DOJ's tax settlement with Trump sets 'dangerous precedent,' former IRS commissioner says

Geoff Bennett:

In the span of 48 hours, the U.S. government, acting on orders from the Trump Justice Department, did something no administration in American history has ever done before.

It created a nearly $1.8 billion fund drawn from taxpayer money designed to compensate allies of the president who claim they were mistreated by the Biden Justice Department. Then the administration permanently banned the IRS from ever examining President Trump's prior tax returns or those of his sons, his company, or any affiliated trust.

That move was quietly announced a day later tucked into a DOJ press release. And there is a third development. New federal ethics disclosures reveal more than 3,700 stock trades made under President Trump's name in companies like Meta, Amazon, and Disney, among others, worth up to around $750 million in just the first three months of this year.

That's on top of crypto ventures tied to the Trump family that have reportedly made more than $1 billion in profits so far.

We're going to focus now squarely on that IRS settlement with former IRS Commissioner John Koskinen, who ran the agency in the Obama and first Trump administrations.

Thank you for being with us.

John Koskinen, Former IRS Commissioner:

Happy to be here.

Geoff Bennett:

So let's back up a bit. And we should say that this original grievance stemmed from a leak. An IRS contractor stole President Trump's tax returns during his first term, leaked them to reporters. That contractor was caught. He went to prison for it.

Given that he was caught and punished, what would the normal legal remedy have looked like and how does that compare to this settlement?

John Koskinen:

Normally, what you would do in the Justice Department and prior cases had maintained was the suit should be against, if you have a claim, for damages against Booz Allen and the contractor who stole the information.

So, the Justice Department, up until this settlement, had taken the position that the IRS was not an appropriate defendant.

Geoff Bennett:

I imagine you have seen a lot of settlement agreements over the course of your career. I read the addendum we referenced in the introduction here.

You have the acting attorney general, Todd Blanche. He signed it. There's no IRS representative who cosigned it. And the way it was sort of slipped out a day after the main announcement about this so-called anti-weaponization fund, how does all of that strike you?

John Koskinen:

I was surprised.

Originally, while the case was pending, assuming it was a case, the administration seemed to be floating possible settlements. And one was immunity for the president from review of his taxes. And then later they proposed and floated the possibility of a settlement fund. And so I thought they were going to pick one or the other.

Both of them were obviously a little off the beaten track. And so to sort of look like sneaked second settlement through on Tuesday after Monday laying out in some detail the settlement fund, on Tuesday, there was almost no detail. It was just a paragraph, very complicated to read, as if it was meant to obscure the issue, although ultimately, when you read it, it does say that there will be no future reviews at all of any of the tax returns filed up until the settlement on Monday.

Geoff Bennett:

Critics, as you well know, they're calling this a pardon on steroids, because, unlike a presidential pardon, this covers not just Trump himself, but his family, his businesses. It covers any tax-related conduct before Monday, in fact, whether prosecutors were aware of misconduct or not.

What questions does that raise for you, the substance of it?

John Koskinen:

Well, first of all, as a process, I'm never aware of the IRS ever telling a taxpayer, we will just won't audit you as part of any settlement. I mean, there are audits that get closed. There are settlements reached. But I have never heard of the IRS in the future saying whatever you filed in the past, we're not going to take a look at.

You do have to wonder what's in those returns that makes it so important for them not to be audited.

Geoff Bennett:

I want to pick up on something you just said, because the optics of this are so extraordinarily problematic, the appearance of self-dealing, the compensation fund, this addendum, the way that it was sort of, to use your word, sneaked out.

It's hard to imagine any president accepting that kind of scrutiny and political blowback unless there was something significant at stake. Given your role as commissioner of the IRS, what does all of that suggest to you?

John Koskinen:

Well, first of all, audits take time and money. So if you didn't have to have an audit, that would be helpful.

The IRS does not audit people just for the fun of it, although it regularly reviews the president's returns. The IRS is just looking for problems, not trying to harass taxpayers or make life difficult for them. So to have this kind of a sweeping immunity, as it were, it just seems to me, raised questions of what's behind it, what's in those returns that make this so important, in a situation where the basic case that was filed had a lot of holes in it.

First of all, as I said, the Justice Department's position historically was, he was serving the wrong person. He filed that case after the statute had run. And it just seemed to me that there were significant issues as to how that was done.

And the fact that nobody ever filed any papers beyond the case, the Justice Department never put in an appearance -- the court required them to show up today answering the question of whether this really was a case. Was there a case in controversy since the president in effect is negotiating with himself, which he acknowledged along the way?

And so it's almost a sham case giving cover to first provide this what some people are calling a slush fund to reward the president's friends and anybody that he thinks needs money. But then adding on to it, this immunity from review of your taxes and your children's taxes and your company's taxes, and I don't know who the affiliates are, but there's never been anything in history that I know of that comes close to this.

Geoff Bennett:

A future administration, a future IRS commissioner will walk in on January 20, 2029. Could they tear this up? Or has the Trump Justice Department permanently bound the U.S. government on behalf of all future presidents?

John Koskinen:

Well, they probably have.

I mean, this is -- as the court said when they -- she closed the case after nobody showed up, obviously, the day to explain themselves, there was no -- the case had been withdrawn. She closed the case and said there is no settlement on this case.

So, normally, you have a court settlement, and it's hard to undo it unless you go to court and the court changes its mind. In this kind of agreement by the president and his former defense attorney, I suppose somebody could -- in the government could say that was a fraud on the public and the money should be returned or not spent.

But by the time a new IRS commissioner shows up, the money will be gone and tracking it down will be difficult. And I would note, the way the settlement fund is set up, we may never know who got paid and how much they got paid, because there's no provision for oversight or public disclosure of the operation of the fund.

So I think a new commissioner would have difficulty sorting his way through trying to figure out how to unwind this. And so the concern for many of us is, it's a really dangerous precedent if the president can pressure the IRS to overlook returns either from the president or friends of the president or anyone the president is trying to do a favor for.

Geoff Bennett:

Former IRS Commissioner John Koskinen, thank you again for your time and your insights this evening.

John Koskinen:

Happy to be here. Thank you.