Trump Fighting Congress’ Demand for His Tax Returns

The law is not on the President's side.

Donald Trump Tax Returns

CNN (“Trump lawyers issue letter fighting tax return request“):

President Donald Trump continues to hold his ground against Democratic efforts to obtain his tax returns, with one administration official telling CNN that the President and his team are willing to fight the House Democratic request all the way to the Supreme Court.

“This is a hill and people would be willing to die on it,” the official said.
House Ways and Means Committee Chairman Richard Neal formally requested six years of Trump’s personal tax returns from the Internal Revenue Service in a letter Wednesday.

The official added that the administration is “not going to set the precedent” of turning over tax returns for future occupants of the Oval Office, slamming the House Democrat request from Neal as “abuse and overreach by Congress” and asked what’s stopping Senate Republicans from seeking House Speaker Nancy Pelosi’s returns.

“They have zero right to it,” the official said, who added Trump has also made it clear he’s not releasing his tax returns.

[…]

Lawyer William Consovoy argued in a statement on Friday that the requests for Trump’s tax information “are not consistent with governing law, do not advance any proper legislative purpose, and threaten to interfere with the ordinary conduct of audits.”

In the Wednesday request, Neal cited a little-known IRS code. Under IRS code 6103, only the Joint Committee on Taxation, the House Ways and Means chairman and the Senate Finance Committee chairman have the authority to request the tax information of an individual.

But in a detailed letter to the general counsel of the Treasury Department on Friday, Consovoy said that “the committee’s authority is subject to important constraints,” which, he said, citing the tax code, “extend to the ordinary taxpayer and the President alike.”

Consovoy said that Neal does not have a “legitimate committee purpose” for obtaining the tax returns, adding that Neal’s request “is a transparent effort by one political party to harass an official from the other party because they dislike his politics and speech.”

[…]

The Democrats’ request was also rebuked by congressional Republicans, with House Republican Leader Kevin McCarthy warning Thursday that it “sets a dangerous standard of having the federal government used as a political weapon” and dismissing the move as “a waste of time.”

More from The Hill (“Trump says law ‘100 percent’ on his side in tax return fight“):

It’s not clear that the law will protect Trump from having to release his tax returns.

The IRS has said that audits don’t prevent people from releasing their own tax information, and Democrats are attempting to use a provision in the federal tax code that gives the chairmen of Congress’s tax committees the power to ask for any tax returns and return information and examine them in a closed session.

The statute says that the Treasury secretary “shall furnish” the documents, so long as they are reviewed in a closed session. But it’s unclear how quickly the IRS will respond and if they will provide House Ways and Means Committee Chairman Richard Neal (D-Mass.) with the documents.

Neal asked the IRS to provide the requested tax returns and related information by Wednesday. Democrats argue that there is no room in the statute for the IRS not to comply and that their request is necessary to conduct oversight of the IRS’s enforcement of tax laws against a president.

This issue has obviously been brewing since the early days of the 2016 campaign when Trump, in defiance of modern convention, refused to make his returns public, citing an ongoing IRS audit. It has long been assumed that, were the Democrats to take over the House following the 2018 elections, they would make this move. The law seems to be on their side.

Longtime NPR correspondent Peter Overby (“Congress Really Can Demand, And Get, Trump’s Tax Returns. Here’s How“) from last November:

When the “committee access” provision, as it’s known, became law in 1924, Congress had been dealing with taxpayers’ information in the Teapot Dome scandal afflicting the Harding administration and in a controversy involving former Treasury Secretary Andrew Mellon. Like Trump, he had served in government while refusing to avoid conflicts of interest by letting go of his holdings.

The committee access provision has rarely been invoked, but here’s how it would work:

For the party in control of the House or Senate, making the request is easy. It would come from the chair of the House Ways and Means Committee (the House panel that writes tax law), Senate Finance Committee or Joint Committee on Taxation. Democrats have been badgering the Republican chairs of those panels to act since February 2017 without success.

Once a request is made, no floor action is necessary. The request would go to Treasury Secretary Steve Mnuchin, who oversees the IRS — not to the taxpayer in the Oval Office, who would officially be out of the loop. Yin said the 1924 law “gave the tax committees the unqualified right to request the tax returns of any taxpayer.”

What would happen next is uncharted territory. Based on recent events, Trump might deploy Justice Department lawyers, and perhaps private lawyers, to fight the request in court. The process might resemble the not-infrequent legal battles over congressional subpoenas for executive branch documents. But the committee access provision has never been before a federal judge.

Were Congress to get access to Trump’s returns, it would be easy for lawmakers to disclose the information, despite various privacy protections that exist for taxpayers. The chair or committee with Trump’s tax returns could submit them to the full House or Senate if there’s a legitimate legislative purpose. At that point, the returns would very likely quickly become available for the public to see on the Internet.

Overby refers to a brief titled “Congressional Authority to Obtain And Release Tax Returns” by George K. Yin, the Edwin S. Cohen Distinguished
Professor of Law and Taxation at the University of Virginia and a former chief of staff of the Joint Committee on Taxation, which concludes:

Following Watergate, as part of the Tax Reform Act of 1976, Congress ended the power of the president to order disclosure of tax return information. However, it retained the authority of its tax committees to do so. This decision was necessary for Congress to protect its informing function. The recent experience involving Nixon had shown the potentially great importance of preserving an ability to make a public disclosure of tax information.

In the present situation, concerns over President Trump’s possible conflicts of interest — including conflicts with tax legislation the committees may soon be asked to approve — would certainly seem to justify a tax committee effort to obtain and inspect his confidential tax information. A review could also assure the American public that the IRS is treating him like any other taxpayer and not giving him preferential treatment. This would not be an idle concern; an initial IRS audit of Nixon’s returns did not result in any proposed adjustment even though the JCT staff later found (and the IRS concurred on second audit) that Nixon actually owed almost $500,000 in additional taxes. And as previously described, Congress had the same worries about the tax agency’s favorable treatment of Mellon. The parallels between the present-day concerns and those that contributed to the creation of the tax committee authority in 1924 are very close.

Whether there should be disclosure of any information obtained is a separate question. There must also be a legitimate purpose for any disclosure. Once the tax committees complete their investigation, they can determine whether any disclosure to the public would be appropriate. [footnotes elided for clarity]

The Brookings Institution’s Steve Rosenthal, writing for Forbes last November (“Congress Can And Should Demand President Trump’s Tax Returns“) expands on this:

Trump maintains a sprawling business empire, which he refuses to transfer to a blind trust.  According to multiple published reports, the president, through his businesses,  derives income from foreign governments and their lobbyists, which also may violate the Constitution’s prohibition against emoluments.  The president reportedly intervened personally to block  the FBI from moving its headquarters and thus opening up for commercial development a site just a few blocks from  his downtown Washington hotel.  The president reportedly paid little or no tax for many years, in part because of aggressive tax planning and, perhaps, tax evasion.  And throughout his campaign and since his election, the President acknowledged that he has been under audit.

These multiple allegations raise legitimate questions about whether the president is running the government for his benefit or the public’s—or both.  Is he profiting from his position?  Is the public harmed?  Is the IRS auditing the president’s returns appropriately—and without favoritism?  Has the IRS proposed any adjustments—and has the president paid them?

The potential need for Congress to be able to force the IRS to turn over a president’s tax returns is obvious for reasons Yin lays out. And I agree with him and Rosenthal that there are enough tax-related questions surrounding President Trump to warrant the relevant committees demanding access. But, rather obviously, this is a power subject to abuse.

Brian Falen, reporting for POLITICO (“Democrats face minefield if they get Trump’s tax returns“), notes that there’s a rather big caveat that mitigates this possibility:

Lawmakers are concerned that, even if they get the president’s filings, his returns will still be protected by strict confidentiality laws — it is a felony, punishable by up to five years, to improperly disclose private tax information.

There are ways around the dilemma, and Democrats intend to make at least some information about Trump’s taxes public — that is much of the point of their entire effort. But that probably won’t happen right away. Lawmakers say they will likely take some time to examine his filings behind closed doors before making anything publicly available.

That means there will be a period, possibly lasting months, when Democrats will have finally seen the president’s long-hidden taxes — and they will be inundated with questions about what’s in them — but they won’t be able to talk about them. If they let anything slip, Republicans will surely jump, demanding an investigation by the Justice Department.

“We’re going to have to be circumspect in terms of the way we handle this,” said Rep. John Larson (D-Conn.), a senior member of the House Ways and Means Committee. “That’s the responsibility of every member.”

[…]

That Democrats may have to keep Trump’s taxes secret for a time has been largely overlooked in the debate over the returns, probably because of a misconception of how the law Democrats are tapping works.

They are relying on a statute that allows the heads of Congress’s tax committees to examine anyone’s confidential taxes. Advocates of the effort emphasize that the law says the Treasury Secretary “shall” hand over any requested returns.

But that’s just the question of whether the administration must give up the documents — even if Trump’s returns are handed over, they will still be protected by privacy laws. Making them public will be a separate matter.

Now, Congress has been notorious for leaking classified and other sensitive information to the press for political reasons and, if Trump’s returns are disclosed to enough Members and staffers, it will be really hard to actually prosecute anyone under this provisison.

FILED UNDER: Congress, Donald Trump, U.S. Constitution, US Politics
James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. CSK says:

    It boils down to this: Unlike his predecessors, Trump is desperate to keep his tax returns hidden. Why?

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  2. Kit says:

    This is a hill and people would be willing to die on it

    So far, many Republicans have died on many hills. They saw themselves on various missions to rape, loot and pillage, only to later find themselves surrounded by the enemy. And Trump’s promised air cover never arrived.

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  3. gVOR08 says:

    Didn’t Trump repeatedly say he’d be eager to release his returns once that pesky audit was over? So if Chairman Neal can establish he’s not under audit I’m sure Trump will be happy to….. Never mind.

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  4. CSK says:

    @gVOR08: Yes. He also said he’d release them after the election.

  5. Franklin says:

    So this loophole has been expected to be used for at least a year or two and the Republicans failed to close it while they controlled every branch of government? Enjoy my serenade on the world’s tiniest violin.

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  6. James Joyner says:

    @Franklin: I would argue that, even aside from this statutory provision, this falls under the inherent investigatory powers of Congress. SCOTUS has upheld Congress’ subpoena power repeatedly and I think there are plenty of legitimate reasons for Congress to be interested in Trump’s taxes.

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  7. @CSK: Come, now! He is being audited. The answer is obvious. He would love to comply, but, alas, the audit!

  8. Bob@Youngstown says:

    @James Joyner:
    Seriously, would anyone question the privilege of Way and Means to investigate the IRS’s capability to complete an audit on a 6 year old return?

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  9. Bob@Youngstown says:

    Confidentiality –
    Assume that the committee (comprised of both Rs & Ds) get the returns and find nothing amiss. That the tax returns are entirely consistent with a multi-billionaire who is paying his legal share of taxes. Would there be any motivation on the part of Ds to leak violate their oath to maintain confidentiality? On the other hand, Rs, who desperately want to support the president, are likely to motivated to breach confidentiality.

    Now the other case, tax returns are NOT consistent with a multi-billionaire paying his legal share of taxes. The Ds would be politically motivated to leak this information. But even if they did not, the Rs on the committee would know, with certainty, that the president was a tax cheat. It’s debatable whether that knowledge would erode their support, but the president would know that the “cat-is-out-of the bag”. In other words, those Rs on the committee would have (as they say) ‘kompromat’ on the president.

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  10. Kathy says:

    It’s a very simple matter, really: the tax returns should be seen by Congress because El Cheeto is desperate they not be seen.

    Speaking of which, seeing as how easy it is to break norms and get cover from a major political party, what you need is some kind of presidential accountability law. Something that would require extensive disclosure of financial records, tax returns, and other sensitive information, even if only to select bipartisan Congressional committees.

    The next would-be dictator might not be an incompetent would-be, tinpot dictator like Trump.

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  11. CSK says:

    @Steven L. Taylor:

    Ah, yes. Of course. The old audit dodge. I suspect his tax returns would show a consistent pattern of evasion, and information that would lead to a revelation of money laundering.

    On a related note: People speak more of Trump’s bankruptcies than they do of the abject failure of virtually all of his branding operations. Trump Steaks? Trump Vodka? Trump Magazine? Trump The Board Game? Trump Ties? I’ve always wondered who the market for this crap was supposed to be. People with the money to plunk down $100 for a liter of Trump Vodka have the brains to pay $20 for a half-gallon of Gordons. People who think Trump Vodka is “classy” can’t afford it. No wonder all the branding operations flopped.

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  12. JKB says:

    There’s legislation, but its never been reviewed in an adversarial hearing in a court. And we know that anything Congress gets will be leaked. Those anonymous sources close to the …. are everywhere. So, since this will be a political question, the best way inform the public is to make the Congress go on the record in a court challenge. It will also move any release into the more active portion of the election season where the political nature will be obvious to the casual attention of voters.

    Never give anything to the government voluntarily. If they have legal authority to something, then the government agents/lawyers can earn their pay by doing the paperwork. Plus, volunteering things changes their legal status if you want to challenge it before a judge later. And the above is doubly important when you’ve done nothing wrong [at least to your knowledge]. Those who “have nothing to hide” must not let constitutional rights erode to avoid a hassle.

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  13. CSK says:

    @JKB: Can you explain Trump’s frenzy to keep his returns hidden? Because I can’t think of any reasons other than that they’ll show he’s either a crook or, as someone put it, “a clown living on credit.” Or both.

    I think he’d rather be exposed as a crook than a penniless clown.

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  14. charon says:

    Most probably just corroboration and details of Trump being kept afloat financially with Russian and other foreign laundered money. Probably other dirt too, but that pretty much for sure.

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  15. Tyrell says:

    @CSK: A crook? Well, how does he get by with that with the IRS? If they were going after him for something illegal on his taxes we would have heard it by now.
    On the one hand I think it would be better if the presidents would release their tax returns. It could show the working people that there are many tax strategies and legal loopholes out there that they do not know about and that they might could use next time. On the other hand this could set some sort of precedent and there soon would be calls for the release of returns of governors, mayors, school board members, pastors (already heard about that ), and pro athletes, and Bob the builder.
    I and the American feel that I have a sacred trust with the IRS to keep my returns secret and confidential. But on the other hand I am tempted to put them out there and maybe someone can figure out why I am paying almost 25% on agi of around $42, 450. And I used one of these computer tax programs where you just put the numbers in and it does the rest.
    I think I remember the other year that the news people got hold of one of Trumps tax returns and they were surprised. Turns out he was paying a higher rate than Senator Sanders and President Obama. What ever they were looking for wasn’t there: “well, I guess that’s it folks!”
    I have got along well with the IRS folks. They have been kind and easy to work with. On the other hand I was shocked and saddened about the way they treated Willie Nelson a few years ago.

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  16. CSK says:

    @Tyrell: Well, again, I have to ask: If there’s nothing shady in his returns, why is he apparently so desperate to conceal them? If he’s done nothing illegal, why the secrecy?

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  17. Bob@Youngstown says:

    @JKB:

    Never give anything to the government voluntarily. If they have legal authority to something, then the government agents/lawyers can earn their pay by doing the paperwork.

    This is how you approach filing your taxes?

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  18. Bob@Youngstown says:

    @Tyrell:

    I am paying almost 25% on agi of around $42, 450.

    IF you are paying 10,600 in taxes on AGI of 42,450…. you’d best get a better tax prep software.

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  19. @Bob@Youngstown: No kidding.

  20. Teve says:

    AGI is before the standard deduction. AGI of 42,450 for a single person means taxable income of 30,450 after SD. IRS tax tables 2018 put taxes on 30,450 at $3,467.

  21. Just nutha ignint cracker says:

    @Bob@Youngstown: I should say so. I paid $2236 on an AGI of $34k. (Just sent in my taxes this week.)

  22. MarkedMan says:

    @CSK:

    People who think Trump Vodka is “classy” can’t afford it. No wonder all the branding operations flopped.

    Actually, Trump brand scams are pretty straight forward. Think of “Rollex” watches, “Taffany” Jewelry, and “Soks Fifth Avenue” clothing. Trump takes the cheapest crap, puts a label on it that regular Joes think is classy, and sells it at a price they can afford for a special occasion. Take Trump Wine. The wine supposedly comes from Trump Winery, a formerly bankrupt West Virginia winery. Yes, West Virginia. I see it in a local liquor store for somewhere around $28 / bottle. I’m not a wine connoisseur myself but know enough to recognize the price point. Special occasion for the every day person or bargain hunting for people who know a great deal about wine. Which means definitely the first because no bargain hunters are spending 28 bucks on WV wine. And no where near the price that a wine with a serious reputation as elite would charge. It’s taking wine that at best should come in a cheap bottle with an cutesy animal label and seeking at $7.99 a bottle and putting a shiny 50 cent label on it and charging 3-4 times as much. It’s not going to people who regularly drink wine and so they are unlikely to realize just how bad it is.

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  23. CSK says:

    @MarkedMan: Yes, but my point is that every single one of his branding operations failed. He was trying to sell “class” at prices unaffordable to people who would believe crap with the name “Trump” on it was “classy.” As for the wine–I don’t know who buys it (I’ve never even seen it), but I don’t think your average hardcore Trumpkin drinks it, or any wine, even on special occasions.

    The fact that all his brands have failed proves my point.

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  24. Guarneri says:

    @CSK:

    Seriously? Because the contents will be distorted for political gain. All of you, you are just being silly.
    I’m embarrassed for you.

    My returns are about 1 inch thick every year because of my profession. I can only imagine Trumps. Easy pickings for propagandists.

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  25. DrDaveT says:

    In the Wednesday request, Neal cited a little-known IRS code. Under IRS code 6103 […]

    Minor correction to this CNN misstatement:

    Section 6103 of the Internal Revenue Code (which is Title 26 of the US Code) is not an IRS creation, or an IRS product, or in any way an IRS code, except in being about the IRS.

    The “Internal Revenue Code” is the body of laws passed by Congress to control what the IRS must and must not do. Section 6103 is the section about the confidentiality and disclosability of tax returns and return information.

  26. CSK says:

    @Guarneri: It’s a bit difficult to distort an honest return done by an upright firm of accountants. I’m fairly sure Trump’s predecessors didn’t have that problem. And I’m equally sure their returns were complicated–and long.

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  27. David M says:

    @JKB:

    Never give anything to the government voluntarily. If they have legal authority to something, then the government agents/lawyers can earn their pay by doing the paperwork.

    You do realize that this is Congress requesting the IRS provide them with copies of the returns. No one is asking Trump to provide anything to the government, or even do anything.

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  28. grumpy realist says:

    I suspect that the main reason Trump is so insistent on not letting anyone else get a look at his returns…..

    …..is because they’ll show in black and white that Trump isn’t at all as rich as he claims he is. I also suspect his income is much less than his lifestyle required–hence all the penny-ante stuff with Trump Steaks and Trump Wine and Trump Vodka. That’s what you do when you’re floundering desperately for cash–not when you have 10 billion prudently invested throwing off an income stream.

    The major problem with investing in real estate is that it’s not like stocks or bonds which throw off dividends or interest. Just owning a chunk of property doesn’t provide an income stream. Ok, maybe you can rent out the real estate, but you have to deal with real estate taxes–and if you had to borrow most of the money to purchase it, all of the rental payments may be going into the mortgage hole….because if you don’t pay them in time then hello foreclosure and bye-bye real estate.

  29. Just Another Ex-Republican says:

    Yep. The biggest con Trump has pulled is the one that has people believe he’s a good businessman, and his tax returns will conclusively show he isn’t nearly as wealthy as he wants people to think. It’s an interesting comment on his psyche that he’s far more worried about that than anything else.

    And if Mitt Romney and the Clintons could figure out how to release their taxes, the argument that Trump’s are too complicated is completely BS.