I.R.S. Contradicts Mnuchin On Providing Trump Tax Returns To Congress

A previously confidential I.R.S. memo contradicts the Administration on the issue of providing copies of the President's tax returns.

Among the many ongoing disputes between Congress and the White House is one dealing with the President’s income tax returns, which he has consistently refused to make public as both a candidate for President and after being sworn into office. Back in April, Congressman Richard Neal sent a request to Treasury Secretary Steve Mnuchin and I.R.S. Commissioner Charles Rettig requesting those returns. That request was made pursuant to 26 U.S.C. 6103 which, among other things, allows the Ways And Means Committee to request copies of the tax returns of any individual American. Despite that statute, Treasury Secretary Steve Mnuchin has refused to comply with both a written request and a subpoena for these documents. In refusing these requests, Mnuchin argued that the request, and subsequent subpoena, lack a “legitimate legislative purpose,” an argument that the Administration has made in a number of other situations where it is refusing to comply with seemingly legitimate document requests. At this point, that means the committee is left with two options. One option they have is to hold Mnuchin in contempt, which seems like a fruitless pursuit since the Justice Department is unlikely to pursue enforcement of any Congressional contempt citation. The other option would be to file a lawsuit seeking a Court order compelling him to turn over the requested documents.

It’s in that context that we get an interesting report from The Wahington Post that a previously confidential memo from the Internal Revenue Service memorandum contradicts the basis for the Administration’s refusal to provide Congress with copies of the President’s tax returns, providing Congress with yet another argument to be used against the Administration in the ongoing court battles over document production:

A confidential Internal Revenue Service legal memo says tax returns must be given to Congress unless the president takes the rare step of asserting executive privilege, according to a copy of the memo obtained by The Washington Post.

The memo contradicts the Trump administration’s justification for denying lawmakers’ request for President Trump’s tax returns, exposing fissures in the executive branch.

Trump has refused to turn over his tax returns but has not invoked executive privilege. Treasury Secretary Steven Mnuchin has instead denied the returns by arguing there is no legislative purpose for demanding them.

But according to the IRS memo, which has not been previously reported, the disclosure of tax returns to the committee “is mandatory, requiring the Secretary to disclose returns, and return information, requested by the tax-writing Chairs.”

The 10-page document says the law “does not allow the Secretary to exercise discretion in disclosing the information provided the statutory conditions are met” and directly rejects the reason Mnuchin has cited for withholding the information.

“[T]he Secretary’s obligation to disclose return and return information would not be affected by the failure of a tax writing committee . . . to state a reason for the request,” it says. It adds that the “only basis the agency’s refusal to comply with a committee’s subpoena would be the invocation of the doctrine of executive privilege.”

The memo is the first sign of potential dissent within the administration over its approach to the tax returns issue. The IRS said the memo, titled “Congressional Access to Returns and Return Information,” was a draft document written by a lawyer in the Office of Chief Counsel and did not represent the agency’s “official position.” The memo is stamped “DRAFT,” it is not signed, and it does not reference Trump.

The agency says the memo was prepared in the fall. At the time, Democrats were making clear they probably would seek copies of Trump’s tax returns under a 1924 law that states that the treasury secretary “shall furnish” tax returns to Congress.

Precisely who wrote the memo and reviewed it could not be learned. The agency says IRS Commissioner Charles Rettig and current chief counsel Michael Desmond, who was confirmed by the Senate in February, were not familiar with it until a Post inquiry this week. The IRS says it was never forwarded to Treasury.

(…)

Some legal experts said the memo provides further evidence that the Trump administration is using shaky legal foundations to withhold the tax returns.

“The memo is clear in its interpretation of the law that the IRS shall furnish this information,” said William Lowrance, who served for about two decades as an attorney in the IRS chief counsel’s office and reviewed the memo at the request of The Post.

Daniel Hemel, a professor at the University of Chicago Law School who also reviewed the memo for The Post, said the document suggests a split over Trump’s returns between career staffers at the IRS and political appointees at that agency and the Treasury Department.

“The memo writer’s interpretation is that the IRS has no wiggle room on this,” Hemel said. “Mnuchin is saying the House Ways and Means Committee has not asserted a legitimate legislative purpose. The memo says they don’t have to assert a legitimate legislative purpose — or any purpose at all.”

The administration has resisted a range of House inquiries, although a federal judge on Monday ruled the president’s accounting firm must turn over his financial records to Congress.

Treasury Department officials said there had been extensive discussions about the tax return issue, with one official saying the issue put the agency in a difficult spot because Trump has predetermined the outcome — and because Mnuchin is a Trump ally who was the finance chair of his 2016 campaign. 

“The decision has been made,” this official said, who spoke on the condition of anonymity to discuss private conversations. “Now it’s up to us to try to justify it.”

Trump has told advisers he will battle the issue to the Supreme Court, according to people familiar with the matter. Trump recently has argued that the tax returns were an issue in the 2016 election but that because he won they should no longer be of concern. 

(…)

Some legal experts have held that the law is clear in giving Congress the power to compel the provision of the returns. But other former government lawyers, including two who served in the Reagan and George H.W. Bush administrations, have argued that the law is unconstitutional and could lead to widespread abuses of taxpayer privacy for political aims.

The IRS memo describes how and why Congress has the authority to access tax returns, explaining the origin of the provision and how it has been interpreted over the decades.

It highlights the special powers given to three committees for compelling the release of tax returns: the House Ways and Means Committee, the Senate Finance Committee, and the Joint Committee on Taxation. Other congressional committees, the memo emphasizes, do not have the same authority.

When it comes to the Ways and Means Committee, the obligation to divulge the returns “would not be affected by the failure” to give a reason for the request. By contrast, other committees “must include a purpose for their request for returns and return information when seeking access,” the memo states.

“One potential basis” for refusing the returns, the memo states, would be if the administration invoked the doctrine of executive privilege.

But the IRS memo notes that executive privilege is most often invoked to protect information, such as opinions and recommendations, submitted as part of formulating policies and decisions. It even says the law “might be read to preclude a claim of executive privilege,” meaning the law could be interpreted as saying executive privilege cannot be invoked to deny a subpoena. 

In addition to the newly-revealed I.R.S. memorandum, the Post also makes note of a review conducted by the Congressional Research Service, an independent non-partisan part of Congress that exists to provide legal and other research to Members of the House and Senate and to committees regarding the matters before them. In that review, the C.R.S. reached largely the same conclusion that the I.R.S. did, with the exception that Congressional authority may arguably be limited by the proviso, established in a series of Supreme Court cases, that the request must have a “legitimate legislative purpose.”

By contrast, the I.R.S. memo seemingly argues that Congressional authority under Section 6103 is unlimited and that the agency has no option but to comply with any request that the Ways & Means Committee, or any of the other bodies authorized to make a request for taxpayer returns, makes under the law. Even if the C.R.S. is correct, though, it seems clear that the Ways & Means Committee has a sufficient “legitimate legislative purpose” to justify this request. This is especially true in light of the ruling in another document request case by Federal District Court Judge Amit Mehta, which gives Congress wide discretion in its document requests in the context of otherwise legitimate Congressional inquiries.

Secretary Mnuchin, meanwhile, is dismissing the memo:

The Treasury secretary, Steven Mnuchin, said Wednesday he was trying to determine who in the Internal Revenue Service wrote a draft legal memo concluding that he must release President Trump’s tax returns to Congress, and he insisted that he disagreed with its findings.

Speaking at a House Financial Services Committee hearing, Mr. Mnuchin said that he became aware of the memo this week after the Treasury Department received inquiries from reporters about a leaked copy of it. He said that he had not reviewed the memo, but that he believed it did not contradict his reasoning for denying the request from the House Ways and Means Committee for six years’ worth of Mr. Trump’s personal and business tax returns.

“The memo is marked draft, it is not a final memo,” Mr. Mnuchin said.

The draft memo, which was written by unnamed agency staff members, determined that the I.R.S. had no choice but to honor congressional requests for Mr. Trump’s tax returns unless he invoked executive privilege to protect them. The memo’s existence was first reported by The Washington Post.

Mr. Mnuchin said he believed the memo does not address the concerns that his legal team expressed when it decided to defy the request. Mr. Mnuchin has refused to comply with the Democrats’ requests because he said they lacked a “legitimate legislative purpose.”

Mr. Mnuchin reiterated that he had followed the guidance of lawyers from his department and the Department of Justice who determined that the Treasury should not release the returns.

Mr. Mnuchin said that it would be “unlawful” for him to fulfill the congressional request and he rejected the suggestion that he was breaking the law not turning over the tax returns.

“I’ve been advised I am not violating the law,” Mr. Mnuchin said.

Whichever interpretation you accept, though, both of these reviews of the relevant law stand in stark contrast that Secretary of Mnuchin and the Administration have taken in this matter. In his letters to Chairman Neal, Mnuchin has stated that he is acting pursuant to legal advice from the Department of Justice, but we have not seen any memo from the department’s Office of Legal Counsel, which would ordinarily prepare such a document, or anywhere else presenting a legal basis for Mnuchin’s position.

One argument that some have suggested that the Administration may try to make to justify the Secretary’s action is that the tax returns are somehow covered by Executive Privilege. However, it is hard to conceive how that doctrine, which I’ve explained in more detail in other posts, could possibly apply to tax returns, especially with regard to returns for years before Trump was even a candidate never mind President of the United States. Beyond Executive Privilege, though, it is hard to see what legal argument the Administration can make barring the committee from getting copies of the returns at some point in the future.

No doubt, this agency memorandum will be cited by Congressional lawyers in what is likely to be the inevitable court battle over the request for the President’s returns. The same will be true of Judge Mehta’s opinion in the case I wrote about yesterday. While neither is controlling authority, they are persuasive on the subjects that they speak to. Assuming that future Judges follow the same line of thought, the Administration is not going to have very good days in Court in its future.

Here’s a copy of the Congressional Research Service Memorandum:

Congressional Research Serv… by on Scribd

And here’s a copy of the I.R.S. Memorandum:

IRS Memo on Trump Tax Returns by on Scribd

FILED UNDER: Congress, Donald Trump, Law and the Courts, Politicians, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Daryl and his brother Darryl says:

    One option they have is to hold Mnuchin in contempt, which seems like a fruitless pursuit since the Justice Department is unlikely to pursue enforcement of any Congressional contempt citation.

    Doug,
    What can Congress do about this? If the AG is corrupt, is there anything short of impeaching the AG that can be done? And is that pointless, as the Senate will not follow thru?
    It seems like Dennison, Baghdad Barr, and Turtle-Face are now in complete control of the United States Government, and there is nothing anyone can do about it.

  2. JKB says:

    a previously confidential memo from the Internal Revenue Service memorandum

    Pretty much proof that if there was anything juicy in Trump’s tax returns it would already be public. The IRS apparently doesn’t have much in the way of information security when partisan politics are involved.

    As to the memo, it is an opinion from IRS lawyers that according to some doesn’t even cite the correct laws or understand Executive privilege. In any case, the Sec of Treasury is relying on the opinions of the Department general counsel, i.e., the superior entity here.

    14
  3. Daryl and his brother Darryl says:

    @JKB:

    Pretty much proof that if there was anything juicy in Trump’s tax returns it would already be public.

    Huh? What are you talkin’ about, Willis?

    In any case, the Sec of Treasury is relying on the opinions of the Department general counsel

    Sycophantic nonsense. The Sec of Treasury is breaking the law at the order of Dennison. If it were Obama or Clinton you would be apoplectic. But you are more concerned with your team than the Country or our Constitution.

    11
  4. Paul L. says:

    @Daryl and his brother Darryl:
    So IRS lawyers believe that dark money 501 (c3/c4) privacy (Tea Party groups) is more important than an individual tax player (Trump).

    14
  5. Kit says:

    Democratic hopefuls might help the situation by announcing that any new administration will undertake thorough investigations into chicanery throughout the government. Politics is one thing, but anyone who broke the law had better pray it not come to light (or that a presidential pardon awaits). Obama made a mistake in turning the page. Start lighting a fire under people’s asses.

  6. DrDaveT says:

    The memo is the first sign of potential dissent within the administration

    What a stupid comment, WaPo. The correct analysis is:

    Daniel Hemel, a professor at the University of Chicago Law School who also reviewed the memo for The Post, said the document suggests a split over Trump’s returns between career staffers at the IRS and political appointees at that agency and the Treasury Department.

    Someone at IRS asked counsel what the law said, and they got an answer from an actual staff expert. Calling that expert part of “the administration” is either vacuous or wrong.
    Speaking of wrong:
    @JKB:

    Pretty much proof that if there was anything juicy in Trump’s tax returns it would already be public. The IRS apparently doesn’t have much in the way of information security when partisan politics are involved.

    There is a legal world of difference between leaking an FOUO draft memo and leaking actual tax return information. The criminal penalties associated with the latter are right there in the statute, if you aren’t too lazy to look them up.

  7. DrDaveT says:

    @Paul L.:

    So IRS lawyers believe that dark money 501 (c3/c4) privacy (Tea Party groups) is more important than an individual tax player (Trump).

    I have no idea what this word salad is supposed to mean, but as an empiricist I’m highly confident that it’s wrong.

  8. @Daryl and his brother Darryl:

    They can keep fighting the Administration in court and keeping the American people informed.

  9. Jax says:

    @DrDaveT: I particularly liked the little Freudian slip where he wrote tax PLAYER instead of payer. We all know Donald Trump has definitely played fast and loose with tax laws, and somewhere deep in Paul’s subconscious, he knows it, too. 😉

  10. EddieInCA says:

    @Doug Mataconis:

    Doug Mataconis says:
    Wednesday, May 22, 2019 at 11:59
    @Daryl and his brother Darryl:

    They can keep fighting the Administration in court and keeping the American people informed.

    And when the administration refuses to abide by the court order, which I believe they will do (and I really hope I’m wrong, but I don’t think I am), what then?

  11. Moosebreath says:

    @EddieInCA:

    “And when the administration refuses to abide by the court order, which I believe they will do (and I really hope I’m wrong, but I don’t think I am), what then?”

    And when the administration drags this out so that there is no final order until after the 2020 election, what then?

  12. Daryl and his brother Darryl says:

    @Paul L.:

    So IRS lawyers believe that dark money 501 (c3/c4) privacy (Tea Party groups) is more important than an individual tax player (Trump).

    Again with your thoroughly investigated, and debunked, conspiracy theories.
    So adorable.

  13. Kathy says:

    @Kit:

    Democratic hopefuls might help the situation by announcing that any new administration will undertake thorough investigations into chicanery throughout the government.

    I’ve been thinking about that.

    One assumption in Nixon’s pardon was that such behavior would not recur. Not that much later we had Iran-Contra, and we saw the lesson learned was “don’t leave evidence,” rather than “don’t commit crimes in office.”

    Dennison, who appears incapable of learning, didn’t learn that. he also appears incapable of understanding simple legal notions. He may believe he cannot be indicted for any crimes committed while in office, rather than he cannot be indicted while in office, a big distinction.

    So it would be a good thing to show that no one is above the law, and that no one can ride out a term in office and walk away scott free. Whoever boots Trump out of office, hopefully in 2020, should make every effort to prosecute Trump, and other officials and advisers who engaged in criminal activity while in office. let him claim executive privilege then. Let him rant and rave that no one put Clinton in jail, too, if that will make him happy.