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The tax audits, which examined the returns of two former high-ranking FBI officials and opponents of former President Donald Trump, are part of a little-known research program designed to help the Internal Revenue Service gather data on possible future tax fraud.
James B. Comey and Andrew McCabe, the former director and deputy director of the FBI, were the subject of inquiries by the IRS’s National Investigation Program about their tax returns from 2017 and 2019, respectively. These audits are designed to help the IRS collect data about certain types of tax filers who are more likely than others to misreport their income, even inadvertently, and is different from law enforcement audits designed to catch people breaking the law. IRS algorithms select taxpayers for National Research Program audits from a pool that disproportionately includes high-income taxpayers who are self-employed or who generate income through sole proprietorships or investments.
Comey and McCabe were government employees for years, receiving predictable salaries that were reported to the IRS along with their withheld taxes, and they would not have fallen into those categories during that time.
But then Trump fired them — Comey in 2017 and McCabe in 2018. Comey wrote two lucrative books and began giving paid speeches, and McCabe joined CNN as an on-air law enforcement analyst. Those arrangements, tax policy experts and former senior IRS officials say, would make both men far more likely to be selected for investigative scrutiny than as FBI agents, because the pool of high-income earners with such eclectic streams of income is significantly lower.
The rare audits were first reported by the New York Times. Lawmakers and the IRS commissioner have asked the agency’s top tax watchdog to investigate.
IRS chief faces questions over audits of Trump foes
Trump has constantly raged against Comey and McCabe — advisers say they were near the top of his list of proverbial enemies as president — and former officials told The Washington Post that Trump often thought they should be investigated. But former IRS officials said the National Review Program would be difficult to use as a deliberate weapon.
By firing the two men, however, Trump made the two earn far more money than at the FBI — by putting them in a new tax bracket that the IRS audits far more often than even well-paid government employees.
The chances of the two men being drawn into the research program’s audits coincidentally so soon after Trump fired them may seem slim, but former top tax policy officials told The Post they were certain it happened — even though they admitted it looked suspicious.
“We like to see patterns, so that’s what we’re seeing,” said Mark Mazur, a former assistant Treasury secretary for tax policy in the Biden administration who previously led the IRS office in charge of the enigmatic research program.
The idea of using the IRS against political opponents certainly crossed the former president’s mind.
Trump, who is known for refusing to release his own tax returns and claiming they are under audit, has regularly complained that the IRS has been a “pain in the ass” for him over the years, one former official said, and he was “incredibly well-versed” in previous accusations that previous administrations rigged the IRS for political purposes.
One former senior official said Trump would say people should be investigated and audited, though neither official who spoke to The Post said he had ever heard Trump give specific orders to that effect. The people spoke on condition of anonymity to describe private conversations.
“They did it to us,” Trump said in 2017, accusing the IRS of conducting politically motivated audits of pro-Republican groups under President Barack Obama, a story that conservative media have often focused on, though no evidence has emerged to support it. statement claim “He would say this person should be investigated, this person should be audited. I never heard him give a direct order,” said one of the former officials.
The IRS has worked for years to avoid even the appearance of political bias, though Trump administration officials said that would not have deterred the former president.
“He didn’t care at all what the rules should be,” said one former employee.
Through a spokesman, Trump said he knew nothing about the McCabe and Comey audits, although he criticized the two men.
The agency has faced previous suspicions that its checks were being used by political actors. Shortly after the 2012 presidential election, Mark Everson, who had served as IRS commissioner during the George W. Bush administration, received a call from an investigative reporter about random law enforcement audits of two aides to Mitt Romney, now a senator from Utah. who was Obama’s Republican opponent that year.
“I said to the reporter, ‘Please tell me you have more than the individuals said they were being audited shortly after the election,'” Everson said. The story never came out. Everson said it would be impossible for the IRS to quickly launch a raft of investigations after a presidential election, even if it wanted to. “Things happen and in the political world they talk and they create conspiracies.”
The research program includes audits that are intrusive and complicated for taxpayers to deal with, but they are very different from the law enforcement audits that most people think of when they worry about hearing from the IRS.
Enforcement audits target specific individuals suspected of violating the tax code. Their purpose is to collect revenue and deter further fraud. For investigative audits, taxpayers are randomly selected by an algorithm, and the procedures do not imply that the IRS suspects fraud. The agency uses the results to regularly reprogram its enforcement software so that it can more accurately track suspicious activity in the future.
“The fact that he is in a [National Research Program] sample, stratified random sample, how is that payoff?” one former senior IRS figure said of Comey.
The Taxpayer Advocate Service, the IRS’s in-house consumer rights watchdog, has for years asked Congress to compensate taxpayers who are selected to participate in a study audit because many people spend hours providing financial documentation for examiners and often hire lawyer because they feel intimidated by a lawsuit.
“These people weren’t elected because you had concerns,” said Nina Olson, who served as the national taxpayer advocate from 2001 to 2019. “They’re really doing a public service.”
The research program, IRS insiders say, is perceived as a vexing necessity within the agency. When the tax collector started the program in 2001, it sent highly trained officers to audit nearly 15,000 taxpayers each year. The depth of the probe frustrated agents who did not file refunds and members of Congress who received complaints from constituents about the program’s invasive nature, according to a former senior IRS official who spoke on condition of anonymity to discuss sensitive internal discussions.
Details of the research program are being closely guarded because the agency fears that leaking information about topics the IRS is studying could encourage would-be fraudsters.
In recent years, the IRS has surveyed between 4,000 and 5,000 taxpayers, a significant drop that experts say is indicative of the IRS’s chronic under-resources and its shift away from enforcement activity, particularly against high-income earners.
In 2019, the most recent year for which data is available, 53 percent of individual law enforcement audits were completed against taxpayers with incomes below $50,000, according to the Taxpayer Advocate Service, and 8 in 10 of those filers claimed poverty tax credits .
Jeff Stein and Lisa Raine contributed to this report.
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