With just over one month left until Americans decide whether we get to experience four more raucous years of Donald Trump, The New York Times released what has been presented by the mainstream media as a “bombshell” report on the real estate mogul’s tax documents — documents Trump says are “illegally obtained” (which the Times denies) and his lawyers say are incomplete, inaccurate and misleading. The Times’ conveniently-timed report, which runs some 10,000 words, has inspired a flood of media coverage citing the supposedly “damning” revelations contained within.
But if you look closer at those 10,000 words, something is conspicuously missing. Any direct, evidence-based claim of actual illegal action on Trump’s part. In fact, the word “illegal” only appears a single time in all those words, and not in direct reference to Trump’s taxes. All the passages that suggest that Trump might have done anything that isn’t allowed under tax law do, at best, only that: suggest that Trump might have bent the rules, maybe. Below is a look at some key passages related to the suggestion of possible illegality in the report.
The only time the word “illegal” appears at all in the report is a partial quote from New York regulators who targeted Trump’s charitable foundation, claiming it had engaged in “a shocking pattern of illegality.” Any further passages hinting at “illegality” in the rest of the piece are heavy on speculation.
On the essential question of the IRS audit of Trump, the Times admits that the materials it reviewed “do not make clear” if he did anything wrong, while the IRS has still not concluded he did anything improper, despite having reviewed the issue for almost a decade now:
The materials reviewed by The Times do not make clear whether Mr. Trump’s refund application reflected his public declaration of abandonment. If it did, that 5 percent could place his entire refund in question.
If the auditors ultimately disallow Mr. Trump’s $72.9 million federal refund, he will be forced to return that money with interest, and possibly penalties, a total that could exceed $100 million. He could also be ordered to return the state and local refunds based on the same claims.
Another potential legal question is how Trump writes off properties. Here’s how the Times frames Trump’s write-off of his Seven Springs property (formatting adjusted):
The tax records reveal another way Seven Springs has generated substantial tax savings. In 2014, Mr. Trump classified the estate as an investment property, as distinct from a personal residence. Since then, he has written off $2.2 million in property taxes as a business expense — even as his 2017 tax law allowed individuals to write off only $10,000 in property taxes a year.
Courts have held that to treat residences as businesses for tax purposes, owners must show that they have “an actual and honest objective of making a profit,” typically by making substantial efforts to rent the property and eventually generating income. Whether or not Seven Springs fits those criteria, the Trumps have described the property somewhat differently.
In another section, the Times suggests that Trump “could have” improperly written off legal fees to Michael Cohen, but admits it has no proof. “[T]he materials obtained by The Times did not include any itemized payments to Mr. Cohen,” but the authors add suggestively, “The amount, however, could have been improperly included in legal fees written off as a business expense, which are not required to be itemized on tax returns.”
That sort of suggestive phrasing is the closest the Times gets to alleging anything illegal in Trump’s handling of his taxes.
Trump, for his part, is accusing the Times of participating in something “illegal,” specifically alleging that the documents on which the report is based were “illegally obtained.” The Times insists that’s not the case. “All of the information The Times obtained was provided by sources with legal access to it,” the report’s team of authors maintains.
In the same passage addressing the question, the Times admits that it has not been able to verify all of the documents referenced, only “portions” of them: “While most of the tax data has not previously been made public, The Times was able to verify portions of it by comparing it with publicly available information and confidential records previously obtained by The Times.” In other words, the entire report is based on partly verified documents.
The Times acknowledges that the documents they reviewed have their “limits” for fully understanding Trump’s finances:
The vast new trove of information analyzed by The Times completes the recurring pattern of ascent and decline that has defined the president’s career. Even so, it has its limits. Tax returns do not, for example, record net worth — in Mr. Trump’s case, a topic of much posturing and almost as much debate. The documents chart a great churn of money, but while returns report debts, they often do not identify lenders.
The paper also informs its readers that this “vast new trove” “contains no new revelations about the $130,000 payment to Stephanie Clifford, the actress who performs as Stormy Daniels” nor does it reveal any “previously unknown financial connection” to Russia.
Alan Garten, an attorney for the Trump Organization, says the Times’ story is “riddled with gross inaccuracies” in part because the paper allegedly “refused to listen” to Trump’s legal team while crafting the story.
“The New York Times’ story is riddled with gross inaccuracies. Over the past decade the President has paid tens of millions of dollars in personal taxes to the federal government,” said Garten in a statement to media. “While we tried to explain this to the Times, they refused to listen and rejected our repeated request that they show us any of the documentation they purport to be relying on to substantiate their claims.”
In a statement to the Times included in the report, Garten slammed one of the key premises of the article. “While you claim that President Trump paid no taxes in 10 of the 15 previous years, you also assert that President Trump claimed a massive refund for tens of millions for taxes he did pay,” Garten told the Times. “These two claims are entirely inconsistent and, in any event, not supported by the facts.”
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