As someone who while updating the Saltzman and Book treatise can spend hours on a footnote massaging a development relating to some obscure aspect of the mindnumbing complexities of Section 6103, I smirked last night listening to national reporters cite the Code section and discuss whether Democratic control of the House means that President Trump’s federal income tax returns will finally see the light of day.
Before I discuss that (and point readers to some excellent discussions of the issue), it is noteworthy that there has not been a leak of those returns, a testament I think to the professionalism of the IRS and the strong culture of confidentiality that agency employees afford to confidential tax return information. And while we try to steer clear of politics on Procedurally Taxing, I am pretty skeptical about the public’s interest (but not the public interest) in the issue: case in point was the resounding thud that accompanied the outstanding article in the NY Times investigating the Trump family’s efforts to transfer considerable wealth from the President’s father to the President and his siblings while paying as little transfer taxes as possible and using tactics that went well beyond the norms associated with acceptable estate planning.
To the issue of the day. Here is Section 6103(f)(1):
Upon written request from the chairman of the Committee on Ways and Means of the House of Representatives, the chairman of the Committee on Finance of the Senate, or the chairman of the Joint Committee on Taxation, the Secretary shall furnish such committee with any return or return information specified in such request, except that any return or return information which can be associated with, or otherwise identify, directly or indirectly, a particular taxpayer shall be furnished to such committee only when sitting in closed executive session unless such taxpayer otherwise consents in writing to such disclosure.
Under Section 6103(f)(4)(A), any return submitted to one of the tax committees mentioned in (f)(1) may then be released to the full House or the Senate, or both. Professor George Yin has been in front of this issue, and in a 2015 article in the Tax Lawyer he suggests that this effectively allows for public release of the returns, assuming that there is some legitimate legislative purpose associated with the inquiry.
Professor Andy Grewal has addressed some of these issues in two posts on the Notice and Comment blog; his first post in 2017 notes that the President may have a constitutional defense to releasing the returns along the lines that an inquiry for purely political purposes may exceed the legislature’s exercise of its legitimate powers. In a post last month Professor Grewal raises the President’s possible use of Section 6103(g) in revenge to obtain tax returns from members of Congress (many of whom have not made their tax returns public).
There is very little law associated with these provisions. That is about to change. A number of Democrats in the House have publicly said that if they took control of the House they would press for release of the returns. In today’s partisan times, it is difficult to see someone from the other side of the aisle doing things for anything but partisan interests. As Professor Grewal notes, all of this is a bit unseemly, and to some extent the public confidence in the tax system, which depends in no small part on the belief that the tax system is not political, is likely to be the big loser when all is said and done.
About Leslie Book
And, of course, there’s this interesting post from a couple of tax guys on PT’s own Forbe’s page:
https://www.forbes.com/sites/procedurallytaxing/2017/02/21/disclosing-president-trumps-tax-returns-an-unconventional-idea/#1737c7a5010d
Ah thanks Bryan and my apologies for the oversight! And of course my colleague who took the lead oar on the rewrite of the Saltzman chapter discussing Section 6103, Stu Bassin, wrote an excellent post on the issue of the NY Times publishing excerpts of the president’s tax returns as well
While the ultimate consequences of last night’s election still remain to be seen, one thing is obvious: one way or another, certain information in President Trump’s tax returns will be disclosed to the American public. The existing emoluments clause violation lawsuit against the President, which has survived a motion to dismiss, would clearly appear to provide a “legitimate legislative purpose” for the House Ways and Means Committee to obtain and release at least certain portions of Trump’s returns, thus satisfying the concerns of Professor Yin with the unfettered release of tax return information under I.R.C. Secs. 6103(f)(1) and (f)(4)(A).
What a tax return tells me is far less than what I would like or need to know about someone’s financial affairs. What should interest the Congressional oversight committees is how much progress the IRS has made in an audit that apparently has been ongoing since at least 2015. IRS is protecting confidentiality. But are they also dragging their feet? Or has a Tax Court petition already been filed, but sealed at the petitioner’s request?
Section 6103 does not apply to state income tax returns that do not include information disclosed by IRS under federal/state agreements. What surprises me is that none of those have been leaked or otherwise disclosed .
“case in point was the resounding thud that accompanied the outstanding article in the NY Times investigating the Trump family’s efforts to transfer considerable wealth from the President’s father to the President and his siblings while paying as little transfer taxes as possible”
‘Dog bites man’ isn’t news. Maybe the public had already seen enough and one more detail didn’t matter.
“the President may have a constitutional defense to releasing the returns along the lines that an inquiry for purely political purposes may exceed the legislature’s exercise of its legitimate powers.”
I’d suggest that US v. Sullivan and Garner v. US would provide a stronger constitutional defence, but only if he can find a circuit that still upholds those Supreme Court rulings. Maybe he should have redacted sensitive information before he submitted the returns in the first place, and tried to get into Tax Court where an order could be made to maintain seal on the sensitive information. It might be too late now though, if the information was already exposed on the returns.