Joe Biden Likely to Escape Tax Audit … Surprise, Surprise! By Charles Taylor (Florida)
Who would have predicted this one; President Joe Biden is likely to escape the IRS tax audit that would have revealed the Hunter Biden income? If the situation was reversed and it was the Trump income under the spotlight, the IRS would have already have moved.
“President Biden is likely to avoid an audit that could reveal whether he made money from his son Hunter Biden’s overseas business dealings — because the Internal Revenue Service has rejected a whistleblower complaint that alleged he owes at least $127,000 in taxes, The Post has learned.
The IRS allows people to inform on fellow taxpayers and win a slice of the proceeds — prompting Chris Jacobs, a former Republican staffer on Capitol Hill, to submit complaints against Biden and his accountant, though he said he didn’t want any financial reward.
Jacobs shared with The Post a reply from the IRS titled “denial” that explained that the government didn’t use his information.
Tax law expert Bob Willens, who teaches at Columbia University’s business school, said the rejection means Biden is likely to run out a three-year statute of limitations, meaning Republican claims that Biden owes up to $500,000 in taxes are unlikely to be resolved.
“It looks like the question of whether the president underpaid his Medicare taxes will never be aired,” Willens told The Post.
The dispute concerns more than $13 million that Joe and Jill Biden routed through S corporations in 2017 and 2018 to avoid paying a 3.8 percent Medicare tax on most of the haul by declaring a small part of it as “salary.” Many wealthy people use S corporations to lower their tax bills and the IRS pursues relatively few cases of lowballing the amount of income that counts as taxable.
The income is believed to be linked to Biden book sales and speaking fees after he left office as vice president. Experts say income that is the direct result of a person’s labor generally should count as subject to the Medicare tax, and ethics experts are calling on Biden to reveal the precise sources amid scrutiny of the president’s links to his son Hunter Biden’s overseas business relationships.
Jacobs did not specifically seek information on the first son’s links to his father, but an IRS audit would necessarily require a review of how Biden earned various income streams.
University of Minnesota law professor Richard Painter, who was chief White House ethics lawyer for President George W. Bush, told The Post recently that without the corporate returns, “you don’t know where the money’s coming from.”
“This exactly why it’s better to disclose — then every card is face-up on the table,” he told The Post last month. “Otherwise, people have no idea what’s in there … and that undermines public confidence in the government.”
IRS auditor Tresa Williams wrote to Jacobs in a reply dated April 22: “Under [IRS rules], an award may be paid only if the information provided results in the collection of tax, penalties, interest, additions to tax, or additional amounts based on the information provided. Therefore, you are not eligible for an award.”
“Although the information you submitted did not qualify for an award, thank you for your interest in the administration of the internal revenue laws,” Williams wrote.
Jacobs filed two separate complaints: one in February against Biden and another last month for Tax Day that mentioned both Biden and his accountant. The IRS notified Jacobs on March 31 that it received his February complaint — before writing 22 days later to say it would not act on the tip. He has not received a reply to his more recent complaint, but the underlying facts are nearly identical.
The IRS generally has a three-year statute of limitations to go after back taxes, so long as the evasion isn’t a willful non-reporting of income.
“Here, without any interest on the IRS’s part in bringing an enforcement action, there’s no way for Mr. Jacobs, that I’m aware of, to prosecute the case himself,” Willens said. “So, clearly, there will be no whistleblower award here because the [IRS] indifference to the information he provided means there will be no ‘proceeds’ out of which these awards are ordinarily paid.”
Willens said that the three-year statute of limitations hits on either the anniversary of Biden’s 2018 tax filing or the filing deadline in April 2019 — meaning the clock’s probably up already or will be in the near future. Biden released an amended copy of his 2018 tax return dated July 7, 2019, and it’s unclear when he initially filed.
“The only other statute of limitations extension that I’m aware of is where the taxpayer ‘fails to report gross income in excess of 25 percent of the gross income he or she reported on the tax return.’ In those cases, there is a six-year statute of limitations imposed. However, here, I don’t think the president failed to ‘report’ his gross income. Instead, what he may have done is ‘mischaracterize’ a portion of his income,” Willens said.
“If the income is merely mischaracterized, rather than omitted, the six-year statute is not operative.”
Willens added: “Of course, filing a ‘false’ return with ‘an intent to evade tax’ means that the statute of limitations never expires, but I don’t think anyone expects the IRS to make that assertion with respect to the president’s tax return(s) … the dispute here, regarding what is ‘reasonable compensation for services actually rendered,’ probably doesn’t rise to that level since the question of reasonable compensation is a factual, rather than a legal, question.”
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