The New York State Attorney General Barbara D. Underwood has filed a lawsuit on June 14 against the Donald J. Trump Foundation and its directors, including the president and his three eldest children, Donald Jr., Eric and Ivanka. According to the New York Times, the state attorney general has concerns involving the charity and the family violating campaign finance laws, illegal coordination with a presidential campaign and self-dealing. The suit asks for restitution and that Donald Trump be prohibited from leading a non-profit in New York for 10 years. The action does not seek criminal penalties.

The allegations

The attorney general’s lawsuit alleges that the Trump charitable foundation paid legal settlements involving Trump business entities as well as help the Trump campaign. The foundation was ostensibly set up solely to dispense money to non-profits and to activities considered to be in the public interest.

The IRS could be the bigger problem

The bigger problem, however, may be with the Internal Revenue Service (IRS). Underwood has also forwarded her findings to the IRS. Despite the fact that the president signed tax returns under penalty of perjury saying he wasn’t using the charity for political or business purposes, the IRS is still likely to investigate.

Potential penalties and fines

The results of the investigation would lead to a range of issues, including civil penalties. These types of investigations have even led to federal criminal charges in the past. The IRS could also revoke the tax exempt status of the foundation, which would likely mean a massive corporate tax bill based on years of operation. It would also mean that the president filed a false tax return.

Experts say that it is common for those who oversee a non-profit for personal gain to go to court and get convicted. With five specific examples of self dealing, this could cause a lot of trouble for the foundation and the family. Similar cases in the past have led to prison sentences. At the minimum, the IRS would seek penalties of 20 percent of the amount of money potentially misused. With a single fundraising event taking in millions of dollars, these fines would be substantial.

Getting help from those with experience

The Trump family is not the first to run into trouble with the IRS or attorney general. Taxes for corporations and non-profits are both quite complicated with those in charge sometimes being held accountable for decisions made. It best to consult someone with experience if you have questions.