The Battle for Trump’s Taxes and the President’s Potential Revenge

by Andy Grewal — Thursday, Oct. 18, 2018

The 2018 midterm elections are around the corner, and Democrats are favored to retake the House. Democratic leaders have indicated that, should they regain control, they will perform robust investigations into President Trump and his administration. Trump’s tax returns have drawn particularly strong interest, and House Minority Leader Nancy Pelosi has already promised that obtaining those returns would be “one of the first things we’d do.”

My prior post discussed the tax code provisions that would support congressional requests for Trump’s tax returns. It noted that Section 6103(f)’s plain language would authorize some congressional committees to request those returns, and that those returns could potentially be made public. However, if a committee sought Trump’s returns for an improper reason, Trump could present constitutional defenses to disclosure. Whether those defenses would succeed remains uncertain,* given the breadth of Congress’s investigatory powers and the absence of any direct case law.

But Trump might have another way of discouraging any improper congressional requests. Section 6103(g) authorizes** the President to obtain anyone’s tax return from the IRS, with no carve-out for federal legislators. Thus, if a congressional committee threatens to request Trump’s tax returns, the President could respond in kind, and threaten to review Democrats’ returns. Most federal legislators have declined to release their tax returns, even after media requests, so this threat would presumably be taken seriously. See Roll Call, Members of Congress: Where Are Your Tax Returns? (Jun. 26, 2017) (473 out of 535 federal legislators have not released their returns or did not respond to requests for disclosure); POLITICO, Pelosi grilled for not releasing her own tax returns (Jul. 19, 2012).

Section 6103(g) contains no meaningful restrictions on the President’s authority. To act under that section, the President must make his request in writing, describe the tax information he wants disclosed to him, and note “the specific reason why the inspection or disclosure is requested.” Section 6103(g)(1). The statute does not say that the President must have a proper reason for his requests, but instead addresses potential abuse through a disclosure regime. That is, under Section 6103(g)(5), the President must report to the Joint Committee on Taxation any disclosure requests he has made and his reasons for making those requests. The JCT can then disclose the President’s requests if it determines that disclosure to Congress “would be in the national interest.” Section 6103(g)(5).

In ordinary circumstances, this potential congressional disclosure would discourage a President from inspecting his political opponents’ tax returns. But given how the sitting President interacts with his opposition, any JCT disclosure might serve his political interests. Though the law would probably prevent Trump from disclosing any specific tax return information he obtained through his Section 6103(g) authority, see Section 7213, if the JCT confirmed that Trump had reviewed his opponents’ tax returns, his vague bluster about them might draw some public attention. That is, the JCT’s disclosure might give Trump credibility where he would otherwise have none. Section 6103(g)(5) might thus make Trump act even more brazenly than otherwise.

Those troubled by Trump’s potential attacks on Democratic legislators, but who support those legislators’ attempts to obtain the President’s tax returns, should consider whether their views on Section 6103(g) are consistent with their views on 6103(f). For example, if a House committee needs no justification to invoke Section 6103(f), then on what basis would one argue that constitutional or other principles restrict Trump’s authority under Section 6103(g)? Also, loose justifications under Section 6103(f) could support loose justifications under Section 6103(g). For example, if Congress believes that it must review Trump’s tax returns to determine whether any conflicts of interest arise from his tax proposals, then President Trump can just as easily argue that he must view legislators’ tax returns to determine whether he should veto any tax legislation presented by them.

Of course, this is all very unseemly. Public confidence in the tax system depends, in no small part, on the belief that the IRS will protect taxpayers’ privacy. And if congressional committees or the President make politically-motivated requests for tax return information and the IRS fulfills those requests, a citizen may wonder whether his or her own tax return information may be disclosed for improper purposes.

These concerns might not be valid. After all, the IRS has an exceptional record in protecting taxpayer privacy. But, for better or worse, political events often affect public perceptions of the IRS. For that reason, both the President and Democratic legislators should pause before acting under Section 6103.

Follow me on Twitter: @AndyGrewal

This post may be updated. Comments welcome.

* See Watkins v. United States, 354 U.S. 178, 200 (1957) (though “there is no congressional power to expose for the sake of exposure,” committee members’ improper motives “would not vitiate an investigation which had been instituted by a House of Congress if that assembly’s legislative purpose is being served”).

**Strictly speaking, Section 6103(g) does not “authorize” the President’s inspection of tax returns. His authority would probably follow from his executive power under the Constitution. Similarly, any congressional power to request tax returns stems from the legislative power, not from Section 6103(f). See Congressional Research Service, Congressional Oversight Manual (Dec. 19, 2014)  (describing Section 6103(f) as a limitation on, rather than a grant of, investigatory authority). But, for ease of exposition, this post will refer to Sections 6103(f) & (g) as provisions that grant authority.

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About Andy Grewal

Law Professor, University of Iowa

2 thoughts on “The Battle for Trump’s Taxes and the President’s Potential Revenge

  1. Jack Townsend

    As noted, the President must disclose in the request “the specific reason why the inspection or disclosure is requested.” If the President is making the request for payback or other political reasons, then the President would have to say that. But admitting the raw payback or political reasons would have political consequences. If the President lies about his reasons, then he is subject to potential false statement prosecution under 18 USC 1001, as well as possibly other crimes (but 1001 seems to nail it).

    And, I would think that, if the Treasury Secretary or the IRS Commissioner did not believe the President’s statement of reasons were truthful, they would not be required to turn over the returns or return information. Indeed, perhaps they would not be authorized to turn over the returns or information. Or they could pull a Johnnie Walters and simply file the request away while doing nothing. Or they could go public about the refusal and resign or be fired.

    And, I would think that, if ultimately tested in court, the courts would read into the statute some relevance to the role of the Presidency and payback and political reasons probably would not work. I am not sure exactly how the case would arise (perhaps one of the taxpayers involved could sue the IRS for wrongful disclosure), but if it did arise, it would signal to the Treasury and IRS that they could not turn over returns or return information for plainly improper purposes.

    Reply
    1. Andy Grewal Post author

      Thanks, Jack. I would emphasize that any limiting principles you discuss should be extended to Section 6103(f) requests. That is, if political payback does not constitute a proper purpose under Section 6103(g), then it should not constitute a proper purpose under Section 6103(f).

      Regarding potential litigation, I could see a court getting involved in Section 6103(f) requests if a congressional committee issued a subpoena with respect to a rebuffed request. For Section 6103(g), however, it’s much harder to see a justiciable controversy. Instead, as you pointed out, remedies would likely be political.

      Reply

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