A leading business publication in New York City has reported that President Donald Trump and his siblings could owe New York state more than $400 million.
Crain’s New York came up with that figure, which includes unpaid taxes, interest and penalties, after the blockbuster New York Times report about the Trump family’s finances. The report said that Donald Trump’s parents left the president and his siblings more than $1 billion worth of real estate and cash, most of which was not taxed.
“The Trumps could be on the hook for $210 million in unpaid gift or estate taxes and a similar amount in unpaid interest and penalties #CrainsNYâ€
The Trumps could be on the hook for $210 million in unpaid gift or estate taxes and a similar amount in unpaid interest and penalties #CrainsNY https://t.co/pTIZMF8Yqs
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— Crain's New York (@CrainsNewYork) October 3, 2018
Crains used the figures provided in the Times article, and calculated the proper amount of taxes that should have been paid, and then calculated the interest and penalties that would apply to the unpaid taxes. They concluded that the Trump family could owe $210 million in unpaid gift or estate taxes and approximately the same amount in unpaid interest and penalties.
The figures were provided to Crains by a top New York Certified Public Accountant, Fred Slater, who has more than 40 years of experience advising real estate professionals. Crains said that other real estate tax experts concurred with Slater’s analysis.
President Trump reportedly could be liable for a larger share of the money owed to New York than his sisters and brother, however. This is because as trustee he signed the tax returns for the estates and thus has more liability.
The New York State Department of Taxation and Finance issued a statement after the report was published saying it is “vigorously pursuing all appropriate avenues of investigation.”
“The state is nasty about this kind of stuff,” said Slater, who is familiar with the techniques allegedly used by the Trumps to minimize their tax bills. There is no reason to believe that taxing authorities in New York are inclined to let the Trumps off the hook when it comes to paying the amounts they owe.
But it is possible the state would be willing to settle for a smaller amount than the full $400 million. This would be done in order to avoid a prolonged legal battle which be in nobody’s best interest.
There is precedent for this as former New York Attorney General Eric Schneiderman settled a fraud lawsuit with Trump University. He had been seeking a $40 million payout against Trump in that suit but settled for $25 million.
Slater’s estimates of the amounts owed were based on the fact that New York charged a 21% tax on large gifts and estates when developer Fred Trump bequeathed his business to his children. The tax rate on gifts and estates has since been reduced to 16% for similar wealth transfers.
The unpaid taxes were able to avoid detection by taxing authorities because the estate transferred wealth using limited-liability companies and other legal entities that IRS officials didn’t typically scrutinize until the early 2000s. Now both the IRS and the New York authorities are familiar with these tax avoidance structures and are able to determine the amount of taxes that should have been paid.
“They didn’t see the money flowing out of these things, and auditors weren’t awarded for understanding them,” Slater said. “They basically never touched them.”
Although the Trumps got away with illegally avoiding taxes for a long time, it looks like they will finally be held accountable, thanks to the New York Times.Â
And New York state taxes are not the only problem facing the Trumps. The IRS and New York City taxing authorities may also be after them for back taxes, interest and penalties. In fact, they may owe hundreds of millions of dollars in civil penalties, and if that happens, it could bankrupt Donald Trump and his family.
I am a lifelong Democrat with a passion for social justice and progressive issues. I have degrees in writing, economics and law from the University of Iowa.
