Fact and Fiction on Trump’s Tax Returns
What Trump’s lawyer’s letter gets right — and wrong
President Trump’s personal attorney, William Consovoy, sent a letter to the Treasury Department’s general counsel on Friday arguing that House Ways and Means Chairman Richard Neal “cannot legally request — and the IRS cannot legally divulge” — the president’s tax returns. The letter gets a couple of things right and other things very wrong.
First, Consovoy is correct that 26 U.S.C. § 6103(f), the once-obscure 1924 statute that everyone is now talking about, does not resolve the present controversy. Section 6103(f) says that upon written request from the House Ways and Means chair or his Senate Finance Committee counterpart, the Treasury secretary “shall furnish such committee with any return or return information specified in such request.” But that is not the end of the story.
As Andy Grewal and others have (rightly) noted, § 6103(f) cannot extend any further than Congress’s legislative power. While “[t]he power to conduct investigations is inherent in the legislative process,” it is “not unlimited.” See Watkins v. United States, 354 U.S. 178, 187 (1957). For one thing, “[t]here is no general authority to expose the private affairs of individuals without justification in terms of the functions of the Congress.” Id. Thus, a § 6103(f) request — like any investigative step by a congressional committee — “must be related to, and in furtherance of, a legitimate task of Congress.” Id. Second, § 6103(f) — like every other statute — is limited by the Bill of Rights. Congress cannot, for example, compel a witness to incriminate herself. See id. at 188.
On its face, Chairman Neal’s request satisfies the “legitimate task” test. “The power of the Congress to conduct investigations … encompasses inquiries concerning the administration of existing laws as well as proposed or possibly needed statutes.” Watkins, 354 U.S. at 187. As Chairman Neal’s letter explains, the Ways and Means Committee “is considering legislative proposals and conducting oversight related to … the extent to which the IRS audits and enforces the Federal tax laws against a President.” This is a serious concern. The president is the head of the executive branch; the IRS is part of the executive branch; and those two facts alone lead to worries that the IRS will show favoritism in its examination of its boss’s returns. Recognizing this risk, the IRS has established an internal procedure for review of the president’s (and vice president’s) tax returns, but this procedure appears to have two significant shortcomings. First, it does not appear to apply to returns filed by the president before his inauguration that are still under audit while he is in office. (As of March 2016, the IRS was still examining Trump’s returns from 2009 onwards.) Second, it does not appear to apply to returns filed by business entities and trusts controlled by the president. It’s entirely legitimate for the Ways and Means Committee to evaluate whether the Service’s examinations of Trump’s pre- and post-presidential personal and business returns have been tainted by favoritism (or, possibly, by animus) and, if so, whether there is anything that Congress should do about that legislatively.
To be sure, Neal’s letter notes at one point that the Ways and Means Committee is seeking to “determine the scope” of the IRS’s examination of the president’s returns, and as Consovoy points out, Neal could determine the scope of the audit simply by asking the IRS commissioner. But Neal’s letter also says that the Ways and Means Committee is “conducting oversight related to … the extent to which the IRS … enforces the Federal tax laws against the President,” and for that, the committee does indeed need to view the returns and the associated IRS work files. Even if Neal hadn’t spelled out the legitimate basis for his inquiry in crystal-clear language, he doesn’t have to. See McGrain v. Daugherty, 273 U.S. 135, 178 (1927) (“express avowal of the object” of the investigation is not required). It might have been better if Neal had added a line reminding the reader that the returns and work files are necessary for the IRS’s oversight effort, but as McGrain makes clear, a less-than-full explanation of the investigation’s purpose is not a fatal flaw. (In any event, I don’t think Neal’s explanation was less than full; it was just concise.)
Consovoy suggests that the legitimacy of the Ways and Means Committee’s investigation should instead be judged on the basis of Neal’s underlying motives, which — according to Consovoy — are political. That suggestion runs headlong into Watkins. “We have no doubt that there is no congressional power to expose for the sake of exposure,” Chief Justice Warren wrote for the Court in that case, “[b]ut a solution to our problem is not to be found in testing the motives of committee members for this purpose.” Watkins, 354 U.S. at 200. As Warren continued: “Such is not our function. Their motives alone would not vitiate an investigation which had been instituted by a House of Congress if that assembly’s legislative purpose is being served.” Id.
In any event, even if Neal’s motives were political, that would not be a reason for the IRS to disregard his request. The whole reason for the constitutional separation of powers, as Madison wrote in Federalist № 51, is that “[a]mbition must be made to counteract ambition.” If politics are what motivate the Ways and Means Committee’s investigation of the executive branch, well, that’s exactly what the Framers thought should happen.
This is not to say that § 6103(f) gives the Ways and Means Committee carte blanche to request any individual’s tax returns. As Consovoy correctly notes, “First Amendment freedoms … apply to congressional investigations” too. So for example, if Neal had asked for the personal returns of every member of the Wall Street Journal editorial board, or if Senate Finance Committee chair Chuck Grassley demanded the returns of every New York Times columnist other than Bret Stephens and Ross Douthat, then there would be a likely First Amendment violation, and the First Amendment trumps § 6103(f). But energetic congressional oversight of the executive branch and its leader does not violate the First Amendment — or come anywhere close.
All of which is to say: Consovoy is right that Congress’s § 6103(f) authority is not unlimited: a request must be in furtherance of a legitimate task, and it must not run afoul of the Bill of Rights. But Neal’s request easily falls within those broad parameters. To quote Warren once more, “[i]t is unquestionably the duty of all citizens to cooperate with the Congress in its efforts to obtain the facts needed for intelligent legislative action.” Watkins, 354 U.S. at 187. That duty clearly applies to the Treasury secretary and the IRS commissioner here.
[Addendum: Consovoy’s letter makes another argument near its conclusion that deserves brief — though really only very brief — consideration. Consovoy says (1) that “IRS examinations are trial-like adjudications” and (2) that “[w]hen a congressional investigation focuses on a ‘pending’ adjudication, it violates ‘the right of private litigants to a fair trial and, equally important, with their right to the appearance of impartiality.’” For the second proposition, Consovoy cites and quotes Pillsbury Co. v. FTC, 354 F.2d 952, 964 (5th Cir. 1966) — a case which, as the quote indicates, involves a private litigant rather than the President of the United States. If anything, Pillsbury’s “appearance of impartiality” concerns are flipped in this case because in the absence of congressional investigation, the IRS would be auditing its own boss without any safeguards in place.
But setting the second proposition aside, focus for a moment on Consovoy’s first claim: that “IRS examinations are trial-like adjudications.” The Supreme Court has roundly rejected the idea that an IRS examination is a judicial proceeding, see United States v. Baggot, 463 U.S. 476, 480–82 (1983), which makes sense, because audits lack the traditional features of a trial (multiple parties arguing adversarily in front of an adjudicator, a right to cross-examine witnesses, and so on). So what authority does Consovoy cite for his curious claim that IRS exams are “trial-like”? Crickets.]
