Editor’s Note: Michael Zeldin, a CNN legal analyst, has served as a federal prosecutor in the Criminal Division of the US Department of Justice and was a special counsel to then-Assistant Attorney General of the Criminal Division Robert Mueller. David Axelrod is a partner in the Columbus, Ohio, office of Shumaker, Loop & Kendrick, LLP. David formerly was a trial attorney in the Tax Division of the US Department of Justice and an assistant United States attorney for the Southern District of Florida. The opinions expressed in this commentary are those of the authors. View more opinion at CNN.
The power of Congress to investigate and obtain documents to carry out its legislative powers and oversight of the executive branch is well established. The Supreme Court has long recognized that Congress’ authority to obtain information necessary to conduct oversight and investigations is necessarily broad. In 1975, Chief Justice Warren Burger, reaffirmed that “‘the scope of [Congress’s] power of inquiry … is as penetrating and far-reaching as the potential power to enact and appropriate under the Constitution’” and that, ancillary to Congress’s oversight and investigative authority, the “[i]ssuance of subpoenas … has long been held to be a legitimate use by Congress of its power to investigate.”
While it is true that “Congress’ investigatory power is not, itself, absolute” and that it “is not immune from judicial review,” House Ways and Means Committee Chairman Richard Neal’s requests for the tax returns of President Trump and his related businesses appear to be well within Congress’s authority. Treasury Secretary Steven Mnuchin’s refusal to comply with his lawful requests is unwarranted and not based on the law.
Requests for Trump’s taxes
On April 3, 2019, and April 13, 2019, Neal requested that the Internal Revenue Service provide the tax returns of Donald J. Trump and his related business entities for tax years 2013-2018. In his requests, Neal appears to have satisfied the legislative and legal bases for obtaining tax return information.
He articulated the legislative needs that the House Ways and Means Committee intends to address, and he provided assurances that safeguards would be put in place to protect the taxpayers’ privacy interests.
In addition to the committee’s right to obtain the tax information requested based on its Congressional oversight authority, Chairman Neal referenced the provision of the tax code that specifically authorizes the Committee to receive Trump tax returns: 26 USC Section 6103(f)(1).
Notwithstanding this, on May 6, 2019, Treasury Secretary Mnuchin formally notified the Committee that he would not disclose the returns. He claimed that the request was “unprecedented,” presented “serious constitutional questions,” and was beyond the Congress’s constitutional authority, because it lacked a “legitimate legislative purpose.”
Refusing to take “no” for an answer, on May 10, 2019, Chairman Neal, issued a subpoena to the Treasury Department and the Internal Revenue Service for the tax return information. Mnuchin defied the subpoena requests on Friday, reiterating his previous argument while adding that he is “not authorized to disclose the requested returns and return information.”
(Many of the same issues are being litigated in the US District Court for the District of Columbia in connection with President Trump’s efforts to prevent the Mazars accounting firm from complying with a subpoena from the House Committee on Oversight and Reform for the tax and related records that Mazars prepared for Donald Trump.)
History of confidentiality
Since the early 20th century, Congress’s authority to obtain tax returns and return information from the Internal Revenue Service has played a critical role in its legislative oversight authority. The Revenue Act of 1924 established Congress’ power to compel tax return and return information, notwithstanding the general rule of taxpayer privacy. Interestingly, the Revenue Act was passed under circumstances similar to Congress’s pursuit of President Trump’s tax returns.
Prior to the passage of the Revenue Act of 1924, taxpayer privacy had a “checkered history”. The first federal income tax laws were passed to finance the Civil War. At the time, tax return information was public, and “courthouses and newspapers published household tax information as a way of encouraging ordinary citizens to police their neighbors’ compliance with the new law.”
Almost from the outset, however, the publication of tax return information met with opposition. By 1870, Congress barred publication of the information in newspapers. In 1894, Congress made it a misdemeanor to disclose certain tax return information. (It is now a felony if the disclosure of tax return information is done willfully.)
In 1921, Congress modified the law that designated tax returns as “public records” to permit their release if ordered by the President pursuant to rules prescribed by the secretary of the treasury.
Teapot Dome and Treasury Secretary Mellon
The rule of tax return secrecy, however, proved to be a roadblock for two important Congressional investigations of the 1920s: Teapot Dome and Treasury Secretary Mellon’s financial dealings.
In 1922, Albert B. Fall, secretary of the interior in President Warren Harding’s administration, was alleged to have accepted bribes from businessmen in exchange for no-bid leases on public oil reserves, including the Teapot Dome oil field in Wyoming.
As part of that investigation, Congress sought the tax returns of individuals it believed to have been involved in the scandal. Calvin Coolidge, President Harding’s successor (Harding died unexpectedly in office) initially refused to provide the records. Although Coolidge ultimately relented, Congress resolved that its ability to obtain tax return information to aid its investigations should not be dependent on the President’s approval.
At about the same time, committees of Congress sought to obtain tax return information from Treasury Secretary Andrew Mellon to determine whether his personal business interests influenced his tax policy recommendations. Here too, Congress believed that its investigation was hampered by its need to obtain executive branch approval to obtain tax returns.
The Revenue Act of 1924
Against this background, Congress passed the Revenue Act of 1924. The Act provides Congress with the power to compel the secretary of the treasury to furnish tax returns upon request.
The Revenue Act provides that: “Upon written request from the chairman of the Committee on Ways and Means of the House of Representatives … the [Treasury] Secretary shall furnish such committee with any return or return information specified in such request, except that any return or return information which can be associated with, or otherwise identify, directly or indirectly, a particular taxpayer shall be furnished to such committee only when sitting in closed executive session unless such taxpayer otherwise consents in writing to such disclosure…..(emphasis added).”
In approving the provision, legislators cited Congress’s need to review tax return information “to evaluate Administration tax proposals, develop its own tax legislative initiatives, and carry out investigations.”
Further, Congress determined “that access to tax returns was important for its legislative prerogatives, including gathering information for prospective legislation and performing oversight of the executive branch.”
Nothing in the legislative history or case law would appear to vest Secretary of Treasury Mnuchin with the discretion to disobey a request from Congress.
Congressional legislative and investigatory powers
Beyond the Committee’s statutory right to the Trump tax information, Congress’s broad oversight powers provide a clear additional basis for the requests.
First, if Congress has a legitimate legislative purpose, it can exercise its investigative powers.
In this case, Chairman Neal appears to have met the threshold for establishing a legitimate legislative need for obtaining the tax information consistent with the Revenue Act and longstanding case law.
In his April 3, 2019, letter to IRS Commissioner Charles Rettig, he wrote: “Consistent with its authority, the Committee is considering legislative proposals and conducting oversight related to our Federal tax laws, including, but not limited to, the extent to which the IRS audits and enforces the Federal tax laws against a President. Under the Internal Revenue Manual, individual income tax returns of a President are subject to, mandatory examination, but this practice is IRS policy and not codified in the Federal tax laws. It is necessary for the Committee to determine the scope of any such examination and whether it includes a review of underlying business activities required to be reported on the individual income tax return.”
As Chairman Neal properly points out in his April 13, 2019, follow-up letter to the IRS Commissioner: “Courts have held that, where “a rational legislative purpose is present for investigating a particular person, organization, or institution[,] [t]here is no requirement that every piece of information gathered in such an investigation be justified before the judiciary.”
He also correctly points out that: “A legislative inquiry may be as broad, as searching, and as exhaustive as is necessary to make effective the constitutional powers of Congress” and that “[t]o be a valid legislative inquiry there need be no predictable end result.”
Second, the powers of Congress to investigate are very broad and fundamental to our constitutional system of checks and balances.
While Congress’ investigative power is not absolute, it is very broad.
The Supreme Court has said this repeatedly when Congress’s powers have been challenged in court.
Recently, the scope of Congress’s investigative powers was challenged, when Fusion GPS (the company that hired Christopher Steele of Steele Dossier fame) sought to have the U.S. District Court for the District of Columbia enjoin the enforcement of a subpoena that its bank had received from Chairman Devin Nunes of the House Permanent Select Committee on Intelligence for certain of Fusion’s financial records. In that lawsuit, Fusion opposed compliance with the subpoena on the grounds that Congress lacked a valid legislative purpose in seeking the information and that the information request was overbroad and not relevant to the Committee’s investigation. The House Permanent Select Committee intervened in the case in support of its subpoena.
In his ruling upholding the subpoena in favor of the House Committee, U.S. District Court Judge Richard Leon, quoting Supreme Court precedent, observed that “[t]he power of inquiry has been employed by Congress throughout our history, over the whole range of the national interests concerning which Congress might legislate or decide upon due investigation not to legislate.
In ruling against Fusion’s effort to quash the subpoena, Judge Leon observed that “[w]hile Fusion is correct that “Congress’ investigatory power is not, itself, absolute” and that it “is not immune from judicial review,” this Court will not - and indeed, may not - engage in a line-by-line review of the Committee’s requests.
“There is no requirement that every piece of information gathered in [a Congressional] investigation be justified before the judiciary.”
The tactics employed by the Trump administration in respect of this case (as well as its refusal to cooperate in other legitimate legislative requests for information and testimony) must be seen for what they are: A determined effort by the administration to stonewall Congress in order to serve Trump’s personal and political interests at the expense of the American people’s right to know that their interests are being properly served and that they are not subordinate to the personal business interests of the President and/or his family.
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In the end, if the requested information is not furnished, the courts will decide, thereby resolving a constitutional standoff. That is why we have checks and balances.