Ways and Means Committee Chairman Richard Neal’s relatively narrow request for several of President Donald Trump’s business returns could be just the first step in unraveling the president’s business empire.
The Massachusetts Democrat chose to focus his request to the Internal Revenue Service on six years of business returns for eight entities, including holding companies associated with the president’s businesses and his golf club in Bedminster, N.J. The request also includes the trust that Trump placed his business interests in when he became president.
An aide for Ways and Means Democrats said the request singles out those entities because they should provide the most expansive view of the president’s business dealings. Almost all of the businesses Trump owns flow through either the trust or those core holding companies. And his golf clubs are all structured the same way, so understanding the Bedminster club—which has been in the news for questionable tax practices—will help the committee understand the structure of the other properties, the aide said.
The committee also chose business entities solely owned by Trump, the aide said.
Neal’s request checks off what has been a major goal for Democrats since taking control of the House in January. The move sets off what may be the beginning of a lengthy and contentious battle between the Treasury Department and Ways and Means, as the panel digs into the financial dealings of the president to determine if he has complied with federal tax laws.
“The chairman was clear that he was taking the most prudent course to make sure that the request is bulletproof, and he’s been exploring that with counsel and being very deliberate,” said Ways and Means member Earl Blumenauer (D-Ore.). Tailoring the request the way Neal did “was in accordance with a very deliberate strategy that’s most likely to be successful,” Blumenauer said.
Neal isn’t limited to just one request, the aide pointed out. Nothing prevents the committee from requesting more information down the road if needed. Ways and Means will review the documents it has requested—if Treasury agrees to turn them over—and then decide whether to seek additional information, the aide said.
Neal also asked the IRS to hand over six years of Trump’s individual income tax returns. And he requested administrative files—work papers, affidavits—for the returns and statements from the IRS on related examinations.
Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, said while he agrees generally with the range of Neal’s request, it falls short in two ways.
Neal chose “big-picture business returns,” but some of the information he is seeking might be on the returns of the underlying businesses feeding into those larger entities, Rosenthal said.
Another shortfall is the limited six-year time frame of the request, he said. Trump’s tax attorneys in March 2016, just a few months before he won the presidency, said his returns from 2009 and onward were under audit.
“If you want to see how an IRS audit actually turned out, you probably would want to ask for an earlier year, like the 2009 year that was open when Trump took office” and, if now closed, was resolved while he was president, Rosenthal said.
Neal said one of the main reasons the committee needs the returns is to ensure the IRS has been fairly and impartially auditing the president.
Trump, in remarks before an April 4 briefing with senior military leaders, mocked Democrats’ six-year request.
“Is that all?,” he said when a reporter asked about it. “Usually it’s 10, so I guess they’re giving up.”
The committee aide said the panel only focused on six years because its understanding is that the IRS is required to keep seven years of returns on hand and destroy ones that are older. There could, however, be a period where the agency only has six based on when a person files and another return is destroyed. So the committee felt it was unnecessary to ask for documents the agency doesn’t have, the aide said.
Necessary for Oversight
Having both personal and business returns could help give the committee a clearer picture of the president’s business dealings and whether the IRS has sufficiently examined his activities.
“It’s perfectly obvious that business tax returns as well as individual ones are a necessary part of the oversight here,” said Daniel Shaviro, a tax professor at New York University School of Law.
Shaviro, who formerly worked at the Joint Committee on Taxation, said he doesn’t know why Neal selected just a handful for business returns to examine.
“I would think that casting the net far more broadly (e.g., all Trump businesses, and all tax returns for the last 20 years) would have been well within reasonable oversight,” he said in an email.
The request encompasses Trump’s five main holding companies and three companies associated with his golf course, which has “been the subject of a lot of scrutiny around tax policy,” said Ways and Means member Dan Kildee (D-Mich.).
“There is not a way for us to completely determine the extent of his personal financial interests without looking at those critical holding companies. Not all 500,” he said.