IRS: Trump is wrong when he says he can't release tax returns because of audits

The IRS released a statement following Donald Trump's claim during the Houston debate that he won't release his tax returns from previous years because he is being audited.

The agency said there is no legal reason Trump can't release his returns, although some tax experts say withholding the returns may be strategically sound during an audit.

Republican presidential candidate Donald Trump is not prohibited from releasing his tax returns because he is being audited, according to the Internal Revenue Service.

“Nothing prevents individuals from sharing their own tax information,” the IRS said in a statement.

Trump, a wealthy businessman, said during Thursday’s debate that he can’t release his tax returns because he is the subject of an audit. At a press conference on Friday, he reiterated that he would not make his returns publicly available until the audit is complete.

“I’m just going to put you people to rest: Until my audit is finished, very simple, you are not going to see anything,” he said.

But while tax law does not prevent Trump from releasing his returns, waiting until his audit is completed may be beneficial, experts said.

“It might not be smart” for Trump to release his returns while under audit, said Robert Kovacev, a tax lawyer at Steptoe & Johnson and a former counsel in the Justice Department’s tax division.

If Trump releases his returns and the media focuses on certain transactions, the IRS may then scrutinize those transactions as well, even if the agency otherwise would not have done so or the transactions were innocuous, Kovacev added.

Dean Zerbe, national managing director of alliantgroup and former senior counsel to the Senate Finance Committee, said he could understand why Trump wouldn’t want “1,000 people helping the IRS with their work.”

Kenneth Gross, a political lawyer at Skadden Arps, said that if Trump released his returns and the IRS required him to file amendments or changes to his returns, the amendments would also be put in the public eye.

Trump said during the debate he has been audited every year for “twelve years or something like that.”

IRS Commissioner John Koskinen said Friday it would be "rare" for an individual taxpayer to be audited as frequently as Trump says he has been.

However, high earners have a greater chance of being audited than most people.

I don't envy anyone who is being audited, and Trump appears to be a target for a variety of reasons – not least of which are his real estate holdings.  There are probably disputes between the agency and Trump about the value of those assets, which could drastically affect his tax bill.

So while many believe that Trump is withholding his returns because he doesn't give as much to charity as he claims, or that his net worth is far below what he says it is, in the end, strategic necessity is a good enough reason not to release them.