Presidential Tax Filings and Audit Transparency Act

This bill requires tax returns by the president of the United States to be audited by the Internal Revenue Services "as rapidly as practicable" and requires the IRS to make the returns publicly available.

Under the measure, the IRS must make available to the public the tax returns and IRS audit materials of the president as well as the returns and audit material of the president's spouse and returns for all corporation, partnerships, trusts or estates that they control.

The agency must redact personally identifying information in the return including the identification number of any person (including any social security number), any financial account number, the name of any individual under age 18, the name of any Treasury employee, or any specific address (but it may include the city and state). The tax returns must be made publicly available within 90 days of its filing.

Within 90 days of the audit commencing, the agency must make an initial report publicly available which includes basic information about the return and when the audit commenced. It also requires the agency to provide subsequent reports every 180 days after the initial report which must include the status of the audit and an estimated timeframe for its completion.

Additionally, the IRS must make a final report publicly available within 90 days of the audit's completion. This final report must include when the audit was completed and a description of all proposed adjustments, adjustments made, and controversies regarding the audit.

If a president fails to file a tax return by the due date, the IRS must still audit the individual's taxable information for that tax year within 60 days of the due date.

Finally, if a president files an amended return, the IRS must follow the bill's requirements for the amended return as if it were a "new" return.

For many years, presidents of the United States have made their tax returns a matter of public record. However, the practice of releasing returns as president or when running for office was not commonplace until the late 1960's. In the 1968 presidential primaries, Governor George Romney, R-Mich., released 12 years of his returns. The act set the precedent for future presidential candidates to release their tax returns. Since then every president since Richard Nixon has made their taxes public — except Donald Trump (Gerald Ford released a summary).

In 1973, questions surrounding President Nixon's tax compliance became a public concern, especially regarding an undisclosed gift of presidential papers to the National Archives as well as other questionable deductions related to his tax returns from 1969 to 1972.

In light of the president overseeing the IRS, the agency, in 1977, established new procedures formally requiring an annual audit for both the president and vice president while in office. Additionally, the mandatory audit procedures would ensure that no IRS employee would be required to make the affirmative decision to audit the president; rather it would be routine.

IRS guidelines today specify that the individual returns of a sitting president and vice president are subject to a mandatory examination. However, the auditing process for presidents' returns is not currently codified in statute; instead, it is set forth in the IRS Manual, a compilation of internal guidelines for IRS employees. The manual provides that the "individual income tax returns for the president and vice president are subject to mandatory [audit] examinations" and that "related returns, including estate and gift tax returns, will be handled in accordance with procedures relating to all taxpayers."

The manual generally prescribes the process for the review of these returns, and emphasizes the need for expedition and sensitive handling, but it leaves numerous aspects of the audit process either ambiguous, unaddressed, or up to an auditor's discretion, including the scope, length, or depth of the IRS's examination of the returns, the makeup or decision-making structure of the audit team, or how the IRS agents conducting the audit should interact with the president and those representing him.

After reviewing the returns, the Ways and Means Committee released a report that found the IRS failed to audit Trump's tax returns during his first two years in office despite the policy making the audit mandatory. According to the report, the returns were filed in 2017 for the two previous tax years, but the agency only began auditing those filings in 2019 — beginning the same day in April that the committee requested access to his taxes and any associated audits. The IRS has still not completed those audits.

While it was not immediately clear why the audits were not performed until Trump left office, the IRS commissioner under Trump, Charles Rettig, testified before the committee that the IRS does not have sufficient resources to run the program, saying the agency does "not have the resources to go after the bigs or the superbigs, as we refer to them, and we get outgunned routinely in that space."

According to a review of the returns by the Joint Committee on Taxation, the records show that in 2018, Trump had positive taxable income for the first time in more than a decade, but that was largely because he had sold properties or investments at a gain of $22 million, and he appears to have exhausted the business losses he had been rolling over for a number of years. As a result, he paid $999,466 in federal income taxes for 2018. The committee also reported that Trump's pattern of reporting negative income returned by 2020, and he paid no federal income taxes in that year.

Earlier this week, the committee voted along party lines to make Trump's tax returns publicly available after redactions to confidential information are completed. No Republicans voted in favor.

At the same time, committee Democrats announced their recommendations for the IRS's mandatory presidential audit program, including codifying the program into law, revising the IRS' manual to provide additional details and guidance for the program, and providing adequate and appropriate staffing and resources necessary for a full and timely audit of presidential tax returns.