TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, June 18, 2018

Hackney: Why The IRS Should Go After Trump

New York Times op-ed:  Why the I.R.S. Should Go After Trump. by Philip Hackney (LSU; moving to Pittsburgh):

The New York State attorney general yesterday filed a lawsuit against the Donald J. Trump Foundation and its directors, accusing the charity and the Trump family of violating campaign finance laws, self-dealing and illegal coordination with the presidential campaign. It asks that Mr. Trump pay restitution and be prohibited from leading a nonprofit in New York for 10 years.

As a former attorney for the chief counsel of the I.R.S. who specialized in nonprofit organizations, I believe Mr. Trump is also criminally liable for his actions. If I were still at the I.R.S., based on the lawsuit, I would make a criminal referral, on charges of tax evasion or false statements on a tax return, or both.

On the tax evasion charge, the government must demonstrate that the defendant willfully failed to pay a tax he owed and acted to disguise or attempted to disguise that evasion. For a false statement charge, the government must show the defendant willingly signed a return under penalties of perjury, making a materially false statement that he knew was false.

These are not easy charges to prove, but the Trump Foundation is a nonprofit organization that is entrusted with money to be used exclusively for public charitable purposes. Any use of foundation money to benefit himself is akin to theft.

The government could anchor a tax evasion and false statement case upon the multiple instances of self-dealing, as cataloged by the New York attorney general, between Mr. Trump and the foundation. ...

A criminal prosecution may be unlikely for both political reasons and issues of proof, but I still think the I.R.S. has a duty to open an investigation under the egregious set of facts the lawsuit laid out. If Mr. Trump has made false statements on these returns, is it possible he made false statements on other tax returns? He has never released his tax returns, so we have no way of knowing that.

I do not believe these violations are within the norm of mistaken or accidental use. It represents a continued willingness to violate basic charitable norms. He may see it as a petty violation, but it is an enormous breach for the broader community.

The I.R.S. owes it to the public to investigate such egregious acts for criminal violations.

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Go after Trump, but give Hillary a pass, huh?

Posted by: Dale Spradling | Jun 18, 2018 6:15:14 AM

Haven't we seen enough of the Left's weaponizing government agencies against political opponents? Their political hijacking of an already damaged IRS will continue to undermine tax compliance and enforcement.

Posted by: Woody | Jun 18, 2018 8:50:52 AM

Remember all the NYT opinion pieces speculating about Clinton tax fraud, demanding that Obama's IRS audit the Clintons and the Clinton Foundation, and questioning the amended returns? /sarc/ ... Yeah, that investigation disappeared into the swamp.

"Looking forward, there’s one last wrinkle: If the IRS gives the foundation a clean bill of health, it will likely resurrect charges that the tax exemption office operates with a political bias.

Posted by: Woody | Jun 18, 2018 10:18:08 AM

Unfortunately even a private citizen can't sue under the current qui tam rules. This needs to be changed so a private citizen could act where the government refuses.

Posted by: Sid | Jun 18, 2018 9:16:37 PM

The scandal-a-day approach is in my view making Trump stronger.

Posted by: mike livingston | Jun 19, 2018 4:19:13 AM

As per usual, the first commenter deflects to the Clinton Foundation. But the emails . . . .

Posted by: Publius Novus | Jun 19, 2018 7:51:07 AM

Who is the author, Phil Hackney? Is it possible for him to be objective in a matter of Trump, the IRS, and partisan politics?

He denies to this day that the IRS abused conservative non-profits, despite clear documentation of that in this blog and admissions and settlements by the Service. He defended Lois Lerner and the IRS division, that also was guilty of destroying hard drives and withholding evidence. He is an apologist for the Clinton Foundation and resorts to hand-picking the points he would like to refute rather than the full and documented corruption and false tax filings. He was well-entrenched in the swamp, spending five years at the IRS Office of the Chief Counsel and as Senior Technician Reviewer in Exempt Organizations in the national office, where he litigated exempt organization tax issues.

Here's a piece by a practitioner who contacted Hackney and sees things differently:

Trump Foundation Imbroglio With New York AG Serves As A Lesson For Small Foundations

I decided to give Professor Hackney a call. Since he answered with "Hi this is Phil", I'm going to go with that. Phil and I had a really nice chat. We are both hard core tax geeks. He of course is really elite. IRS Chief Counsel's office and now a law school professor. I on the other hand spent my career in large local then regional public accounting. I did have the distinction of being one of the guys who actually looked things up, which is what sparked my writing career. That difference in background accounts for a difference in perspective....

Posted by: Woody | Jun 19, 2018 11:18:20 AM

Publius: "As per usual, the first commenter deflects to the Clinton Foundation. But the emails..."

Actually: "But the influence peddling..."

But you guys never care about that sort of thing, unless it's the GOP, and nobody else...

Posted by: MM | Jun 20, 2018 6:47:27 PM