Trump’s Tax Audit and Agreement with the Justice Department

A tax audit involving President Donald J. Trump, which began during his time as a television celebrity, is likely resolved following an agreement with the Justice and Treasury Departments this week. This settlement appears to conclude a lawsuit filed by Mr. Trump and his sons against the Internal Revenue Service (IRS), which could have resulted in over $100 million in penalties, based on an analysis by The New York Times in 2020.

The core issue of the audit stemmed from a $72.9 million tax refund Mr. Trump received starting in 2010. This refund covered all federal income tax paid, plus interest, for the years 2005 through 2008, when Mr. Trump was a prominent figure on reality TV with his show “The Apprentice.” Mr. Trump asserted the refund was justified due to significant business losses amounting to $1.4 billion from 2008 and 2009, which previous tax law prevented him from declaring in prior years.

Two years ago, Eric Trump confirmed that the audit was still active. During Mr. Trump’s first presidential term, records show the audit was paused. It remains unclear if further delays occurred during his current term. However, if active until this settlement, penalties and interest would have significantly increased.

Mr. Trump has consistently maintained that his tax filings were lawful, and his loss claims legitimate, defending the approach taken.