Donald Trump has been fairly open about the fact that he has used tax loopholes to avoid having to pay in to the government, but that’s never been done with casinos until now. Trump has managed to avoid paying hundreds of millions of dollars in taxes for casinos, a move that even his lawyers are believing to be questionable. This comes following a report from the New York Times.
The New York Times goes on to further state that this is likely how Donald Trump had managed to report a massive loss of $900 million to the federal government just after transferring the ownership of the casino, which may allow him to skip out on taxes for 18 years.
Another important thing to look at is how Donald Trump somehow managed to cancel his millions upon millions of his debt that resulted from the fall of his casinos in Atlantic City when they fell through during the early 1990s. Any canceled debt is taxable by the federal government. This would mean that he should still be owing millions for the debt that was forgiven by his creditors, and yet he has managed not to pay a dime. This is likely due to some loophole he has found in the tax system, which may or may not be legitimate but would be hard pressed to use against him for tax fraud if there was reason to believe that the loophole was correct. At best, it might cost him a fee and becoming responsible for those missing taxes.
It is expected that Trump avoided taxes on the canceled debt by trading off the debt relief in exchange for partnership equity, which is essentially worthless but would mean that he could avoid being liable for taxes on the debt. This is a tax evasion strategy that has already been addressed in the law and has been made illegitimate, but there are small details that differentiates the circumstance that might have allowed for him to slip in a small crack in the policies. His lawyer has advised him that the IRS would most likely not be pleased with the loophole attempt if he ever faced an audit, particularly because this type of scenario was addressed by congress and outlawed back in 2004.
Throughout the election Donald Trump has refused to release his tax returns and cited that he would only do so after the IRS has finished auditing him. This means that he is currently facing a situation in which the IRS may decide that he has to pay on these missing casino taxes, and if it’s serious enough they could even push for fraud. If he has found a legitimate loophole that the IRS can’t pursue, that could open up the door for many other operators and businesses that find themselves in similar circumstances until it gets addressed.
Ironically, Hillary Clinton was actually one of the lawmakers that had put in a vote to shut down the loophole that Donald Trump has allegedly exploited.