The issue is not as simple as many seem to think, and it almost certainly will be resolved in court.
To the surprise of few, House Democrats responded to Tuesday’s electoral victories by stepping up plans to seek the tax returns that President Trump has declined to make public since he launched his presidential bid in 2015.
But the process available to the incoming majority party in January will present some uncertainties, both legal and political.
“Every president since Gerald Ford has voluntarily done this,” likely incoming Ways and Means Chairman Richard Neal, D-Mass., told reporters in Massachusetts on Wednesday. According to the law, the panel chairman “has the ability to ask for the returns, and I assume there would be a court case that would go for a period of time,” he said. “Proportionality is very important,” Neal stressed, and said he would count on the tax attorneys and economists at the Joint Committee on Taxation to keep the process proper.
His colleague Rep. Bill Pascrell, D-N.J., who recently published an entire timeline of unsuccessful demands for the tax returns through House and Senate floor action, told The Hill on Thursday that the examination will be an “academic, rational review” and that there would be “no leakage.” Decisions on whether to make part or all of the returns public would come later.
"The presidential campaign is over and the fear that a political opponent will try to use tax returns for electoral benefit is passed,” Pascrell said in an earlier statement. “President Trump is now governing while also owning a business with international investments. The Constitution faces unprecedented threats due to this arrangement. I believe the powerful Ways and Means Committee has the responsibility to use that power to ensure proper oversight of the executive branch by requesting a review of President Trump’s tax returns and moving towards a formal release of these documents to the public."
The Internal Revenue Service, which keeps Trump’s tax returns going back decades in a safe, referred Government Executive to the Treasury Department for comment. Secretary Steven Mnuchin “would review any request with the Treasury general counsel for legality,” a department spokesperson said on Thursday. (A spokesman for the joint tax committee declined to comment.)
But a controversy is probably in the cards. Trump’s personal attorney, Rudy Giuliani, told the New York Times last month that he would advise Trump to fight any such request, accusing Democrats of conducting a “circus” with little legitimate legislative or oversight purpose.
Despite being virtually the only presidential candidate in the past four decades to resist suspending privacy rights and releasing his tax records, Trump has long maintained that he could not release them because they’re under audit. The IRS under Commissioner John Koskinen stated that the existence of an audit doesn’t prevent taxpayers from releasing them on their own.
The custom of presidential candidates voluntarily releasing their returns dates to the post-Watergate era after President Nixon resigned in 1974.
But Trump, after taking office, has continued to defend his decision to retain privacy by saying that no one but the media cares about them. At least two states, Maryland and New York, have taken up legislation that would require future presidential candidates to release their tax returns if they want to be on the ballot.
Historically, the authority for congressional committees to seek the returns dates back a century to the Harding administration after its infamous Teapot Dome financial scandal, as noted by former Joint Committee on Taxation chief of staff and now law professor George Yin last year in a Washington Post op-ed. “Congress decided that tax information should remain confidential except in two situations. First, it authorized the president to determine whether any tax information could be disclosed. And, in 1924, it gave the same power to certain congressional committees,” he wrote.
A Case With ‘Political Overtones’
Specifically, the authority of Congress to make an exception to privacy lies in Section 6103 of the tax code, which protects taxpayer records. It says that the chairmen of Ways and Means or the Senate Finance Committee can request a return and the Treasury secretary “shall” provide it.
That’s vague, former Commissioner Koskinen told Government Executive. “In light of the overall purpose of the code to protect the confidentiality of taxpayer information, can a chairman seek the information for any reason, even for political purposes or to harass someone they oppose of simply don't like?” he asked. “Put another way, do they have to have a purpose related to tax policy and administration to have a right to the return? The statute doesn't answer that question directly, but it's not an unreasonable question. You could imagine, in contentious times, a committee creating an ‘enemies list’ and then harassing the individuals by revealing their tax returns.”
Also unclear, Koskinen added, is whether, the records are available to all lawmakers and only in closed session. And while the statute refers to the secretary, that’s often interpreted as a reference to the IRS, he said. “As a general matter, questions of tax policy are the domain of the secretary, but tax administration is the domain of the commissioner. In this case, with the political overtones, I think it would be safe to view this is a policy or political, not tax administration, matter.”
Former Commissioner Lawrence Gibbs, now with the law firm of Miller & Chevalier, told Government Executive he could recall no precedents for Congress obtaining a president’s returns. “
“Based on my prior experience, however, any such request for returns would have to be made by specifically authorized persons acting in specifically designated capacities strictly in conformance with the provisions of the exceptions to be found in Code section 6103,” he said. “I doubt the returns would be made available for general public release, as I do not recall any such statutory authorization.” He also agreed with Rep. Neal’s notion that the issue is headed to the courts.
Trump, according to an analysis in the Yale Law Review in February 2017, has some case law to fall back on that may help him resist the House Democrats’ demands. “As the Supreme Court explained in Watkins v. United States, “there is no congressional power to expose for the sake of exposure,” wrote tax law professor Andy Grewal. “Rather, if Congress wants to collect information from the executive branch or other outsiders, it must do so in connection with its legislative power.”
If House Democrats end up receiving the returns, their expectations of finding relevant information on possible policy conflicts of interest with Trump’s domestic and foreign business holdings may not be borne out.
“What's helpful to remember is that tax returns generally don't tell you much if anything about the value of a taxpayer's assets or even, for partnerships, what the nature of the business is in any detail,” Koskinen said. “So you probably wouldn't learn much from the president's returns about relations with Russia or Russians. Nor would you learn much about where funding for the various business partnerships came from in terms of purchases of condo units.”
But the tradition of presidential candidates’ releasing their tax returns might be preserved.