Congress seeks IRS probe amid fears it targeted Trump foes with audits

Congressional Democrats and Republicans on Thursday seethed over new reports that the IRS may have targeted President Donald Trump’s political enemies with audits, issuing shared calls - backed by the tax agency itself - for a full federal probe into the matter.

The demands arrived in response to reports that the IRS initiated detailed reviews into the tax records of James B. Comey, the former FBI director, and Andrew McCabe, a deputy who later took over the agency. Trump repeatedly trained his public ire on the two men, leading Comey to raise the possibility this week that the newly revealed audits amounted to political payback. The former president, however, has said he had no knowledge of the IRS’s work.

With Comey and McCabe, the suspicions of interference ran high because of their past work to investigate Trump in connection with his 2016 campaign, including the president’s efforts to obstruct the federal probe. Normally, the tax audits to which the two men were later subject are rare and random. But the fact that they both experienced them within the space of a few years perplexed a wide array of IRS officials, former agency aides and congressional lawmakers, who said the situation warranted further review.

Sen. Ron Wyden, D-Ore., the top lawmaker on the Senate Finance Committee, requested a “thorough investigation” and pledged his panel would explore the matter. Rep. Richard E. Neal, D-Mass., the leader of the tax-focused House Ways and Means Committee, expressed fear that the situation “reeks of political targeting.” And Rep. Kevin Brady, R-Texas, the leading GOP lawmaker on the panel, said he would support “investigating all allegations of political targeting.”

[IRS chief faces questions over audits of Trump foes]

An investigation into the matter would be carried out by the Treasury Inspector General for Tax Administration, or TIGTA, which typically opens probes at lawmakers’ request. A senior government official familiar with the matter, speaking on the condition of anonymity to discuss it, said Rettig had referred the issue to the watchdog for review. A spokesman for TIGTA declined to comment.

Charles Rettig, the head of the IRS under Trump who stayed at the request of President Joe Biden, previously referred the allegations to the inspector general to investigate, according to lawmakers and aides. In a statement, IRS spokeswoman Jodie Reynolds maintained Rettig personally “is not involved in individual audits or taxpayer cases,” which instead are handled by “career civil servants.”

“As IRS commissioner, he has never been in contact with the White House - in either administration - on IRS enforcement or individual taxpayer matters,” Reynolds said. “He has been committed to running the IRS in an impartial, unbiased manner from top to bottom.”

The swift reactions and sharp condemnations reflected seriousness of the controversy and the legacy of distrust that surrounds the IRS in Washington. It immediately raised the specter of the disgraced Nixon administration, which leveraged the agency - and its vast powers to scrutinize Americans’ finances - as a political weapon.

Trump, however, stressed in a statement: “I have no knowledge of this.” Instead, he highlighted an earlier report from a Justice Department inspector general that had criticized Comey and McCabe, adding: “[T]ell us what you think after you read it.”

For years, Trump has repeatedly and publicly attacked Comey and McCabe, calling for them to be charged with crimes and accusing them of pursuing a politically motivated witch hunt against him. While both men were investigated, and at times criticized for their conduct, neither was charged with any crime.

“I don’t know whether anything improper happened, but after learning how unusual this audit was and how badly Trump wanted to hurt me during that time, it made sense to try to figure it out,” Comey said in a statement. “Maybe it’s a coincidence or maybe somebody misused the I.R.S. to get at a political enemy. Given the role Trump wants to continue to play in our country, we should know the answer to that question.”

A lawyer for McCabe confirmed he, too, was audited.

The New York Times, which first reported the audits, said Comey’s audit began in 2019 and focused on his 2017 tax return, the year he signed a seven-figure book deal. McCabe’s audit began in 2021, months into the Biden administration, and focused on his tax return for 2019.

The initiative under which they were audited - now known as the National Research Program - was designed as a teeth-pulling process to help the IRS determine which taxpayers are most likely not to pay all the taxes they owe. In past years, roughly 15,000 taxpayers were randomly audited annually, though budget cuts have lowered the number recently. The unit is staffed by modelers, statisticians and research analysts.

“This is either the most brazen of crimes involving manipulation of audit processes or a complete statistical fluke,” said Joseph Rillotta, a former counsel to the IRS commissioner now in private practice as a white-collar tax attorney.

As a rule, taxpayers with employers - those who file W-2 forms - tend to evade taxes less frequently than self-employed people, whose compliance rate can fall below 50%. So the IRS program can tend to oversample self-employed workers, a category into which Comey and McCabe may have fallen when they left the government after Trump fired them, according to one senior IRS official who spoke on the condition of anonymity to describe its process.

Other senior IRS officials, who also requested anonymity, said the IRS leaped into action immediately after learning about the audits of Comey and McCabe. The aides said the tax agency sought to ensure that the inspector general took action to investigate. IRS leaders also moved to insulate Rettig and the broader workforce from any perception of political bias.

In a culture designed to avoid political interference, these officials said they could not imagine how a president could interfere and target enemies for an audit. But they also acknowledged the possibility existed, given the unique circumstances.

“The IRS culture is so much a by-the-book culture,” one official said. “Yet the likelihood of both of these men being audited is not impossible. Nobody has any idea what to think. Nobody believes the IRS targeted these people, and at the same time no one believes they didn’t because when you have two people like this, it’s kind of odd.”

Regardless, Mark Everson, who served as IRS commissioner during President George W. Bush’s administration, said someone at the agency should have blocked a random audit of Comey if the program selected him - precisely because of his political status.

“Somebody should have exercised more judgment before proceeding with the Comey audit,” Everson said. “I would have hoped that would be the case. Even if randomly selected, I think a supervisor should have said, ‘We can just knock this one out.’ "

For congressional Democrats and Republicans, meanwhile, the allegations served as stark reminders of the tax agency’s troubled past. In the wake of the Nixon scandal, the IRS has prided itself on systems designed to keep politics or personal motivations out of the agency’s tax review process.

The agency has only two political appointees: the commissioner and the general counsel. The rest of its staff is composed of career employees. But political controversies still have dogged its work, including an incident more than a decade ago that left Republicans seething over audits targeted at conservative nonprofit groups, including those associated with the tea party.

The trouble loomed large over then-President Barack Obama and helped bring about a generation of steep budget cuts at the IRS, depleting its staff and its ability to carry out audits that target tax cheats. Rettig himself has estimated the tax gap - the discrepancy between taxes owed and how much the agency collects - at roughly $1 trillion annually. Democrats’ attempts later to bolster IRS enforcement similarly met steep Republican resistance, with some expressing renewed fears it would pry improperly into Americans’ lives.

On Thursday, the fresh allegations of mismanagement left some in Congress to direct their criticism at Rettig, calling for his ouster before his term expires at the end of the year. Rep. Bill Pascrell Jr., D-N.J., a top member of the House Ways and Means Committee, described the commissioner’s leadership as “one catastrophe after another.”

“Charles Rettig has wrecked public trust in the IRS and I reiterate my calls for President Biden to fire Mr. Rettig immediately,” Pascrell said. “If Mr. Rettig cared at all about this agency he would hand in his resignation today.”

The Washington Post’s Jeff Stein and Jacob Bogage contributed to this report.