All this month The Atlantic, along with many other publications, reported that the House Ways and Means Committee took up a request by one of its Democratic members to obtain President Trump’s tax returns by invoking a venerable provision of the federal Tax Code. In the time since Congressman Bill Pascrell, Jr. (D-NJ) made his request on February 1, 2017, a broad variety of publications have followed, reported, explained, and opined upon the Committee’s consideration of the matter.
On February 14, 2017, along strict party lines, the Ways and Means Committee voted not to invoke its statutory authority to examine President Trump’s tax returns. The Committee’s action received considerable news coverage. The most common theme among the reports, regardless of the correspondent’s view about what should happen with President Trump’s tax returns, was that the statute at issue is “obscure” or “little known.” However that view of the statute got started, one need only read a handful of the reports to see how easily the media can fall victim to its own echo chamber.
The statute considered by the Committee, 26 U.S.C. § 6103, is anything but obscure. It is, in fact, one of the foremost reforms arising out of the Watergate scandal. The investigation and hearings into the burglary led to the discovery that President Nixon had routinely abused the IRS’s audit and investigatory powers, particularly against his political opponents. The Articles of Impeachment against President Nixon charged that he had “endeavored to obtain from the Internal Revenue Service … income tax returns for purposes not authorized by law.” In the wake of those events, Congress added privacy protections to taxpayer information held by the IRS and rearranged existing protections (the subsection the Committee considered was one of the latter). In particular, the Tax Reform Act of 1976 reformed tax privacy to emphasize that tax returns and related information “shall be confidential.” To guard against abuse by future presidents and other government officials, Congress prohibited disclosure of tax returns and related information “except as authorized” by statute. Under this reform, confidentiality became the rule and disclosure, the exception.
The newly strengthened privacy protections, backed up by criminal and civil penalties for unlawful mischief, are designed to ensure that IRS information is used only to administer taxes and related programs, such as social security, and that any disclosure is strictly limited by tailored safeguards and procedures designed to prevent improper violation of taxpayer confidentiality. Over time, politicians have found ways around the statute’s safeguards. A number of well-documented, egregious, and large scale violations during the Obama administration, which were directed against President Obama’s political opponents, are described in our Investigative Report: Presidential Access to Taxpayer Information (which also provides more detail about the statute). By and large, however, government actors — especially those not administering taxes — are legally and procedurally barred from publishing or using confidential information about any taxpayer absent prior consent.
Congress, like the Executive Branch, is not immune from the temptation to use confidential taxpayer information held by the government. To limit the risk of abuse by legislators, the applicable statute strictly limits congressional access to particular circumstances and subject to specifically tailored safeguards. Under 26 U.S.C. § 6103(f), the section of the statute that Rep. Pascrell invoked, three congressional committees, including the Ways and Means Committee, can request access to examine any taxpayer’s information (which would include the President’s) but only subject to procedural safeguards designed to make the fact of their request publicly transparent.
First, the Chair of the Ways and Means Committee must send a written request to the Secretary of the Treasury (that is, a third party from a separate, co-equal branch of government) that describes the information sought (like returns from named taxpayers for specific periods). The Secretary of the Treasury, in turn, must record and then regularly and publicly report the number and types of these requests. Even then, the Secretary may furnish confidential tax information that can be associated with or identify a specific taxpayer only when the Committee members are meeting alone in executive session, unless the specific taxpayer provides written consent prior to any broader disclosure. Those safeguards ensure that congressional access to any taxpayer’s confidential information becomes a matter of public record.
But how many taxpayers have the time, ability, or inclination to read any part of the Congressional Record, let alone all of it every day, or even a portion of their own representative’s report and reaction about a committee’s work? Indeed, by requiring that every congressional request for an American taxpayer’s confidential information is transparent, the Tax Reform Act of 1976 implicitly relies on the press and third-party watchdog groups to make that information known to the broader public, hopefully, in an accurate and user-friendly form. In the present case, however, the press missed their own boat by failing to understand the purpose and context of the statute at issue. If the press intends to improve its reputation for reporting the facts accurately, it needs to take the time, at the very least, to understand the laws and government procedures it’s trying to report.
Mike Geske is counsel at Cause of Action Institute