Trump And His Income Tax Return(s)

Michael Lodge

by Michael Lodge

First let’s state that Trump is under audit by the IRS.  This is an important fact of my argument.

Secondly, when a client files their tax return that take a tax position that they must support if audited.  A tax position can be tested by the IRS and you must have a solid tax legal response to support your tax position.

Thirdly, when a client signs their return they sign a statement that says, “Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct and complete.  Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.”

Now here the tax client has taken a position on his tax return, income, itemized deductions and what ever else you have reported.  This means, what you have said is your tax position and you will have to defend it if audited.  And then you signed that under penalties of perjury that the information is correct.  Double whammy.  Now, here comes the IRS auditor and he/she will send you a letter telling you what they are questioning and they want to see proof of your tax positions.  Now high-profile individuals an audit can take a long time because during the course of the audit the Auditor can open up more years and if you own companies can open up those companies.  And your social media accounts are gleamed to see what you have purchased or said about your tax situation to use against you in the course of the audit.  As a tax professional you do not want your client talking, clients have this ability to say the wrong thing, it happens all the time.  So the tax team uses their professional ability to direct the audit and form the tax legal argument to your tax position.  The client must remain silent, post nothing on social media (in fact close the accounts down) and make no statements about their tax returns to the public.  The golden rule “SHUT UP” is a very good term for tax clients to follow under audit.

In the recent weeks Bloomberg and Buffet have come out trying to force Donald Trump to release his tax returns.  And they will even show their tax returns.  Dumb move.  If a tax accountant or tax attorney allowed Trump to release his tax returns it would be a malpractice suit filed immediately against them.  You never let your client release tax returns to be under the eye of media which will ask questions of Trump, if he answers incorrectly the IRS will use it against him if it pertains to a position he has taken on his return under audit (or even prior years not under audit).  The IRS would love to hear from trump and catch him at mistakes. The IRS loves penalties and purgery. The IRS has a whole program inside their system that goes out an gleams information off all social media sites. And since Trump is running for President his adversaries would love for him to make a mistake, and the media would misinterpret the tax returns badly because they don’t know how to read tax returns and they will spin the information to meet their own agenda. Not good for the tax client to open up tax positions under audit.  In fact it is just stupid.

If anyone is under audit use the golden rule – “SHUT UP”. Let the professional work for you and handle your tax audit issues.

This is my opinion as a tax accountant who’s firm represents clients on tax audits.

For tax help or questions call:  877.778.1770 or submit them to:  tax@icontaxgroup.com