Monday, September 26, 2016


David Farenthold of The Washington Post has unearthed what appear to be more shady doings at the Trump Foundation.
Donald Trump’s charitable foundation has received approximately $2.3 million from companies that owed money to Trump or one of his businesses but were instructed to pay Trump’s tax-exempt foundation instead, according to people familiar with the transactions.
I applaud what Farenthold is doing -- but I don't agree with Josh Marshall, who titles his post about this story "This Looks Really Big." I think it should be big. But the public will shrug it off, because the relevant law is just ambiguous enough to allow people who aren't Trump haters to conclude that there's nothing significant here.

I'll quote Marshall's summary of the story:
Last week we noted that a Trump family aide defended the idea that Trump Foundation money is really Trump's money since often he takes money that's owed to him and directs it to the Foundation....

Now it turns out that a lot of the Foundation money does come in just this way. But here's the key. It sounds like Trump is not paying taxes on that income.

It works like this. Trump or one of his businesses is owed money by Company X or Person Y. Trump says 'Don't send the check to me. Just send it to my Foundation.' No problem with that.... But you have to pay taxes on that money because it's your income.

Here's where it gets weird. Fahrenthold got a series of false explanations from Trump representative Boris Epshteyn about how this money was handled. When Fahrenthold presented Epshteyn with proof of these diversions, Epshteyn shifted gears and said the diversions did happen but they were fine.

At this point, Epshteyn cited an 1942 tax case....
That's where America's eyes will start to glaze over. If there were an easy-to-grasp rule in this case -- divert money to a rich guy's charity and he has to pay taxes on it no matter what -- then a failure on Trump's part to pay taxes on the money cited in Farenthold's article would be seen as a scandal. But Epshteyn cites a High Court ruling saying you can divert money and not pay taxes on it, as long as you don't control what charity the money goes to -- if you just suggest that it goes to a certain charity without instructing that it goes there, apparently you're off the hook. At this point, all Trump and his team have to say is, that he never gave any specific instructions and he gets the benefit of the doubt.

And that's exactly what Epshteyn says:
“He’s never directed fees to the foundation,” said Boris Epshteyn, a senior adviser to Trump, who responded on the campaign’s behalf in a phone interview on Saturday. Epshteyn said that what Trump did was provide a service, renounce any fees, and then merely suggest that the other party make a donation to a charity of their choosing.

“He’s waived fees from time to time,” Epshteyn said. “He’s never directed it to a specific charity.”

... sometimes, Epshteyn said, a gift arrived at the Trump Foundation.

“He’s Donald J. Trump,” Epshteyn said, explaining why donors had chosen this particular charity.
Farenthold tried to press the case, citing, among other things, a fee for a Comedy Central roast in 2011, which was diverted to the charity:
The Post asked about the 2011 gift from Comedy Central. Back then, Trump had bragged on video that he was getting a big appearance fee. “They paid me a lot of money, and they were very generous. And all of that money goes to charity,” Trump said.

After The Post brought up the Comedy Central case during the Saturday interview, Epshteyn conceded that Trump had, indeed, controlled where this money went.

It was his income. And, Epshteyn said, he paid taxes on it.

Could he provide proof of that tax payment?

“Absolutely not,” Epshteyn said.
Farenthold brought another example:
The Post offered the donations recorded from [Richard] Ebers, who was the Trump Foundation’s biggest donor in 2011, 2012, 2013 and 2014. Together, his gifts totaled $1.887 million.

The two people familiar with that arrangement said Ebers bought tickets and other goods and services from Trump. They said it was unclear if Trump himself or one of his employees instructed Ebers to pay the foundation instead of Trump.

The Post asked Epshteyn and [canpaign spokeswoman Hope] Hicks if Trump had paid taxes on the money received from Ebers. They did not answer the question, beyond saying that Trump had followed “all applicable rules and regulations.”
Farenthold and other reporters can continue to look into this, but as long as there's ambiguity about the law and about suggesting versus directing, this won't be a scandal for Trump. It might become a legal issue for him down the road, but it's not sufficiently open-and-shut to become a political scandal between now and November.

I'd love to say that this will become a major issue, but I don't see it.


Kenneth Fair said...

This needs to be addressed from the other end. If Trump was owed money and "forgave" those debts, that debt forgiveness was income to the other party. Did they record it as income on their taxes? Gotta say I doubt it.

AllieG said...

Steve, what WOULD in your opinion be an issue that hurts Trump if tax evasion doesn't? Are there none. That's true for 40 percent of the electorate, sure. What about the others?

Anonymous said...

So, the Clinton Foundation and the email scandals makes Hillary untrustworthy even though they're really complex and hard to understand, but Trump's foundation problem don't stick because it's really complex and hard to understand.

Seems like a double standard.

Jimbo said...

Clinton Rules. It goes back to the 1990s as everyone knows. GOP Presidential candidates (Reagan, W, McCain, Romney) always get IOKIYAR Teflon standard.

jsrtheta said...

Wow. So felonious behavior won't do it.

Guess we should just give up.

Lit3Bolt said...

God fucking Damn it Steve. White Old guys like you are the problem. You instantly concede everything to Republicans, no matter how many felonies they admit.

Fuck you and your defeatism. Go ahead and spread your legs for the media. You've been doing it for years.

Danp said...

Maybe someone can explain this to me. Assume Trump takes the money, claims it as income, but then donates it to the foundation, taking a charitable deduction. How does he gain by having the money go directly to the foundation? The only explanation I can come up with is minimum tax rates, suggesting that his deductions are very high compared to his income. Since we know he really doesn't give his own money to charities, it would be interesting to at least speculate on the nature of his taxes, since he won't share his returns. Or maybe I don't really understand taxes. It's possible.

Feud Turgidson said...

DanP: "maybe I don't really understand taxes. It's possible"

Good news, DanP: It's not "possible", if's confirmed.

1. Such a direction has LOTS of tax implications, including for the payor. If the payor expensed the payment as business, it's one hundred percent deductible against revenues because it's in the cost of doing business. But not if it's a charitable donation; then it CANNOT be deducted as cost of business (any more than deducting a bribe). Instead, the payor has to treat it as a charitable donation, with different, potentially VERY different, effects on the payor's tax liability.

2. Similarly, whichever of these his businesses or even himself who was to have 'earned' the inocne cannot treat the direction as the same thing as a flow thru unless it or he has ZERO control and derives ZERO arguable benefit from the DJT Foundation's use of ANY AND ALL funds it receives, due to the effects of commingling.

3. Having the decisions made by one's children with no firewall where he and his companies pay his children is insufficient relinquishment of control. That alone is a breach of the Code, and will result in being ordered to refile, pay any resulting different at some multiple of 100 percent of any tax avoided, he personally is subject to a fine, and the DJTF can lose its charitable foundation status as tax exempt.

4. But 3 just concerns control. From what we know , DJT received a direct or flow thru benefit from how at least some of the monies paid out by the DJT Foundation. That's another instance of illegal tax avoidance, but potentially more: it could be tax evasion. And SOMEONE's gonna pay a steep price for this, if not Trump then the professional services providers, accountants and or attorneys. Do you think they will sacrifice their professional standing, the licenses to pratice, to protect Trump?

5. This is going to make his audit a much more painful and even dangerous process. I actually don't think he and his businesses have been under IRS audit, I think it's course of business review, which is different and way less expensive and risky. But NOW, it'll get turned into audit.

Susanna said...

Stories about this need simplified headlines, e.g. "Trump's $2.3 million tax dodge" and "Scalper Scandal Taints Trump Campaign".