Tax Avoidance Patterns: Paying $750 in Federal Income Tax, Reporting Chronic Losses, and Claiming a Disputed $72.9 Million Refund
Tier 4Under IRS Audit2000-01-01 to 2020-09-27
Factual Summary
A Pulitzer Prize-winning investigation by The New York Times, published on September 27, 2020, revealed that Donald Trump paid $750 in federal income taxes in both 2016, the year he won the presidency, and 2017, his first year in office. The investigation, based on a review of more than two decades of Trump's tax information, documented a pattern of chronic losses, aggressive deductions, and tax avoidance strategies that allowed Trump to minimize or eliminate his federal income tax liability for years at a time.
According to the Times investigation, Trump paid no federal income taxes in 10 of the 15 years prior to the 2020 report, primarily by reporting losses from his businesses that offset any taxable income. In the years he did pay taxes, the amounts were minimal relative to his claimed net worth. The $750 payments in 2016 and 2017 were possible because Trump applied $9.7 million in business investment credits to offset his tax obligations for those years.
The investigation identified a $72.9 million federal tax refund that Trump received beginning in 2010, which had been under IRS audit for more than a decade as of 2020. The refund originated from Trump's claim that he had abandoned his stake in his Atlantic City casino empire, allowing him to declare a massive loss and apply it retroactively to recover taxes paid in prior years. The refund included interest and was calculated to cover taxes paid over several preceding years. The IRS audit, which remained unresolved as of the Times report, could have required Trump to repay the $72.9 million plus interest and penalties, potentially totaling more than $100 million.
The Times documented that Trump's businesses reported losing more money than nearly any other individual American taxpayer during the period studied. His core businesses, particularly his golf courses, reported year after year of losses that Trump used to offset income from other sources, including his compensation from The Apprentice television show and licensing deals. The investigation raised questions about whether the reported losses reflected genuine business failures or were structured specifically to reduce tax liability.
The tax return data also revealed that Trump had more than $300 million in loans coming due within four years of the 2020 report, a financial obligation that would create pressure to generate cash or refinance debt, potentially creating conflicts of interest for a sitting president.
When the Times report was published, Trump characterized it as "fake news" and "totally made up" but did not dispute specific findings. He stated, "I paid millions of dollars in taxes but was entitled, like everyone else, to depreciation and tax credits."
Primary Sources
1. The New York Times: "Long-Concealed Records Show Trump's Chronic Losses and Years of Tax Avoidance," September 27, 2020 (by Russ Buettner, Susanne Craig, and Mike McIntire; awarded Pulitzer Prize for Public Service, 2021)
2. Trump tax return data covering approximately 20 years, reviewed by the Times
3. IRS audit records regarding the $72.9 million refund
4. Congressional Joint Committee on Taxation report on presidential and vice-presidential tax returns (released in redacted form, December 2022)
5. Trump's public statements disputing the Times report, September 2020
Corroborating Sources
1. NBC News: "NYT obtains 2 decades of Trump's tax info; he paid $750 in federal income taxes the year he won presidency," September 27, 2020
2. PBS NewsHour: "What NYT report tells us about Trump's taxes, and what it doesn't," September 2020
3. Axios: "NYT: Trump paid $750 in federal income taxes in 2016 and 2017," September 2020
4. Democracy Now: "A Criminal Tax Cheat? Bombshell NYT Report Shows Trump Paid No Federal Income Tax for 10 of 15 Years," September 28, 2020
5. Wikipedia: "Tax returns of Donald Trump" (comprehensive summary with citations to primary sources)
Counterarguments and Context
Trump and his advisers argued that his tax strategies were lawful and that depreciation, investment credits, and loss carryforwards are standard tools used by real estate developers across the industry. His attorney stated that Trump "has paid tens of millions of dollars in personal taxes to the federal government, including paying millions in personal taxes since announcing his candidacy in 2015." Defenders noted that the U.S. tax code is designed to incentivize real estate investment through depreciation and that Trump was using the system as Congress intended. The ongoing IRS audit of the $72.9 million refund suggests the agency itself had not concluded that Trump's tax returns were fraudulent, as the audit process provides the taxpayer with due process before any determination of liability. However, paying $750 in federal income tax while claiming to be a billionaire, generating losses large enough to eliminate tax liability for entire years, and claiming a refund large enough to trigger a decade-long federal audit collectively describe a tax posture that diverges sharply from Trump's public image as a hugely successful businessman. Either the losses were real, in which case Trump's businesses performed far worse than he publicly claimed, or the losses were structured to minimize taxes, in which case the extent of the avoidance is extraordinary. The Pulitzer Prize awarded to the investigation reflects the journalistic community's assessment of its significance and rigor.
Author's Note
This entry is classified as Tier 4 because the primary evidence comes from investigative journalism rather than a completed legal proceeding against Trump. The IRS audit of the $72.9 million refund was unresolved as of the most recent public reporting, and no criminal tax fraud charges have been filed. The Congressional Joint Committee on Taxation did review Trump's tax returns and released a report in December 2022, but the committee's conclusions focused on procedural failures in the IRS's handling of presidential audits rather than on Trump's individual tax liability. The Pulitzer Prize-winning investigation provides the most comprehensive public accounting of Trump's tax posture, but the ultimate legal determination rests with the IRS audit process, which has not been publicly resolved.