The Press and the President’s Tax Returns

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

Pitfalls of Politicization

Disregard of legal standards that apply to everyone to achieve immediate political goals is never good. Politicization tends towards pernicious, unpredictable results.  It is particularly erosive when it infects the administration of justice.  Developments in Texas v. United States, a federal case testing the limits of the President’s and Congress’s authority to set immigration policy, demonstrate just how—and how much—politicization can undermine the rule of law.

Back in May 2016, Judge Andrew Hanen of the Southern District of Texas found that lawyers representing the United States made a series of misstatements to the court and the 26 plaintiff States and that those lawyers knew the truth when they spoke. In 2014 and 2015 those lawyers misrepresented, among other things, timing under an executive order that expanded an immigration program to millions of additional persons, most of whom were parents of children born here as citizens, for whom permissible work periods were expanded to three years. Arising from the interplay of immigration, constitutional, and administrative law, the legal issues in Texas v. United States were complex.

But the problematic misrepresentations by the Justice Department’s lawyers were straightforward. The lawyers for the United States said that the immigration authorities wouldn’t start implementing the program before February 2015.  That led the court and 26 States to forego extraordinary proceedings for emergency relief that might have resulted in a restraining order expressly preventing implementation by the federal government.  The same lawyers also misrepresented how many three-year extensions were at issue, and the government granted over 100,000 before the truth came out in court. “[T]he Justice Department lawyers knew the true facts and misrepresented those facts to the citizens of the 26 Plaintiff States, their lawyers and this Court on multiple occasions.”   The misrepresentations enabled the government to do broadly what could have been expressly restrained.

The court, quite reasonably, asked Why? The DOJ gave several reasons, none sufficient.   The scores of government lawyers working on the case “lost focus” on the facts which had “receded in memory or awareness.”  That excuse gives away the cake:  it admits a breach of every lawyer’s duty of competence.  The government’s other excuse was that many lawyers were responsible for the case, spread across multiple agencies.  The government’s disingenuous conclusion was that any remedy should only apply to the handful of lawyers who appeared in court.  Two weeks ago, on the last full day of the Obama administration, the government lost.  The court ruled, “[a]t the very least, the Justice Department should, in an organized manner, require its attorneys to review and understand each state’s ethical rules before those attorneys appear in that state. This is a minimum requirement.”

Indeed, the court’s requirement is, if anything, too minimal and the Justice Department escaped by the skin of its teeth the Court’s more fulsome wrath from May. Commentators who previously administered Justice in prior Republican and Democratic administrations, however, suggest a more plausible, but still insufficient, reason for the misconduct:  politicization at the Department of Justice.   That should trouble everyone, regardless of party affiliation.

The federal government’s omission of facts that have “receded” or “lost focus” in the service of a legal victory for its current political masters must never be acceptable, minimized, or considered “normal” mistakes, regardless of their complexity. Current events show why.  The most troubling aspects of Texas v. United States arose during the Obama administration.  But headlines during the first weeks of the Trump administration reveal the political staying power of at least four horsemen: Executive Orders, judicial review, immigration, and administration representations. Politicization will undermine the validity of them all.

Mike Geske is counsel at Cause of Action Institute