The Fight Over Trump’s Tax Returns Will End Up in the Supreme Court. Here’s Why.
Should elected officials be allowed to gain access to the federal income tax returns of American taxpayers? When President Richard Nixon tried to do this to get dirt on his political opponents he was deservedly condemned and Congress passed a law in 1976 to bar the practice. But now Democrats want to ignore that law to get their hands on President Donald Trump’s tax returns.
Section 6103 of the Internal Revenue Code guarantees the confidentiality of all our tax returns—yours, mine, and even Trump’s.
A recent Congressional Research Service report notes that federal officials are prohibited from disclosing taxpayer returns and information without the taxpayer’s consent. Criminal penalties apply to unauthorized disclosures.
According to the Congressional Research Service, Congress passed this provision because of “revelations that President Nixon sought to use tax return information for improper purposes.”
What improper purposes? Partisan politics.
But while Democrats vilify Republican Nixon for using the power of government to go after opponents on his infamous enemies list, House Ways and Means Committee Chairman Richard Neal, D-Mass., is being hailed a hero by his party for following in Nixon’s footsteps.
Neal has written Internal Revenue Service Commissioner Charles Rettig demanding copies of the tax returns filed by Trump and eight of his companies for the last six years.
Trump lawyer William Consovoy has contested that demand, contending in an April 5 letter that Neal’s demand is illegal and “the IRS cannot legally divulge” the Trump tax returns.
The court fight over whether Congress can get the Trump returns is complicated, as I will explain below. It’s virtually certain to wind up in the Supreme Court.
If I had to bet on who will ultimately win the court fight, I would put my money on Consovoy, a well-known and skilled Supreme Court litigator.
Interestingly, in 1986 a judge on the U.S. Court of Appeals for the District of Columbia supported the law keeping tax returns private, finding in the case of National Treasury Employees Union v. the Federal Labor Relations Authority that taxpayer privacy is “fundamental to a tax system that relies on self-reporting.”
The judge was right.
Few people had heard of that judge in 1986, but you’ve likely heard her name in more recent years. She got a big promotion and is now Supreme Court Justice Ruth Bader Ginsburg. If she winds up hearing the case dealing with the fight over the Trump tax returns, it will be interesting to see if she sticks with her position of 33 years ago, or adopts a different position to strike a blow against Trump.
The House Democratic majority that took control of the chamber in January is clearly more interested in investigating every aspect of Trump’s life than legislating.
Getting Trump’s tax returns has become a crusade for many Democrats—especially now that special counsel Robert Mueller has concluded Trump and his campaign didn’t collude with Russia to get elected in 2016.
Neal notes that an exception to the general rule of privacy for tax returns allows the chairman of the House Ways and Means Committee—that’s him—to request tax returns or information about the returns.
Democrats are claiming this exception gives Neal the absolute right to get the Trump returns, with no exceptions. But that’s a gross oversimplification.
If tax return information requested by the Ways and Means chairman includes information that can identify the taxpayer, it can be provided only when the requesting committee is “in closed executive session.”
Both the Congressional Research Service and Trump attorney Consovoy point out that the committee can exercise its power under this law only in the context of its constitutional oversight and investigative authority. This is a critical distinction.
The committee’s power is “subject to the same legal limitations that generally attach to Congress’ use of other compulsory investigative tools,” the Congressional Research Service observes. It adds: “Notably, the inquiry must further a ‘legislative purpose’ and not otherwise breach relevant constitutional rights or privileges.”
Consovoy cites numerous court decisions holding that legislative “investigations” like Neal’s must have a legitimate legislative purpose. Congress doesn’t have a “stand-alone” investigation power.
In a 1957 case, Watkins v. U.S., the Supreme Court told the House Un-American Activities Committee that “there is no congressional power to expose for the sake of exposure” and especially not the “private affairs” of individuals.
Furthermore, according to the high court, Congress can’t use its investigation to act like a “law enforcement or trial agency”—or, as Consovoy put it in a follow-up letter to the Treasury Department Monday, like “a junior-varsity IRS, rerunning individual examinations or flyspecking the agency’s calculations.”
The point is that the House committee has no power to conduct its own examination and audit of any individual taxpayer—be it the president or anyone else.
Audits are a function of the executive branch, not the legislature. Congress can’t, as the Justice Department opined in 1981, intrude “on the Executive Branch’s function of executing the law.”
Neal claims that his legislative purpose in demanding the president’s tax returns is to determine “the extent to which the IRS audits and enforces the Federal tax laws against a President.”
As chairman of the Senate Finance Committee, Sen. Chuck Grassley, R-Iowa, has the same authority under this statutory provision as Neal. But he’s not on board with Neal’s request, saying that it “doesn’t make sense when taken at face value, because you can’t take it at face value.”
Consovoy points out several facts to debunk Neal’s claim that the congressman just wants to review IRS enforcement of “Federal tax laws against a President.” He notes that Neal:
- Hasn’t requested the tax returns of any other president.
- Is demanding tax returns from before Trump became president.
- Has asked no questions of any kind about IRS policy and procedures when the agency is auditing presidential tax returns.
- Hasn’t even waited for the IRS to finish its “ongoing examinations (and any resulting appeals)” dealing with Trump’s tax returns.
Consovoy makes a strong case that there is no legitimate legislative purpose driving Neal’s demand, which means the demand to see the Trump tax returns is outside the constitutional authority and power of Congress.
Rather, Consovoy writes, Neal’s “request is a transparent effort by one political party to harass an official from the other party because they dislike his politics and speech … and they want to use the information to damage him politically.”
The Treasury Department must determine whether to comply with Neal’s demand. Treasury Secretary Steven Mnuchin has said his agency is consulting with the Justice Department “given the unprecedented nature of this request” to ensure the agency is complying with the law and to avoid “potentially weaponizing the IRS.”
Neal, by the way—who chairs one of the most powerful committees in the U.S. House, with extensive power over the American economy, private industry, and taxpayers—has never disclosed any of his tax returns, although he claims he will eventually.
Apparently, Neal believes the public’s need to know doesn’t extend to him.
What will happen now with the Trump tax returns?
We don’t have the ultimate answer, though Trump has a far stronger case than most of the media are portraying. But don’t expect to be reading through the president’s complex returns anytime soon on the Internet. There will be a long court battle ahead with important implications about the protections for the privacy of all tax returns—including your own.