When Congress’ Joint Committee on Taxation investigated the IRS audits of Donald Trump’s taxes, an agent’s note on Trump’s 2017 filings stood out.
The IRS agent wrote that Trump “hires a professional accounting firm and Counsel to prepare and file tax return,” and they “ensure” that Trump “properly reports all income and deduction items.”
Joint Committee staff were befuddled by the note, according to a report on the IRS’ mandatory audit of the former president’s taxes, published Tuesday by the House Ways and Means Committee.
“The staff failed to understand why the IRS believed that use of counsel and an accounting firm ensures accuracy,” the Ways and Means Committee wrote in its report.
The accounting firm, Mazars USA, is one of the country’s largest, and it worked for Trump for decades until February of this year, when it cut ties with the former president and his company. In the months since, Trump and attorneys for his company have harshly criticized the firm’s work.
It’s a common practice for IRS agents to give some deference to large accounting firms, according to forensic accountant Bruce Dubinsky.
“If I’m a revenue agent and I see that he’s got Mazars or (another firm) I’m going to go, ‘Okay, look, the returns are all computerized, they’re done properly. I’ve got some level of faith that somebody in their quality control process—because all these firms have a quality control review process—has laid eyes on several layers on this, and I’m not gonna look at every number,'” said Dubinsky.
But Mazars’ work was recently criticized by lawyers for two Trump Organization companies that were found guilty on Dec. 6 of 17 New York State criminal counts related to tax fraud. During the trial, a Trump Organization attorney claimed during closing arguments that a Mazars accountant “failed in his job” to spot wrongdoing from company executives.
That accountant, Donald Bender, described Trump’s annual tax returns as a stack of paper “multiple feet” tall, gesturing with his hands high over the witness stand. Bender testified that he worked on Trump’s and the company’s taxes for nearly four decades, but that relationship came to a screeching halt in February.
Mazars wrote in a letter to the Trump Organization’s general counsel that a decade’s worth of the reports “should no longer be relied upon.” In the letter, a Mazars attorney wrote that the company “performed its work in accordance with professional standards” and compiled 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 civil investigation as among the reasons the accounting firm could no longer stand by its Trump financial statements. In September, the New York attorney general sued Trump and his company, alleging a massive yearslong fraud tied to the valuations of Trump Organization properties.
A spokesperson for the Trump Organization said in a February email that, “While we are disappointed that Mazars has chosen to part ways, their February 9, 2022 letter confirms that after conducting a subsequent review of all prior statements of financial condition, Mazars’ work was performed in accordance with all applicable accounting standards and principles and that such statements of financial condition do not contain any material discrepancies.”
But Trump and his team have since soured on Mazars, frequently criticizing the company.
Trump on Nov. 18 summarized his defense team’s stance on Mazars, in a post on his social media platform Truth Social.
“The highly paid accounting firm should have routinely picked these things up – we relied on them. VERY UNFAIR!” Trump wrote.
During her closing argument on Dec. 1, Trump Organization attorney Susan Necheles said Mazars “was either totally negligent or he turned a blind eye.”
Mazars and Bender did not reply to requests for comment, but during the Trump Organization’s trial, prosecutors showed an agreement between the company and Mazars in which the accounting firm stipulated that its work “does not include any procedures designed to detect errors, irregularities, illegal acts, including fraud or defalcations, should any exist.”
