New York state tax authorities are investigating allegations that Donald Trump participated in “dubious tax schemes” including “instances of outright fraud” that increased his wealth by hundreds of millions of dollars.
A New York Times investigation uncovered a “vast trove of confidential tax returns and financial records” which the newspaper said showed the president and his siblings set up a fake corporation to disguise millions of dollars in gifts from their parents.
Mr Trump is said to have received the equivalent of at least $413m (£318m) from his father Fred C Trump’s property empire, with much of the money allegedly accumulated through tax evasion.
The state’s Department of Taxation and Finance said it was “reviewing the allegations in the NYT article and is vigorously pursuing all appropriate avenues of investigation”.
The White House called the Times report “misleading” but did not deny or address the details of the story.
Spokeswoman Sarah Huckabee Sanders said the Internal Revenue Service had “reviewed and signed off on these transactions” decades ago.
Mr Trump has long portrayed himself as a self-made billionaire who turned a “very small” $1m (£770,000) loan from his father into a vast fortune.
"My father gave me a very small loan in 1975... and I built it into a company that's worth many, many billions of dollars," he said during the presidential campaign.
But the Times investigation, based on interviews with Fred Trump’s former employees and advisers and more than 100,000 pages of financial documents, paints a vastly different picture.
By the age of three, the future president is said to have been earning $200,000 (£153,000) a year in today’s money from his father’s empire. He was a millionaire by the age of eight and was receiving the equivalent of $1m a year by the time he left university, documents reportedly show.
Mr Trump’s parents are said to have transferred well over $1 billion (£770m) in wealth to their children, which could have generated $550 million in tax under the 55 per cent rate then imposed on gifts and inheritances.
According to the Times, the Trumps paid only $52.2 million tax, about five per cent.
The evasion was allegedly achieved in part through the systemic undervaluation of the business empire of Fred Trump, a prolific property developer who transferred most of his assets to his four living children before he died in 1999.
In tax returns, the properties – which included 25 apartment complexes with 6,988 flats – were valued at $41.4m. Over the next decade, they were sold off for more than 16 times that amount.
Following the publication of the story late on Tuesday, New York City mayor Bill de Blasio said: “I’ve directed NYC’s Department of Finance to immediately investigate tax and housing violations and to work with NY State to find out if appropriate taxes were paid.”
The Times, citing tax experts, reported it was unlikely Mr Trump could face criminal prosecution because the alleged actions were past the statute of limitations.
However, there is no time limit on civil fines for tax fraud.
Charles J Harder, a lawyer for Mr Trump, said there was “there was no fraud or tax evasion by anyone” and called the allegations "100% false and highly defamatory”.
In a statement, he added: “President Trump had virtually no involvement whatsoever with these matters. The affairs were handled by other Trump family members who were not experts themselves and therefore relied entirely upon the aforementioned licensed professionals to ensure full compliance with the law.”
The documents obtained by the Times did not include the personal tax returns of Mr Trump, who unlike other White House candidates and presidents in recent decades has consistently refused to release his records.
Democrat senator Elizabeth Warren, who is rumoured to be planning a bid to stand for election against Mr Trump in 2020, tweeted: “NY Times reporting is likely just the tip of the iceberg – what else is he hiding?”
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