Bidens and Ben
© Access/Screenshot/Shutterstock.com/KJNBen, Bidens & the IRS
President Biden is likely to avoid an audit that could reveal whether he made money from his son Hunter Biden's overseas business dealings — because the Internal Revenue Service has rejected a whistleblower complaint that alleged he owes at least $127,000 in taxes, The Post has learned.

The IRS allows people to inform on fellow taxpayers and win a slice of the proceeds — prompting Chris Jacobs, a former Republican staffer on Capitol Hill, to submit complaints against Biden and his accountant, though he said he didn't want any financial reward.

Jacobs shared with The Post a reply from the IRS titled "denial" that explained that the government didn't use his information.

Tax law expert Bob Willens, who teaches at Columbia University's business school, said the rejection means Biden is likely to run out a three-year statute of limitations, meaning Republican claims that Biden owes up to $500,000 in taxes are unlikely to be resolved. He told The Post: "It looks like the question of whether the president underpaid his Medicare taxes will never be aired."

The dispute concerns more than $13 million that Joe and Jill Biden routed through S corporations in 2017 and 2018 to avoid paying a 3.8 percent Medicare tax on most of the haul by declaring a small part of it as "salary."

Many wealthy people use S corporations to lower their tax bills and the IRS pursues relatively few cases of lowballing the amount of income that counts as taxable.

The income is believed to be linked to Biden book sales and speaking fees after he left office as vice president. Experts say income that is the direct result of a person's labor generally should count as subject to the Medicare tax and ethics experts are calling on Biden to reveal the precise sources amid scrutiny of the president's links to his son Hunter Biden's overseas business relationships.

Jacobs did not specifically seek information on the first son's links to his father, but an IRS audit would necessarily require a review of how Biden earned various income streams.

University of Minnesota law professor Richard Painter, who was chief White House ethics lawyer for then-President George W. Bush, told The Post recently that without the corporate returns, "you don't know where the money's coming from." He told The Post last month:
"This exactly why it's better to disclose — then every card is face-up on the table. Otherwise, people have no idea what's in there ... and that undermines public confidence in the government."
IRS auditor Tresa Williams wrote to Jacobs in a reply dated April 22:
"Under [IRS rules], an award may be paid only if the information provided results in the collection of tax, penalties, interest, additions to tax, or additional amounts based on the information provided. Therefore, you are not eligible for an award.

"Although the information you submitted did not qualify for an award, thank you for your interest in the administration of the internal revenue laws."
Jacobs filed two separate complaints: one in February against Biden and another last month for Tax Day that mentioned both Biden and his accountant. The IRS notified Jacobs on March 31 that it received his February complaint — before writing 22 days later to say it would not act on the tip. He has not received a reply to his most recent complaint, but the underlying facts are nearly identical.

The IRS generally has a three-year statute of limitations to go after back taxes, so long as the evasion isn't a willful non-reporting of income. Willens said:
"Here, without any interest on the IRS's part in bringing an enforcement action, there's no way for Mr. Jacobs, that I'm aware of, to prosecute the case himself. So, clearly, there will be no whistleblower award here because the [IRS] indifference to the information he provided, means there will be no 'proceeds' out of which these awards are ordinarily paid."
Willens said that the three-year statute of limitations hits on either the anniversary of Biden's 2018 tax filing or the filing deadline in April 2019 — meaning the clock's probably up already or will be in the near future. Biden released an amended copy of his 2018 tax return dated July 7, 2019, and it's unclear when he initially filed.
"The only other statute of limitations extension that I'm aware of is where the taxpayer 'fails to report gross income in excess of 25 percent of the gross income he or she reported on the tax return.' In those cases, there is a six-year statute of limitations imposed. However, here, I don't think the president failed to 'report' his gross income. Instead, what he may have done is 'mischaracterize' a portion of his income.

"If the income is merely mischaracterized, rather than omitted, the six-year statute is not operative.

"Of course, filing a 'false' return with 'an intent to evade tax' means that the statute of limitations never expires, but I don't think anyone expects the IRS to make that assertion with respect to the president's tax return(s)... the dispute here, regarding what is 'reasonable compensation for services actually rendered,' probably doesn't rise to that level since the question of reasonable compensation is a factual, rather than a legal, question."
Jacobs said he's concerned about the IRS decision to deny his claim:
"It seems highly curious that the IRS could spend five months processing a simple change to fix a typographical error made by one of my clients, and yet dismiss a complaint regarding Joe Biden's conduct in just three weeks."
Jacobs said he's concerned about the IRS decision to deny his claim.
"It seems highly curious that the IRS could spend five months processing a simple change to fix a typographical error made by one of my clients, and yet dismiss a complaint regarding Joe Biden's conduct in just three weeks.

"If Republicans win back control of Congress next year, they should conduct rigorous oversight as to why the IRS has reportedly spent a decade auditing Donald Trump, yet does not want to scrutinize what tax experts of both parties have called Joe Biden's legally questionable conduct."
Republicans, indeed, are vowing to investigate Biden's tax situation next year if they retake control of Congress and accuse him of hypocrisy in urging the wealthy to pay their "fair share." Biden last year proposed legislation to close the tax loophole and boost IRS enforcement.

Democrats say that Biden used a common tax strategy and that there's no directly analogous case that indicates he was wrong in his calculations.

The White House did not offer comment for this article, but Biden spokesman Andrew Bates noted last year in a statement to the Washington Post that House Republicans weren't eager to review Trump's tax records. The former president, unlike Biden, refused to release his tax returns, saying that they were under audit.

Bates said:
"[Biden] has released over 22 years of tax returns and is proud to have restored the bipartisan tradition of being transparent with the American people about the personal finances of the chief executive. After a four-year hiatus, he also welcomes this born-again support for that critical tradition from congressional Republicans, and congratulates them on their 180.

"With the Build Back Better agenda, the President is fighting to ensure our economy delivers for middle class families — not just those at the top — which means the wealthy pay their fair share and the IRS is given the resources they need to crack down on wealthy tax cheats. He encourages his GOP colleagues to reverse themselves on that, as well."
Republicans such as Rep. Jim Banks of Indiana say Biden may need to pay a half-million-dollar tax bill. Banks last year requested a report from the Congressional Research Service on what constitutes "reasonable compensation" for S corporations.

Although no cases identical to Biden's were documented by the CRS report, Banks said that
"according to the criteria CRS provided to my office, he owes the IRS and the American people hundreds of thousands of dollars in back taxes" and "every American should know about Joe Biden's tax hypocrisy."
Banks told Fox News last year that "when we take back the House in 2022, Oversight [Committee] Republicans won't forget about Biden's legally dubious tax avoidance schemes."

Willens told The Post last year that each case is unique and that
"the question remains whether the compensation [Biden] exacted from his corporation was 'reasonable.' In my view, the case can easily be made that reasonable compensation should be multiples of $300,000."
Willens refered to the 2018 figure that Biden deemed as subject to the Medicare tax.

Willens later told the Washington Post:
"I don't have any problem with what he did. In fact, he would have been almost derelict had he not channeled his earnings through an S corporation."
Political debate over the use of S corporations has raged for decades, impacting other politicians, including 2004 Democratic vice presidential nominee Sen. John Edwards (D-NC) and former House Speaker Newt Gingrich (R-Ga.).

John Bogdanski, a former member of the IRS Commissioner's Advisory Group and a professor at Lewis & Clark law school, told The Post last year that Biden would not have to pay Medicare taxes for the share of income made off the labor of other people, which can be complicated to determine. He said people generally make assumptions in their own favor and get away with it.
"There are millions — literally millions — of S corporations. So there might be a half a million S corporations that are playing this game. And the IRS doesn't have anywhere near enough of a budget to bring a half a million cases every year."
Bogdanski added that he thinks it's "quite rich" for Republicans to focus on Biden's taxes when Trump never released his own tax returns.

David Gamage, a tax law professor at Indiana University Bloomington, said:
"The general view among tax experts is that it's quite easy for taxpayers to get away with this form of tax planning to the point of it being very abusive. This is not the sort of tax planning that should be going on as a matter of tax policy, but it's very hard for the IRS to police. I would hope that increased attention to this issue, whether that be through focus on a President Biden using this form of tax planning or more generally, would increase the case for reform."