Audit Immunity for Trump Family Puts I.R.S. in a Bind

President Trump’s return to office has been an unforgiving crucible for the hidebound Internal Revenue Service. He and his aides have decimated its ranks, fired and replaced its leaders and made repeated attempts to enlist the agency in his quest for political retribution.

Now, as part of an arrangement drawn up this week by Todd Blanche, the acting attorney general, the I.R.S. faces its most profound legal and ethical test yet: a demand to drop any audits of Mr. Trump, his family members or their “affiliates.”

Tax lawyers and former I.R.S. officials said such expansive protection would cut to the core of the agency’s mission to collect taxes in a disinterested, nonpartisan way — and could potentially run afoul of the laws governing how it does so.

“It’s just completely contrary to the notion that you’re supposed to comply with the law and the I.R.S. is there to make sure you do that,” said George Yin, a tax law professor and former chief of staff at congressional Joint Committee on Taxation. “The idea that you can get a free pass from the I.R.S. or anyone can get a free pass from the I.R.S. is just completely ridiculous.”

Immunity from I.R.S. scrutiny for Mr. Trump and his family was part of a broad agreement made by the Justice Department to resolve a lawsuit he filed against the I.R.S. over the leak of his tax returns. Beyond the audit provision, the Justice Department committed to creating a $1.8 billion fund to pay victims of “weaponization,” a proposal that has been rebuked by both Republicans and Democrats on Capitol Hill.

While the Justice Department has said Mr. Trump himself will not be paid out of that fund, an end to any and all audits based on tax returns previously filed could be quite lucrative for the Trumps. The New York Times reported in 2024 that an adverse ruling in an I.R.S. audit could cost Mr. Trump more than $100 million, though it is unclear if that examination is still underway.

The nine-page outline creating the $1.776 billion “anti-weaponization” fund was agreed to and signed on Monday by Frank Bisignano, who leads the I.R.S. as its chief executive officer. The one-page addendum calling for the I.R.S. to drop any audits of Mr. Trump and his family members was released the following day and signed by only Mr. Blanche.

That has raised the question of how, and if, the leader of the Justice Department can control decisions made at the I.R.S., which falls under the Treasury Department.

“There’s a genuine question as to whether the attorney general can do this,” said Daniel Hemel, a tax law professor at New York University. “I can’t think of precedent where the attorney general signs a piece of paper that ends audits for a large number of people.”

Representatives for the I.R.S. and Treasury Department did not respond to questions about whether they would carry out Mr. Blanche’s order.

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The I.R.S. has historically made a point of not giving the president special treatment. Its internal procedures call for the mandatory audit of the president’s annual tax returns. And, unlike the Justice Department, the I.R.S. is subject to a federal law that bars the president, vice president or their aides from influencing or directing its investigations. I.R.S. agents can face prison time if they carry out a politically motivated audit or halt one at the direction of the White House.

The prohibition includes an apparent carve out for the attorney general, but I.R.S. officials may still be wary of heeding Mr. Blanche’s order if they wonder whether White House officials or other Trump aides were involved in crafting it. A future Justice Department led by a Democrat could well investigate a halt to audits of Mr. Trump.

That will only add to the challenge of translating Mr. Blanche’s one-page order into a change in approach at the I.R.S. For it to take effect, I.R.S. officials would probably have to provide a more detailed command to stop anyone auditing Mr. Trump, his family members or other entities potentially covered by Mr. Blanche’s order from doing so.

“I think it’s going to be challenging,” said Tim Bilotta, a former I.R.S. executive who previously oversaw audits of small businesses in the southwestern United States. “The agents and the managers are not going to want to be perceived as breaking a law,” so to provide cover for themselves “they are going to ask the higher-ups to provide them with written instruction on what they want done.”

Mr. Bilotta said he expected that I.R.S. agents in particular would want more detail on Mr. Blanche’s order that the audit protection apply to Mr. Trump “or related or affiliated individuals” and their entities. Such a protection would likely to apply to Mr. Trump’s children and the businesses they run, but it is less clear if it would apply to, for example, Jared Kushner, the president’s son-in-law, and the firms he has invested in.

“If I were the executive overseeing the audit, I would ask ‘when you say related parties who are you talking about?’” Mr. Bilotta said. “When you say family members, are you talking sons and daughters? Are we talking cousins, aunts and uncles? Are we talking second cousins? Who are we talking about?”

It is unclear who at the I.R.S. might provide that detail and how. The agency is without a confirmed chief counsel, the agency’s top legal position, after Mr. Trump suddenly pulled the nominee for the job last year.

Ken Kies, a Treasury official acting as the top I.R.S. lawyer, previously represented Mr. Trump in his tax controversies, according to his financial disclosure. As a result, he has recused himself from all issues relating to Mr. Trump’s taxes, according to three people familiar with the matter.

The top lawyer at the Treasury Department, Brian Morrissey, resigned on Monday over his concerns about the resolution to Mr. Trump’s lawsuit against the I.R.S., three people familiar with his thinking said. Mr. Morrissey has not responded to requests for comment, and it is unclear if the audit protections, signed by Mr. Blanche the day after Mr. Morrissey left the government, specifically prompted him to resign.

But during his confirmation hearing to be Treasury’s general counsel last year, Mr. Morrissey said he was aware of the statute preventing the president from directing I.R.S. audits.

“It’s imperative that the only considerations that the I.R.S. is considering are the facts and the evidence with respect to that taxpayer and not any political considerations,” Mr. Morrissey said last June.

Andrew Duehren covers tax policy for The Times from Washington.

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