In a case against Trump Corporation, echoes of his father’s tax tactics

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The indictment announced Thursday accuses the Trump Organization of a new series of informal maneuvers that resemble, in some ways, an updated version of Fred Trump’s model. In Mr Weisselberg’s case, instead of just getting a higher salary, his base pay was set at $540,000 and then increased with a series of benefits designed to avoid income and payroll taxes, according to the indictment.

Some of the additional benefits for Mr. Weisselberg and other Trump Organization employees came from annual bonuses derived from various corporate entities controlled by the company that were designated as “non-employee” pay, which allowed Mr. Weisselberg to reduce his income taxes by transferring money into some kind of retirement account Intended for self-employed persons. The Trump Organization also paid his apartment rent, Mercedes-Benz leases and private school fees, none of which were reported as taxable income.

The indictment said Mr Weisselberg “also received unreported cash which he could use to pay for personal leave tips”.

“Specifically,” she says, “Weisselberg caused the Trump Corporation to issue corporate checks payable to an employee of the Trump Organization who cashed the checks and received the cash. The cash was given to Weisselberg for his personal use. Trump Corporation reserved this cash as “Holiday” Entertainment”, but maintained internal spreadsheets showing that the cash was part of Weisselberg’s employee compensation.”

The indictment accuses the Trump Organization of failing to report cash payments as income to tax authorities, and says Mr Weisselberg “intentionally caused receipt of cash payments to be omitted from his personal tax returns”. In addition, the company is accused of writing checks to cover “items such as new beds, flat-screen televisions, carpet installation, and furniture” for Mr Weisselberg, expenses that were tracked internally at the Trump Organization but not reported as revenue.

In addition to the case against Mr Weisselberg, the 25-page indictment notes potential problems for others in Mr Trump’s company, saying that attempts to avoid declaring compensation and paying taxes extended to at least two other unidentified employees. The plaintiffs also target the Trump Organization’s practice of reporting certain income as “non-employee compensation,” which is not normally subject to payroll deductions.

Last year, The Times reported that Mr. Trump’s company routinely announced, as a business expense, millions of dollars in payments it classified as consulting fees, at least some of which appeared to have gone to his eldest daughter Ivanka Trump. At the time of the payments, Mrs. Trump was also a full-time CEO at her father’s company and made a regular salary, which raised the question of why she was at the same time considered a consultant.

After The Times article was published, the attorney general and state attorney general were reported to have expanded their own investigations into the Trump Organization to include consulting payments. Thursday’s indictment did not include anything about them, and it is not clear where this aspect of the investigation stands.

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