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Trump Gears up for Tax Fight over D.C. Hotel

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Trump Gears up for Tax Fight over D.C. Hotel

Donald Trump is gearing up for another tax fight: not over his personal taxes, but the bill due on the five-star luxury hotel he’s building just a short distance from the Capitol.

This week, lawyers for Trump began the process of suing the District of Columbia government to reduce Trump’s tax bill for the new Trump International Hotel project. The hotel is set to open in September, just two months before the presidential election where Trump is all but certain to be the Republican nominee.

If Trump moves forward with the hotel-related tax battle, it would be another potential distraction for his presidential campaign. His failure to release his own personal tax returns has generated numerous news stories, as has his claiming of a $302 property tax break on his Manhattan apartment. That relief is available only to taxpayers who make less than $500,000 a year.

Trump is also suing two restaurateurs who backed out of plans to open dining establishments at the planned Washington hotel after Trump lashed out at Mexican immigrants last year.

Trump’s D.C. tax dispute centers on the value of buildings one of his development companies is leasing and renovating in the former Old Post Office complex on Pennsylvania Avenue, one of the most prestigious locations in the nation’s capital.

The post office and clock tower, built in a Romanesque Revival style, was completed in 1899 and served for several decades as the headquarters of the U.S. Post Office Department. Trump’s team and historic preservation specialists in the federal government have reportedly been at odds over some aspects of the construction and design plans.

In recent years, city assessors valued the structures – or, technically, the leases of those buildings – at about $98 million. After a first-level appeal last year, the city reduced the assessment to closer to $91 million. Last fall, Trump’s team took the case to a city appeals board, but that panel refused to cut the bill any further.

On Tuesday, Trump’s attorneys opened an electronic file for the suit against the city in D.C. Superior Court and obtained a case number.

The opening of a case file usually signals the filing of a suit is imminent. But as of Wednesday afternoon, no legal filing to open the case had actually come in, a clerk said.

Trump’s team has a deadline of September 30 to file a suit challenging the assessments. Such suits initially go to mediation, which often takes up to a year and a half to get underway.

Court records show the matter is being handled by real estate attorney William Bosch of Arnold & Porter. Bosch did not respond to messages seeking comment for this story. A spokeswoman for Trump’s presidential campaign and a development executive at the Trump Organization in New York also did not respond to requests for comment.

It’s unclear precisely how much money Trump has at stake in the current tax fight.

The tax in dispute is technically not a real estate tax, but a “possessory interest” tax D.C. enacted in 2000 to capture revenue from private companies leasing space on government property that is otherwise tax exempt. The tax was challenged in court by the developers of Union Station. The litigation was settled and the bill for that project was cut.

Trump’s Trump Old Post Office LLC was billed almost $1.7 million in tax on the buildings for the current tax year and paid half of that sum in April, city records show. It paid roughly $1.7 million in 2015, as well.

As Trump aides prepared their bid for the project in 2012, they tried and failed to get the D.C. government to waive the tax, the Washington Business Journal reported.

The hotel project is passing through a sensitive and contentious stage for tax issues as the construction work moves towards completion. Additional tax can be assessed when the work is 65 percent complete, experts said.

Such a supplemental assessment was recently done on the property, and Trump’s team is currently appealing that to a city panel, an official said Wednesday.

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