Treasury Department Refusal to Submit Donald Trump's Tax Records to Congress


When the House Ways and Means Committee invoked a law demanding Treasury send them documents, Secretary Steven Mnuchin refused to comply.

 

Every major party’s Presidential nominee since 1976 has disclosed his tax information.[1] While running for office in 2016, Donald Trump indicated he would not release any tax information until the ongoing audits of his prior tax returns were completed by the Internal Revenue System (“IRS”).[2] Investigations into Trump’s tax returns started in 2002 and the specific audit Trump referred to began in 2009.[3] On April 3, 2019, Richard Neal, Chairman of the Ways and Means Committee in the House, requested Trump’s tax returns for the previous six years from the IRS.[4] Neal stated that his purpose for the request was to evaluate Federal tax laws and the effectiveness of the current IRS’s practice to audit Presidents’ tax returns.[5]

 

Steven Mnuchin, Secretary of the Department of the Treasury (“Treasury”), refused the request on the grounds that the request lacked a legitimate legislative purpose.[6] Instead, Mnuchin suggested providing the Committee with information explaining “how the IRS conducts mandatory examinations of Presidents . . .”[7] However, Mnuchin does not have the power to unilaterally decide that the Committee had no legislative purpose for its request.

 

Neal cited IRS Code § 6103(f) as authority for the request.[8] Section 6103 generally makes an individual’s tax information confidential.[9] Therefore, such tax information may not be disclosed by a governmental body without the taxpayer’s consent.[10] However, an exception to this general rule is § 6103(f)(1), which directs that “the Secretary shall furnish” requested tax information to the Ways and Means Committee.[11] If the chairman of the Committee requests a particular taxpayer’s returns, the Secretary may only disclose the information when sitting in a closed executive session.[12] Although § 6103(f) lacks limitations on requests, the Committee’s requests are bound by legal limitations that restrict Congress’s investigative authority.[13] Investigations conducted by Congress must not breach Constitutional rights and privileges, and must further a legislative purpose.[14]

 

Congress’s investigative authority is “broad and indispensable . . . [and] encompasses inquiries into the administration of existing laws, studies of proposed laws, and surveys of defects in our social, economic or political system for the purpose of enabling the Congress to remedy them.”[15] Although broad, the authority is limited. Seeking to expose for the sake of exposure or inquiring into the private affairs of citizens are not valid uses of Congressional power.[16] However, if the request exposes an individual or inquires into the private affairs of citizens that could result in valid legislation, the request falls under Congress’s authority.[17]

 

Chairman Neal requested Trump’s tax returns, citing the legislative purpose of investigating the current Federal tax laws in regards to IRS audit procedures for a sitting president.[18] No Federal tax laws currently exist requiring an IRS audit of Presidents’ taxes. However, the Internal Revenue Manual (“IRM”) requires an audit of the President's taxes.[19] The IRM is not a law, but an  internal policy document of the IRS.[20] Because of this, the internal policy is not legally binding on the IRS. If Congress begins to pursue the enactment of a federal law mandating the audit of a president, Congress would be operating within its own legislative power, as all federal tax laws are enacted by Congress. Any requests pursuant to such a potential law would presumably further a legitimate legislative purpose. It seems reasonable that Chairman Neal's stated purpose of considering a tax law for the President falls within the ambit of a "legitimate legislative purpose."

 

In July 2019, the Ways and Means Committee sued the Treasury and IRS over nondisclosure of Trump’s tax returns.[21] Chairman Neal asked the court to enforce a subpoena requesting the documents.[22] The Justice Department, defending the Treasury Department's decision not to turn over the documents, claimed that Neal seeks the President’s tax returns solely for the purpose of releasing them to the public, which would make it a clear violation of privacy rights.[23] The lawsuit was put on hold in January 2020 by U.S. District Judge Trevor McFadden in Washington, D.C. in anticipation of several similar decisions being issued later in the year by higher courts.[24] The Supreme Court separately addressed to other cases involving subpoenas for President Trump's tax records and affirmed Congress could seek them if it met a four-part test. 

 

The problem for Mnuchin and others is that the letter of the law compelled compliance with the subpoena. If President Trump sought to block the effort in court, he was entitled to do so. For the Treasury Department to act as a shield and tool for the President to stonewall Congress in defiance of clear federal law is a dangerous precedent. Further investigation into what Secretary Mnuchin or others at the Treasury Department may have known, or communications they had with President Trump or others involved with the President's finances about the contents of his tax records, would be essential to proving any criminal misconduct in connection with the complete failure of Treasury to comply with the law in transmitting his tax returns to Congress.


[1] Robert Farley, Trump Wrong About Tax Law, FactCheck.org (April 11, 2019), https://www.factcheck.org/2019/04/trump-wrong-about-tax-law/.

[2] Donald Trump (@realDonaldTrump), Twitter (May 11, 2016, 4:51 PM) https://twitter.com/realDonaldTrump/status/730500562022760448?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E730500562022760448%7Ctwgr%5Eshare_3&ref_url=https%3A%2F%2Fwww.nytimes.com%2F2020%2F07%2F09%2Fus%2Fpolitics%2Ftrump-taxes.html.

[3] Katie Rogers, Trump on Releasing His Tax Returns: From ‘Absolutely’ to ‘Political Prosecution’, NY Times (July 9, 2020), https://www.nytimes.com/2020/07/09/us/politics/trump-taxes.html.

[4] Letter from Richard Neal, Comm’r, H.R. Comm. on Ways and Means, to Charles Rettig, Comm’r, Internal Revenue Serv. (April 3, 2019), https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/Neal%20Letter%20to%20Rettig%20%28signed%29%20-%202019.04.03.pdf.

[5] Id.

[6] Letter from Steven Mnuchin, Sec’y, Dept. of the Treasury, to Richard Neal, Comm’r, H.R. Comm. on Ways and Means (May 6, 2019), https://home.treasury.gov/system/files/136/Secretary-Mnuchin-Response-to-Chairman-Neal-2019-05-06.pdf?mod=article_inline.

[7] Id.

[8] Neal, supra note 4, at 1.

[9] 26 U.S.C. § 6103(a) (2012)  .

[10] Id.

[11] Id. at § 6103(f)(1). Note, Congress provided this directive specifically to “address perceived difficulties in acquiring tax information during congressional investigations during the Harding Administration’s Teapot Dome scandal.” David Carpenter et. al., Congressional Access to the President’s Federal Tax Returns, Cong. Research Serv. 2 (May 7, 2019) https://fas.org/sgp/crs/secrecy/LSB10275.pdf.

[12] 26 U.S.C. § 6103(f)(1).

[13] Carpenter, supra note 11 at 2.

[14] Id.

[15] Trump v. Mazars USA, LLP, 140 S.Ct. 2019, 2031 (2020).

[16] Carpenter, supra note 11 at 3.

[17] Id. Note, this is partially because Congress’s informing function is indispensable to ensure to the public that the government is working properly and efficiently. See Watkins v. U.S., 354 U.S. 178, 200 (1957) (“The public is, of entitled to be informed concerning the workings of its government.”). The informing function is Congress’s power “to inquire into and publicize corruption, maladministration or inefficiency in agencies of the Government.” Id. at 233 n. 33 (emphasis added). Congress’s informing power may even be stronger than the legislative power. Congressional Oversight of the Executive, Final Report of the Joint Committee on the Organization of Congress (Dec. 1993) https://archives-democrats-rules.house.gov/Archives/jcoc2am.htm#6 (citing Woodrow Wilson’s Congressional Government).

[18] Neal, supra note 4 at 1.

[19] Mnuchin, supra note 6.

[20] Qureshi v. U.S. 67 Fed.Cl. 783, 788 (Fed. Cl. 2005).

[21] Richard Rubin, House Panel Sues Treasury for Trump Tax Returns, Wall Street J. (July 2, 2019), https://www.wsj.com/articles/house-panel-sues-u-s-treasury-for-trump-tax-returns-11562081358.

[22] Id.

[23] Id.

[24] Jan Wolfe, U.S. Judge Puts on Hold House Lawsuit Seeking Trump Tax Returns, Reuters (Jan. 14, 2020), https://www.reuters.com/article/us-usa-trump-taxes/u-s-judge-puts-on-hold-house-lawsuit-seeking-trump-tax-returns-idUSKBN1ZD2TK.