When the Congressional Joint Committee on Taxationthe IRS audits of Donald Trump’s taxes, an agent’s memo in the review of Trump’s 2017 filings singled out.
The IRS agent wrote that Trump “hires a professional accounting firm and Consultant to prepare and file a tax return” and “ensure” that Trump “properly reports all income and deductions.”
Joint Committee staff were confused by the memo, according to a report on the IRS’s mandatory audit of the former president’s taxes, released Tuesday by the House Ways and Means Committee.
“The staff failed to understand why the IRS believed that using consultants and an accounting firm ensured accuracy,” the Ways and Means Committee wrote in its report.
The accounting firm, Mazars USA, is one of the country’s largest and worked for Trump for decades until February of this year, when it cut ties with the former president and his firm. In the months since, Trump and his company’s lawyers have harshly criticized the company’s work.
It’s common practice for IRS agents to give some consideration to large accounting firms, according to forensic accountant Bruce Dubinsky.
“If I’m a revenue representative and I see he’s got Mazars or (another firm) I’m going, ‘Okay, look, the returns are all online, they’re done right. I have some level of faith that someone in their quality control process — because all of these companies have a quality control review process — has looked at multiple levels at this, and I’m not going to look at all the numbers,” Dubinsky said.
But Mazars’ work has recently been criticized by lawyers for twoon Dec. 6 of 17 New York State criminal charges related to tax fraud. During the trial, a lawyer for the Trump Organization argued during closing arguments that a Mazars accountant “failed in his job” to detect wrongdoing by company executives.
That accountant, Donald Bender, described Trump’s annual tax returns as a stack of paper “several feet” high, gesturing with his hands high above the witness stand. Bender testified that he worked on Trump and the company’s taxes for nearly four decades, but that relationship ended in February.
Mazars wrote in a letter to the Trump Organization’s general counsel that“should no longer be relied upon.” In the letter, a lawyer for Mazars wrote that the firm “performed its work in accordance with professional standards” and drafted the statements based on information provided by the Trump Organization.
In the letter, a Mazars executive cited revelations from a New York attorney general’s political investigation as among the reasons the accounting firm could no longer stand by its Trump financial statements. In September, New York’s attorney general sued Trump and his company, alleging a massive multi-year fraud tied to the Trump Organization’s real estate valuations.
A Trump Organization spokesperson said in a February email that: “While we are disappointed that Mazars has chosen to part ways, the letter dated February 9, 2022 confirms that after conducting a subsequent review of all previous statements of financial condition, the business of Mazars has been conducted in accordance with all applicable accounting standards and principles and that these statements of financial position are free from material misstatements.”
But Trump and his team have been critical of Mazars ever since, frequently criticizing the firm.
Trump on Nov. 18 summed up his defense team’s stance on Mazars in a post on the social media platform Truth Social.
“The highly paid accounting firm should have sorted these things out – we relied on them. VERY UNFAIR!” Trump wrote.
During her closing arguments on Dec. 1, Trump Organization attorney Susan Necheles said Mazars “was completely negligent or turned a blind eye.”
Mazars and Bender did not respond to requests for comment, but during the Trump Organization trial, prosecutors pointed to an agreement between the firm and Mazars in which the accounting firm stipulated that its work “does not include procedures intended to identify errors, irregularities, illegal acts, including fraud or misrepresentation, if any.”