham
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