In their request for President Donald Trump’s tax returns, House Democrats seem not to have embarked on a fishing expedition for every lurid detail of the president’s financial history, but rather offered at least on its face a more measured rationale with limited scope: information surrounding the Internal Revenue Service’s ability to audit its boss.
Wednesday’s request from House Ways and Means Chair Richard Neal (D-MA) to IRS commissioner Chuck Rettig seeks only six years of the president’s personal returns and the returns for only eight of his businesses, but it also seeks the IRS’s work product on processing and auditing the returns.
Beyond the narrowly tailored specifications of the request, House Democrats used an equally narrow rationale for the request itself: overseeing the IRS in its task of auditing the president.
Numerous tax experts in interviews with TPM characterized Neal’s request as a cautious but pragmatic way of attempting to ensure that in an expected legal challenge a judge would conclude it falls firmly within established congressional oversight powers, while also affording access to documents that could shed real light on Trump’s finances.
“The IRS has to audit the president, and that puts them in an almost automatic conflict of interest when you have to audit your boss,” said George Yin, a University of Virginia professor and former staffer on the Joint Committee on Taxation who wrote a widely circulated paper on the statute that empowers Neal to issue the request. “But I think that from the standpoint of the committee, that seems like a very clear and legitimate reason to make this type of request.”
The only similar case of Congress requesting the president’s tax returns came in 1974 with President Nixon, when a Joint Committee on Taxation investigation found that the IRS had treated Nixon’s tax examination favorably. A congressional audit – followed up by a second IRS audit – found that Nixon owed nearly half a million in back taxes.
Neal himself has evinced a keen awareness of the fact that the request is likely to be refused, setting up a court fight. He told journalists on Thursday that he decided to ask for six years of Trump’s returns in part because “the IRS advises you should retain six years of your tax records. And we thought if this were to end up in court we didn’t want an issue … where it would be thrown out based on a technicality.”
In April 5 letter urging the Treasury to disregard Neal’s request, Trump personal attorney William Consovoy called the IRS oversight rationale “pretextual,” and claimed that Neal’s request is “not about examining IRS policy. It is about scoring political points against President Trump.”
And while the Democrat’s stated focus might be on IRS oversight with a court battle in mind, the meaty substance of the request – which encompasses eight Trump-owned legal entities and IRS work product around Trump – suggests a dramatically deeper scope.
Brian Galle, a former federal tax prosecutor and Georgetown law professor, told TPM that while Neal “grounded” the scope of the request in “Congress’s legitimate interest” in overseeing the IRS, “the letter presents the possibility of finding out for real where the revenues are coming from, and who his organization is doing business with.”
“I think most tax experts would agree that if all the public saw was Trump’s 1040, we wouldn’t learn that much from where his income is coming from,” Galle said. “What you would need are his business tax returns, and in particular, work papers and audit materials.”
Steven Rosenthal, a tax expert at the Brookings Institution who worked with the New York Times on the newspaper’s blockbuster investigation of Trump family finances last year, told TPM that Neal had apparently limited the request to “umbrella businesses, into which other companies are rolled into.”
But it’s the IRS audit materials – requested to evaluate the agency’s ability to audit its boss – that could provide the deepest look.
“You cannot easily tell from the face of a tax return whether the IRS has even audited that tax return, asked questions about it, or whether there were discussions before the tax return was filed,” Joshua Blank, a professor at the University of California, Irvine School of Law who specializes in taxation, told TPM. “The only way to really get a full picture of whether the IRS suspected that the tax return contained an abusive transaction, or tax fraud, or misreporting, would be to see the IRS work product.”
Blank added that one document in particular – a form 5701 – would show whether the IRS had decided to adjust any information on any of Trump’s returns, with “a narrative that describes why the IRS, after an audit, decided to make an adjustment to the tax return.”
It’s not clear what form the IRS’s response to Neal’s request will take. While many expect a lengthy legal battle over the request, others expect that the IRS could try to find a way to reply in a limited fashion.
“What they asked for – 6 years of returns – does not necessarily comport with the stated goal of examining how the IRS audits the president,” said Andy Grewal, a professor at the University of Iowa College of Law.
But Rosenthal pointed out that “Neal is allowed more than one bite at the apple.”
“If the information comes back and Neal looks at it, decides he needs more, he can ask,” Rosenthal said. “The statute permits it. Nothing can prevent that.”