Republicans Let Trump Keep Unparalleled Benefit: I.R.S. Immunity

Even as he bowed to Republican demands to pare back the extraordinary benefits the Justice Department offered to President Trump and his allies this spring, the acting attorney general, Todd Blanche, would only go so far.

Mr. Blanche did, after weeks of back and forth, put in writing that he was ending the $1.8 billion fund created to pay people who say they have been targeted by Democratic officials. And as part of the same announcement Sunday night, Mr. Blanche clarified that there were, actually, some limits on the seemingly boundless protection from I.R.S. examination that he ordered up for Mr. Trump, his family and their businesses.

But the fact remains that Mr. Trump, a billionaire who has tangled with the I.R.S. throughout his life, no longer has to worry about the agency coming after him for any of the many aggressive tax positions he has taken over the years. Where the I.R.S. previously made a point of regularly auditing whoever occupies the Oval Office, Mr. Trump has leveraged his control of the federal government to instead escape the scrutiny that every other modern president, not to mention every other regular taxpayer, has been subject to.

There’s no question that such immunity, itself without precedent, will be immensely valuable for Mr. Trump. But exactly how much in additional taxes and penalties he can now avoid is unclear. I.R.S. audits are, in general, confidential. Just one dispute Mr. Trump had with the agency, previously revealed by The New York Times, could have cost him more than $100 million. Any other ongoing audits could have cost him even more.

“I’ve been audited every year for my entire life, which — I have a lot of wealthy friends that were never audited to this day, they were never audited. I was audited,” Mr. Trump said in the Oval Office on Monday. “I was treated very unfairly by the I.R.S.”

Mr. Trump’s newly won ability to thwart the tax agency does not seem to bother the Senate Republicans who refused to advance Mr. Blanche’s nomination to be attorney general without changes to the deal. Both of them, Senators John Cornyn of Texas and Thom Tillis of North Carolina, said on Monday that they were satisfied with Mr. Blanche’s concessions and would vote to approve him.

Indeed, Mr. Cornyn and Mr. Tillis had only ever sought to correct the sloppy way the audit protection was drafted — and to put in writing his previous, spoken clarifications. Mr. Cornyn, for example, asked Mr. Blanche to state that Mr. Trump could only avoid audits of tax returns he had already filed, meaning that the president could still face an I.R.S. exam of claims he makes the next time he does his taxes.

The initial wording of Mr. Blanche’s May 19 order also seemed to extend the protection not only to Mr. Trump, but to his entire family “without limitation” and any companies they were connected to. That raised the possibility of a huge pool of people and companies claiming immunity under the deal.

Senator Elizabeth Warren, Democrat of Massachusetts, last month sought to test the boundaries of Mr. Blanche’s proclamation, asking 11 companies with connections to Trump family members, including Kalshi, Polymarket and American Bitcoin, if they considered themselves protected from I.R.S. audits. Six of the companies, including those three, responded that they did not. Others, like World Liberty Financial, did not reply to Ms. Warren.

Mr. Blanche, at Mr. Cornyn’s urging, wrote on Sunday night that only the plaintiffs in the lawsuit that Mr. Trump filed against the I.R.S. would be eligible for the audit protection. That includes the president, Donald Trump Jr., Eric Trump and the Trump Organization — which Mr. Trump’s lawsuit defines as the Trump Organization, LLC, and 418 other entities that are not specifically identified.

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Mr. Trump’s lawsuit against the I.R.S., filed in January, focused not on a dispute over an audit but the leak of his tax information during his first term. Federal law allows people to sue the agency if their tax returns are improperly disclosed, and it offers the possibility of monetary damages if a court finds the I.R.S. to blame for the leak.

Mr. Trump originally demanded at least $10 billion in damages from the I.R.S., but the Justice Department instead gave him the audit protection as part of a deal to end the lawsuit. The Justice Department settled without contesting Mr. Trump’s claims, though lawyers at the I.R.S. had recommended several defenses against them.

The federal judge in Miami who oversaw Mr. Trump’s lawsuit against the I.R.S. has blasted the outcome as a collusive exercise in self-dealing. She has noted that she lacks the legal power to halt it, one of the many legal uncertainties surrounding the audit provision.

Also among them is whether Mr. Blanche, as the acting head of the Justice Department, even has the authority to direct how the I.R.S., a part of the Treasury Department, conducts its audits.

There is also a statute prohibiting the president and his aides from directing the I.R.S. to start or stop an audit. While that law does include a carve out for the attorney general, it still creates the risk that individual I.R.S. agents could face criminal investigations under a future administration for following through on Mr. Blanche’s order.

Such weighty legal questions would usually fall to the top lawyers at the Treasury Department and the I.R.S. But the general counsel of the Treasury Department quit on the day that the Justice Department announced it was settling Mr. Trump’s lawsuit against the I.R.S.

And the acting top lawyer at the I.R.S., Ken Kies, was pushed out of the administration last month, though he had been recused from issues involving Mr. Trump because he had worked for Mr. Trump as a tax lawyer. Mr. Trump’s choice to succeed Mr. Kies as the chief counsel of the I.R.S. is another tax lawyer who has worked for him.

The I.R.S. has not answered questions about whether it is following Mr. Blanche’s direction.

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