Report on the Internal Revenue Service's Mandatory Audit Program Under the Prior Administration(2017-2020)

"EXECUTIVE SUMMARY 

For nearly four years, the Committee on Ways and Means (Committee) has been investigating how the IRS enforces the federal tax laws against, and ensures compliance by, a President. In particular, the Committee sought answers about the IRS’s internal policy that requires a mandatory examination of individual income tax returns filed by Presidents and VicePresidents. This policy is found in the Internal Revenue Manual (Manual or IRM), a compilation of internal guidelines for IRS employees, and is not currently codified in the Internal Revenue Code of 1986, as amended (Code).

The Manual provides that the “[i]ndividual income tax returns for the President and Vice President are subject to mandatory examinations.” See IRM §§ 3.28.3.4.3 (01-01-2019) [updated 3.28.3.5.3 (11-17-2020)] & 4.2.1.15. The Manual contains no further information about the timing, scope, or oversight of the mandatory examination (also commonly referred to as a “mandatory audit”). The Committee sought the return information and tax returns of the former President to investigate how the IRS’s mandatory audit program operated under the stress of a President who maintained financial interests in hundreds of related entities and reportedly was under audit every single year.

The Committee expected to find that the mandatory audit program expanded to account for the former President. The Committee also expected to find that the mandatory examinations of the former President’s tax returns would have been started promptly and completed during his Presidency. However, the designating agents made a concerning discovery. The designated agents found that there was only one mandatory audit started and none completed during his four years in office. Clearly, the mandatory audit program was dormant, at best, during the prior Administration..."
IRS Mandatory Audit Program