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IRS audits: Strange coincidence or new enemies list?

Jul 7, 2022, 5:16 PM
(Andrew Caballero-Reynolds/AFP/Getty Images)...
(Andrew Caballero-Reynolds/AFP/Getty Images)
(Andrew Caballero-Reynolds/AFP/Getty Images)

(CNN) — It’s the most bizarre coincidence: two former top FBI officials, former Director James Comey and his deputy Andrew McCabe were both audited by the IRS after they were fired by the Trump administration.

Even it if turns out there’s a connection, the story, first reported by the New York Times, recalls dark periods when the country’s tax agency was used, or seemed to be used, as a political weapon.

What’s the history of the IRS being used as a weapon?

First, there was Richard Nixon’s “enemies list.”

A list of journalists, union officials, and actors unfriendly to the President was handed to the IRS director at the time, Johnnie Mac Walters, who long denied anyone was audited as a result of being on the list.

Now read this account from the journalist and scholar David Andelman, who said he was audited repeatedly after publishing a report about Nixon’s stance on school busing.

Then there was the IRS scandal of the Tea Party era.

Conservative political groups during the Obama administration had trouble achieving tax-exempt status, which created a politically damaging scandal even though subsequent reviews found no partisan political targeting since liberal groups were also scrutinized.

What’s happening now?

The news about the former FBI officials facing audits broke on Wednesday. McCabe immediately called for an investigation.

“The occurrence of this one in 30,000 event, twice, for the same people who are targeted in the same way by the former President, and continue to be targeted to this day, I’ll add, is — it is just — it defies belief,” McCabe, now a CNN law enforcement analyst, said on “New Day” Thursday.

The head of the IRS has asked a watchdog to investigate, the agency announced Thursday.

Is there any direct evidence the IRS specifically targeted Comey and McCabe?

No. It may simply be an incredible coincidence that these two top FBI officials, both of whom were fired by the Trump administration in public and spectacular ways, were subsequently subjected to random audits.

How big of a coincidence is this?

Big. In both the tax filing years for which Comey (2017) and McCabe (2019) were audited, Americans filed about 153 million tax returns. About 5,000 of these types of audits were conducted in 2017 and about 8,000 in 2019, according to the Times report.

How were Comey and McCabe selected randomly?

Here’s what the IRS says on its website about the random selection of tax returns for these audits:

Random selection and computer screening – sometimes returns are selected based solely on a statistical formula. We compare your tax return against “norms” for similar returns. We develop these “norms” from audits of a statistically valid random sample of returns, as part of the National Research Program the IRS conducts.

An experienced auditor is said by the IRS to review each return flagged by the system and then they can refer it for audit.

Was there anything wrong with Comey and McCabe’s taxes?

No. Comey actually got a small refund of $347, according to the Times, and McCabe said he had to pay a small amount of additional money to the IRS.

What does the IRS say about this coincidence?

The agency appears to be taking the matter seriously. IRS Director Charles Rettig, a Trump appointee, has referred the allegation to an inspector general at the Treasury Department, and in a statement the agency vehemently denied any wrongdoing.

“It’s ludicrous and untrue to suggest that senior IRS officials somehow targeted specific individuals for National Research Program audits,” the IRS said.

The IRS said audits are handled by career civil servants and it has safeguards to protect against politically motivated audits.

When did these coincidental audits occur?

Comey was informed of his audit for the 2017 tax year in November of 2019, according to the Times.

McCabe was informed of his audit for the 2019 tax year in October of 2021, after Trump left office.

The agency said in a statement to the Times that Rettig, who has led the IRS since 2018, has no role in selecting candidates for audits.

McCabe told “New Day” Thursday he suspected no wrongdoing until he was contacted by the New York Times. He also praised the IRS official who conducted his audit. But he argued an investigation is warranted.

Why were Comey and McCabe fired by the Trump administration again?

Comey was fired by Trump, at least in part, because he refused to promise loyalty to the then-President and squash the FBI’s investigation into Russian interference in the 2016 presidential election and whether Trump campaign officials were involved.

McCabe was fired as FBI deputy director in 2018, days before he was eligible for early retirement. He later settled a lawsuit against the Department of Justice and was able to essentially expunge the firing and claw back retirement benefits. Trump disliked McCabe because he featured in that same Russia investigation and Trump had frequently attacked McCabe’s wife, who had run for state senate in Virginia as a Democrat in 2015.

CNN has reached out to representatives of Trump for comment. The former President, through a spokesman, said in a statement to the Times: “I have no knowledge of this.”

What’s the current story with IRS audits?

The IRS has actually been auditing fewer people in recent years, according to a recent GAO report.

It audits people who make less than $25,000 and more than $500,000 at the highest rate, according to GAO.

A separate Congressional Research Service report documented a 63% decline in the IRS’s examination rate between 2010 and 2019, largely due to budget cuts and fewer examiners. The IRS went from having more than 46,000 employees in its collections and examiner workforce in 2010 to fewer than 30,000 in 2019.

Aren’t audits supposed to be private?

Yes. Just ask Trump, who has a years-long standoff with the IRS over massive deductions he took. He refused for years to release his tax returns despite the long-standing custom of presidential candidates. The Times ultimately obtained and published some of them. Trump has spent years trying to shield his tax returns from investigators in New York and in Congress.

The IRS also launched an investigation after ProPublica recently obtained and published information about the tax returns of the wealthiest Americans, including Jeff Bezos, Elon Musk, and Warren Buffett. That worthwhile series of reports showed how the richest people on Earth avoid paying taxes.

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IRS audits: Strange coincidence or new enemies list?