100-year-old statute

Democrats planning to examine Trump’s tax returns after the midterms

A nearly 100-year-old statute allows the chairmen of Congress’ tax committees to look at anyone’s returns.

By BRIAN FALER

The years-old mystery of what’s in President Donald Trump’s tax returns will likely quickly unravel if Democrats win control of at least one chamber of Congress.

Democrats, especially in the House, are quietly planning on using an obscure law that will enable them to examine the president’s tax filings without his permission.

The nearly 100-year-old statute allows the chairmen of Congress’ tax committees to look at anyone’s returns, and Democrats say they intend to use that power to help answer a long list of questions about Trump’s finances. Many also want to use it to make public confidential information about Trump’s taxes that he’s steadfastly refused to release.

“Probably the approach would be to get all of it, review it, and, depending on what that shows, release all or part of it,” said Rep. Lloyd Doggett of Texas, the No. 4 Democrat on the Ways and Means Committee.

That could bring a swift end to the long-running battle over Trump’s returns, while generating loads of fodder for what promises to be an array of investigations into the administration if Democrats win power.

Lawmakers are not doing much now to advertise their opportunity to seize Trump’s returns ahead of the midterm elections, in part because some believe it will only rile his supporters.

But it could be one of the most immediate results of Democrats returning to power. Nonpartisan election experts say Democrats will likely win the House, with the Cook Political Report putting the chances at 75 percent. They’re less likely to win the Senate, though even Majority Leader Mitch McConnell has conceded that’s possible.

It would be highly unusual for Congress to release confidential tax information, though not unprecedented.

As part of their Obama-era investigations into whether the IRS discriminated against conservative groups seeking tax-exempt status, Republicans on both the Finance and Ways and Means committees agreed to release private tax information about the organizations. At the time, Democrats decried the move, though some now call it justification for unmasking Trump’s returns.

Transparency advocates have long complained about Trump bucking a 40-year tradition of presidents producing their returns. His filings could answer questions about what he earns, how much he pays in taxes and whether he gives to charity.

It could also help answer broader, nagging questions like what sort of conflicts of interests are posed by his businesses, his ties to Russia and other foreign governments and how his family benefits from government actions.

“There are legitimate oversight questions that can only be answered by having those documents,” said Sen. Mark Warner of Virginia, a tax writer and the top Democrat on the chamber’s intelligence committee.

Publicly releasing the returns would not come without some risk for Democrats, and not all lawmakers are convinced it’s a good idea, let alone legal.

It would be highly unusual, and surely incense the president. Some predict it would precipitate a legal war with the administration while scuttling any chance Democrats have of working with Trump on issues where they agree, like increasing infrastructure spending. Democrats might be accused of using their access to private tax information as a political weapon.

Some also wonder whether it would eventually lead to lawmakers’ releasing confidential tax filings for other officials, like the vice president or members of Congress or even people outside the government.

Insiders predict, though, that once the public becomes aware it’s possible for Democrats to unilaterally seize Trump’s returns, they will face enormous political pressure to make them available. Others say once members of Congress receive copies of the returns, it would be only a matter of time before they are leaked to reporters.

The 1924 law stipulates the Treasury Department “shall” turn over “any return or return information” requested by the chairs of the tax committees or the head of Congress’ nonpartisan Joint Committee on Taxation for them to review privately.

The law was passed amid concerns about corruption and conflicts of interest in the executive branch, such as those posed by then-Treasury Secretary Andrew Mellon’s business interests.

“When this right was first developed, it was developed in an environment not dissimilar to now,” said George Yin, a former JCT chief who now teaches at the University of Virginia’s law school.

The law has been so rarely used by Congress than even Democrats on the Senate’s tax committee said they were unaware Trump’s returns could soon be within their grasp.

“Wow,” said Sen. Sherrod Brown of Ohio, a Democratic tax writer. “The Finance committee can do that?”

“I didn’t know that, but that’s interesting.”

Members of the Ways and Means committee have been feuding with Republicans over the issue for months, with the GOP repeatedly voting down Democrats’ bids to have the panel make use of the power.

Asked whether they would force the issue if they win the House, Rep. Richard Neal of Massachusetts, the panel’s top Democrat, said: “Yeah — that would be consistent with our beliefs.”

“Democrats have voted again and again to release those documents,” he said.

Democrats say they would likely bring in experts to help them understand Trump’s surely complicated finances. “There has to be a thorough review of it — and not just by members but by bringing in experts like CPAs to say, ‘What does this show?’” said Doggett.

In rare instances, lawmakers have used the law to publicly release private tax information, despite normally stiff penalties for disclosure designed to safeguard taxpayer privacy. Improperly releasing protected information is a felony, punishable by up to five years in prison — one reason why tax returns rarely leak.

In 2014 and 2015, after extensive consultations with Congress’ legal, tax and ethics advisers, both tax committees voted to release protected information as part of their investigations into the IRS’ tea party-targeting scandal. Lawmakers didn’t release any individual person’s returns, but the information disclosed enjoyed the same legal protections.

As Neal notes, the issue also came up during the Nixon administration.

In 1973, an IRS employee leaked Nixon’s tax return showing he paid an unusually low tax rate (Nixon’s famous “I am not a crook” quote referred to his taxes, not the better-known Watergate scandal).

Seeking to quell the issue, Nixon asked JCT to audit his returns after questions emerged about the IRS’ ability to adequately vet the president’s taxes. Four months later, JCT produced a 1,000-page report showing Nixon had underpaid his taxes over several years by almost $500,000, which amounted to half his net worth. Lawmakers agreed to make that report public, though it includes private tax information.

Said Neal: “There’s a precedent for doing this.”

Even some Republicans agree.

“The short answer is ‘yes,’” said one Republican involved in the IRS investigations.

Some outside observers warn that outing Trump’s filings could inaugurate a new era in which presidents are not just expected to release their returns, but are compelled to produce them by the opposing party.

“We’ve never forced presidents to release their returns by saying, ‘Do it or we’re going to do it for you.’ We’ve always relied upon them to do it voluntarily," said Joe Thorndike, director of the Tax History Project at the nonpartisan Tax Analysts. “We would be crossing a threshold.”

What’s more, he said, there’s no reason why other elected officials might not become subject to the same standard, or perhaps even private businesses or individual taxpayers.

“It’s not limited to the president — they could release anybody’s tax return,” said Thorndike. “Where does it end?”