IRS was 'asleep at the wheel' for failing to audit Trump tax returns, Senate Finance chair says

The IRS "was asleep at the wheel" when it came to handling former President Donald Trump's tax returns, Senate Finance Committee Chair Ron Wyden, D-Ore., said Wednesday.

"The presidential audit program is broken," Wyden said in a statement vowing to work to pass legislation to reform that decades-old program.

His assessment came after the House Ways and Means Committee reported that the IRS had only started one mandatory audit of Trump's personal income tax returns during his four years in the White House — even though the agency's rules required annual audits of the president's tax returns.

That sole mandatory audit of Trump's 2016 tax return was not completed while he was in office, according to the House panel's investigation, which concluded that the presidential audit program was "dormant, at best," during the Trump administration.

"There is no justification for the failure to conduct the required presidential audits until a congressional inquiry was made," Wyden's statement said.

"I have additional questions about the extent to which resource issues or fear of political retaliation from the White House contributed to lapses here," the senator added.

The IRS did not immediately respond to CNBC's request for comment on Wyden's statement.

The Ways and Means Committee's report on the presidential audit program was released after the panel's Democratic majority voted to release redacted copies of Trump's federal income tax returns. That vote followed a yearslong legal battle with Trump, who had fought to keep his tax information out of the committee's hands.

Trump broke with decades of electoral precedent by refusing to publicly release his tax returns, both when he was running for president in 2016 and after winning that election. At the time, Trump claimed he was restricted from releasing the returns because of an ongoing IRS audit, though fact-checkers have reported that he still could have released them.

The Supreme Court last month rejected Trump's final bid to stop Congress from obtaining years of his taxes. On Tuesday, another report gave summary information about Trump's joint tax filings with his wife, Melania Trump, for the tax years 2015 through 2020. That report, prepared by the Joint Committee on Taxation, showed that Trump and Melania declared negative income on multiple years' tax returns and paid $0 in federal income taxes in 2020.

Trump spokesman Steven Cheung slammed Democrats' actions, calling the "unprecedented leak" as "proof they are playing a political game they are losing" and urging them to release tax returns of House Speaker Nancy Pelosi and her husband. "If this injustice can happen to President Trump, it can happen to all Americans without cause," Cheung's statement said.

Wyden in his statement Wednesday morning argued Trump's tax returns "exemplify the shortcomings of our tax code and consequences of Republicans' decades-long fight to gut the IRS."

"These are issues much bigger than Donald Trump. Trump's returns likely look similar to those of many other wealthy tax cheats — hundreds of partnership interests, highly-questionable deductions, and debts that can be shifted around to wipe out tax liabilities," Wyden said.

"All of this goes completely unchecked when you're more likely to get struck by lightning than have your hundreds of partnerships audited," he said.