As we explained earlier this week, post-Watergate reforms to the Internal Revenue Code declared taxpayer’s tax returns and related information confidential. Disclosure of confidential taxpayer information is the exception and is prohibited except for enumerated, limited purposes and situations that are “authorized by statute.” Even when disclosure is statutorily authorized, the Internal Revenue Code imposes additional procedures so that, absent prior consent, disclosure of confidential taxpayer information to the government for purposes other than administering or enforcing tax law becomes a matter of public record.
Recent debate about President Trump’s tax returns has provided a case study about how the confidentiality rule and limited disclosure exceptions operate, both legally and politically. Under 26 U.S.C. § 6103(f), the House Ways and Means Committee and the Senate Finance Committee can request access to examine any taxpayer’s information (including the president’s) without the taxpayer’s consent, but only subject to procedural safeguards designed to make the fact of Congress’s request publicly transparent. Last week, the Ways and Means Committee considered but decided against invoking that authority to obtain the president’s returns. On February 27, 2017, the Democrats forced the entire House to take a floor vote on whether the Committee should invoke the statute. Again, along party lines, the decision was made not to seek the President’s returns (although two Republicans voted “present” rather than nay).
Thereafter, in a March 1, 2017 letter, Democratic members of the Senate Finance Committee requested that their Chairman, Orrin Hatch (R-UT), use the same statutory authority to obtain President Trump’s tax returns for the Committee’s review. The Democrats argued that the information would help investigate suspicions about the President’s business and political relationships. Senator Hatch, in a joint letter with House Ways and Means Committee Chairman Brady, rejected the Democratic members’ request. The Senate and House Chairmen argued that their Committees’ authority to obtain taxpayer information should only be invoked when tax improprieties or abuse of taxpayer rights were suspected, and that broader uses to investigate business and political relationships would be an “abusive” and “dangerous precedent.”
The press has widely reported these events and arguments, as it should. As we wrote earlier this week, “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.” The public is indeed paying attention and some constituents are vigorously inquiring about their representatives’ and senators’ position about the President’s tax returns. Engagement like that indicates that the statutory protections promoting transparency for congressional requests to see confidential taxpayer information are operating as they should. Lawmakers must weigh the value of confidentiality whenever they consider seeking access to a taxpayer’s protected information and, when they choose disclosure over confidentiality (or when, as in this instance, they vote against disclosure), constituents will know and be able to use that information in evaluating the work of their representatives.
Mike Geske is counsel at Cause of Action Institute
