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What the leaked IRS memo does and doesn’t say about the Trump tax returns controversy

The draft memo, written last year, is awkward for the Trump administration.

Treasury Secretary Steven Mnuchin testifies during a House Financial Services Committee on Capitol Hill May 22, 2019
Treasury Secretary Steven Mnuchin testifies during a House Financial Services Committee on Capitol Hill on May 22, 2019.
Mark Wilson/Getty Images
Andrew Prokop is a senior politics correspondent at Vox, covering the White House, elections, and political scandals and investigations. He’s worked at Vox since the site’s launch in 2014, and before that, he worked as a research assistant at the New Yorker’s Washington, DC, bureau.

The standoff over President Trump’s tax returns took another turn this week, as news broke that IRS staffers prepared an internal draft analysis that seems to argue the agency is obligated to hand over the president’s returns to House Ways and Means Committee Chair Richard Neal (D-MA).

The draft IRS memo, first reported by Jeff Stein and Josh Dawsey of the Washington Post, uses words such as “clear,” “mandatory,” “requiring,” and “obligation” to make the case that handing over the returns to the Ways and Means chair isn’t optional. It mentions one potential exception — executive privilege — though it’s not clear if it would apply to this situation, and in any case, the Trump administration hasn’t invoked that here.

Treasury Secretary Steven Mnuchin has taken a different position. He has refused to give Trump’s tax returns to Neal (even after a subpoena), and claimed in congressional testimony Wednesday that he “was advised” that doing so would violate the law. He says the Justice Department has provided him advice, but DOJ has not yet explained its reasoning on the matter.

Vox inquired with the IRS why the draft memo was written, who wrote it, and why it wasn’t finalized, but a spokesperson sent only the following statement:

The memo in question is a draft background paper that was never finalized. It is not the official position of the IRS.

The document was prepared last fall. The IRS Commissioner and the Chief Counsel were unaware of the paper until this week’s media inquiry. The document was not sent to Treasury.

What the IRS memo says

The memo, titled “Congressional Access to Returns and Return Information,” analyzes the part of the US Code that the battle over Trump’s tax returns focuses on: Section 6103, which you can read here.

The key bit says that upon receiving a written request from the chair of the Ways and Means Committee, the secretary of the Treasury “shall furnish such committee with any [tax] return or return information specified in such request” — though there’s the caveat that if that information can identify the taxpayer, it will be furnished “only” when the committee is in “closed executive sessions.”

On April 3, the new Democratic chair of the House Ways and Means Committee, Richard Neal, officially made a written request for Trump’s tax returns — so that’s what this current dispute is all about. (Earlier this month, Neal subpoenaed the returns because Treasury Department wouldn’t comply.)

Now, the IRS says that this draft memo was written last year, before Neal made that request. But here’s what the memo (which you can read here) says about what should happen next:

  • Giving Neal the returns is “mandatory” per the statute: “In general, the statutes provide that the Secretary shall furnish returns and return information upon a specific written request from the Chair of the respective committees. ... Unlike some other provisions of section 6103, the language in subsections 6103(f)(1) and (2) is mandatory, requiring the Secretary to disclose returns and return information requested by the tax writing Chairs.”
  • Neal doesn’t need a reason to ask for the returns: “[S]ubsections (f)(1) and (2) do not require the Ways and Means and Finance Chair or JCT Chief of Staff to include a reason or purpose for the request. Therefore, the Secretary’s obligation to disclose return and return information would not be affected by the failure of a tax writing committee or the JCT to state a reason for the request.”
  • The “only” potential excuse is executive privilege: The memo does contain a brief discussion of “one potential basis for a refusal” of a congressional subpoena for the tax returns like the one Neal has filed — executive privilege. But, the memo says, executive privilege is usually invoked to shield information either about the policymaking process or about open investigations. It’s not clear either applies here, and in any case, that’s not the argument the Treasury Department is relying on in fighting Neal’s subpoena (it has not invoked privilege).

Mnuchin is making a different argument, which the memo doesn’t directly address

Now, the draft memo essentially takes Congress’s constitutional oversight powers for granted here. The Ways and Means Committee, it says, has “oversight authority regarding tax issues” that “is rooted in the constitutional oversight authority of the Legislative Branch over the Executive Branch.”

But Mnuchin has made a different argument. He has claimed that despite the statute’s seemingly unambiguous language, the Ways and Means chair cannot just request anyone’s returns — because there are constitutional restrictions on Congress’s investigative power.

In an April 23 letter to Neal, Mnuchin cited past Supreme Court cases to argue that congressional investigations are an “auxiliary to the legislative function” and must be related to “a legitimate task of the Congress.” Therefore, he says, his view is that Congress needs to have a “legislative purpose” to ask for someone’s tax returns.

Now, Neal actually anticipated this line of argument — so when he made his initial request for Trump’s returns, he said he in fact did have a legislative purpose in mind. He claimed he wanted to evaluate an IRS policy to audit all presidents’ tax returns. But Mnuchin’s response was that, in his opinion, this is a “pretextual” justification, and that Democrats’ obvious true motivation is to get the president’s tax returns rather than to review IRS audit policy.

The draft IRS memo, written before this year’s back-and-forth, does not discuss this constitutional line of argument about a “legislative purpose.” So Mnuchin argued in congressional testimony Wednesday that the memo is “addressing a different issue, and is not addressing the issue that we and the Department of Justice looked at.”

Yet the Justice Department still hasn’t released its reasoning for why Mnuchin should — and even must, he claims — deny Neal’s request.

“We have a conclusion and as soon as the Justice Department, which we’ve asked them to work on expeditiously, has the full memo, it will be released publicly,” Mnuchin said at the hearing.

But the IRS staff members who wrote their draft memo appear to believe the legal issues here are simpler than Mnuchin is letting on.

A new IRS appointee could add an additional wrinkle to this legal debate. Per a report from the New York Times’s Maggie Haberman and Nicholas Fandos, Trump particularly pushed Senate Majority Leader Mitch McConnell to move quickly to confirm his nominee to fill the job of IRS chief counsel earlier this year. That new nominee, Michael Desmond, was confirmed in February — just in time to handle this battle for Trump. It is not known whether he has had an impact on this debate, but according to the IRS’s statement, he was unaware of the draft memo until this week. The matter may end up in court.

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