The owners of a luxury hotel in Panama City that ousted the Trump Organization as property managers last year accused it on Monday of evading taxes in Panama and creating a “false light” around the hotel’s finances.
The accusations, made in a legal filing in Manhattan federal court, are fraught with potential diplomatic and legal complexities for President Trump. They essentially assert that his family business cheated a foreign government, a claim the Trump Organization characterized in a statement as “completely false.”
The president’s company, the filing alleges, “also made fraudulent and false claims to the Panamanian tax authorities” to “cover up its unlawful activities.” This was originally detected during an audit last year by that country’s tax agency, according to the filing.
It was not possible to immediately verify accusations in the filing that the Trump Organization did not fulfill its obligation as managers to ensure all the hotel’s taxes were paid, including those related to the Trumps’ management fees. Panamanian law imposes a tax on commissions paid to foreign businesses, but the Trumps’ management fees may have qualified for an exemption.
The filing does not make clear how much money may be owed — or for how long the Trump Organization may have failed to pay the taxes — but suggests that the company’s actions on this and other matters exposed the hotel’s owners to millions of dollars in liability.
The Trump Organization said the accusations were misdirected. “To the extent any taxes were to be withheld,” the company’s statement said, it was the responsibility of the hotel owners, not the Trump Organization, which “did not evade any taxes.” The statement added that the tax decisions were made on the advice of an international accounting firm.
The filing comes as the Trump Organization is waging battle with congressional Democrats investigating the president’s personal finances. While those investigations present more immediate political threats to Mr. Trump, the Panama dispute could open a new line of attack on the president’s business and provide fodder for his critics.
The filing also alleges, among other claims, that the Trump Organization understated employee salaries in reports to the Panamanian social security agency, which may have reduced the hotel’s social security tax payments. Collectively, the company’s actions made “the financial and operational performance of the hotel appear in a false light,” the filing says.