Trump’s three largest tax problems

Donald Trump’s tax problems are obviously of great public interest. This post summarizes the three largest issues as widely reported in popular media1 :

1) IRS audit on partnership losses – The federal government’s tax auditors at the Internal Revenue Service disagree with a tax position taken by Trump that could reportedly increase his income tax owed by more than $100 million after adding interest and penalties. Since it does not appear that the Trump organization has the liquidity to pay this type of tax assessment, the outcome of the tax audit could determine the ability of the companies to continue as a going concern.

2) Falsifying business records – New York State prosecutors have already filed a legal memorandum stating that they have evidence “extensive and protracted criminal conduct at the Trump Organization”. Trump’s former attorney now working with government criminal investigators has already testified that hush-money payments were mischaracterized as “legal expenses” in Trump’s bookkeeping. Under New York law, falsifying records by itself is only a misdemeanor, but if it results in the commission of another crime, it becomes a felony under N.Y. Penal Law § 175.10.

3) Tax fraud – False business records often triggers a charge of tax fraud under N.Y. Tax Law § 1806 so these are likely to work in tandem.

As time goes on, we could learn more about tax problems with foreign bank transactions. Trump reportedly owes $400 Billion to foreign lenders without the ability to repay. That could trigger tax issues larger than the issues above. We do not know if the federal government will pursue charges against a former president. I suspect that they will not. However, it does seem likely that New York Attorney General Cyrus Vance will quickly pursue charges in New York State when the president leaves or is removed from office.

1 I am not offering any original opinion. This post is only a compilation and summary of the reports published by major national and regional news sources. Other sources have already offered commentary for accountants and attorneys at a much deeper level into the issues for those interested in the underlying technical issues. This is meant as a superficial level summary.