IRS Counsel Nominee Briefly Advised Trump Organization on Taxes

(Bloomberg) -- President Donald Trump’s nominee for chief counsel of the Internal Revenue Service briefly advised the future president’s real estate company on a tax question several years ago.

Michael Desmond counseled the Trump Organization on “a discrete reporting matter for a subsidiary company that was resolved with no tax impact,” James Wilkinson, a spokesman for Desmond, said in a written statement to Bloomberg News. Wilkinson said Desmond didn’t interact with anyone at the Trump Organization, which was a longtime client of two other partners at his law firm.

Democrats on the Senate Finance Committee have given no sign they plan to scrutinize Desmond’s Trump work at his confirmation hearing Thursday. Still, potential conflicts of interest have drawn attention under Trump, who broke with presidential tradition by refusing to release his tax returns and has mused publicly about using government agencies to punish enemies.

Wilkinson said Desmond disclosed the work during a meeting with Senate staff members of both parties.

The IRS automatically audits every president’s taxes, but its review of the billionaire developer’s finances is likely more than a formality. In March 2016, his lawyers disclosed that the agency had audited his company every year since 2002, and that audits from 2009 onward were still unresolved. Trump has cited those ongoing audits as the reason he won’t make his returns public.

The chief counsel is considered the IRS’s most important job after commissioner, overseeing an army of lawyers who interpret the country’s tax code. It would be unusual for a chief counsel to be involved in an individual tax matter, Wilkinson said. If something involving Trump came up, Desmond would seek advice from ethics officials, said Wilkinson.

After serving as a Justice Department trial attorney early in his career, Desmond in 2000 joined a new boutique tax firm in Washington known as McKee Nelson Ernst & Young. There, his colleagues included William Nelson, a former IRS chief counsel, and Sheri Dillon.

Nelson and Dillon would become Trump’s tax counsel in 2005, just after Desmond returned to government service to take a top Treasury post. When Desmond went back to private practice in 2008, his old firm announced that he would rejoin as head of the tax practice –- potentially giving him oversight of the firm’s work for Trump.

But Desmond never actually assumed that role, Wilkinson said, partly because of a severe downturn in the firm’s business. McKee Nelson sold to another firm, Bingham McCutchen, the following year. Desmond, Dillon and Nelson remained together at Bingham until 2012, when Desmond started his own law practice in Santa Barbara, California.

Wilkinson didn’t say when Desmond did the work for Trump, but it apparently took place sometime between 2008 and 2011. Desmond has served as co-counsel with Dillon or Nelson for at least two other tax clients, court records show.

Nelson and Dillon now work for Morgan Lewis & Bockius LLP, where they continue to represent Trump. They didn’t respond to phone and email messages seeking comment. Morgan Lewis also has a connection to Charles Rettig, Trump’s pick for IRS commissioner: Nathan Hochman, Rettig’s partner in private practice for more than a decade, now works there. The Senate Finance Committee approved Rettig last week, and the nomination is now subject to approval from the full Senate, where Republicans are likely to confirm him.

Dillon became widely known after a January 2017 news conference in which she described the incoming president’s plans to minimize conflicts of interest with his real estate business. Her presentation, while standing next to a large stack of folders said to contain legal documents transferring control of the company to Trump’s sons, was later parodied by actress Cecily Strong on NBC’s “Saturday Night Live.”

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