Confidential draft IRS memo says tax returns must be given to Congress unless president invokes executive privilege

A confidential Internal Revenue Service legal memo says tax returns must be given to Congress unless the president takes the rare step of asserting executive privilege, according to a copy of the memo obtained by The Washington Post.

The memo contradicts the Trump administration’s justification for denying lawmakers’ request for President Trump’s tax returns, exposing fissures in the executive branch.

Trump has refused to turn over his tax returns but has not invoked executive privilege. Treasury Secretary Steven Mnuchin has instead denied the returns by arguing there is no legislative purpose for demanding them.

But according to the IRS memo, which has not been previously reported, the disclosure of tax returns to the committee “is mandatory, requiring the Secretary to disclose returns, and return information, requested by the tax-writing Chairs.”

The 10-page document says the law “does not allow the Secretary to exercise discretion in disclosing the information provided the statutory conditions are met” and directly rejects the reason Mnuchin has cited for withholding the information.

“[T]he Secretary’s obligation to disclose return and return information would not be affected by the failure of a tax writing committee . . . to state a reason for the request,” it says. It adds that the “only basis the agency’s refusal to comply with a committee’s subpoena would be the invocation of the doctrine of executive privilege.”

The memo is the first sign of potential dissent within the administration over its approach to the tax returns issue. The IRS said the memo, titled “Congressional Access to Returns and Return Information,” was a draft document written by a lawyer in the Office of Chief Counsel and did not represent the agency’s “official position.” The memo is stamped “DRAFT,” it is not signed, and it does not reference Trump.

The agency says the memo was prepared in the fall. At the time, Democrats were making clear they probably would seek copies of Trump’s tax returns under a 1924 law that states that the treasury secretary “shall furnish” tax returns to Congress.

Precisely who wrote the memo and reviewed it could not be learned. The agency says IRS Commissioner Charles Rettig and current chief counsel Michael Desmond, who was confirmed by the Senate in February, were not familiar with it until a Post inquiry this week. The IRS says it was never forwarded to Treasury.

Executive privilege is generally defined as the president’s ability to deny requests for information about internal administration talks and deliberations.

On Friday, Mnuchin rejected a subpoena from the House Ways and Means Committee to turn over the tax returns, a move that probably will now lead to a court battle. Mnuchin has criticized the demands as harassment that could be directed against any political enemy, arguing Congress lacks a “legitimate legislative purpose” in seeking the documents.

Breaking with precedent, Trump has refused to provide tax returns, saying without evidence they are under audit.

Mnuchin and other senior staff members never reviewed the IRS memo, according to a Treasury spokesman. But the spokesman said it did not undermine the department’s argument that handing over the president’s tax returns would run afoul of the Constitution’s mandate that information given to Congress must pertain to legislative issues.

The spokesman said the secretary is following a legal analysis from the Justice Department that he “may not produce the requested private tax return information.” Both agencies have denied requests for copies of the Justice Department’s advice to Treasury.

Some legal experts said the memo provides further evidence that the Trump administration is using shaky legal foundations to withhold the tax returns.

“The memo is clear in its interpretation of the law that the IRS shall furnish this information,” said William Lowrance, who served for about two decades as an attorney in the IRS chief counsel’s office and reviewed the memo at the request of The Post.

Daniel Hemel, a professor at the University of Chicago Law School who also reviewed the memo for The Post, said the document suggests a split over Trump’s returns between career staffers at the IRS and political appointees at that agency and the Treasury Department.

“The memo writer’s interpretation is that the IRS has no wiggle room on this,” Hemel said. “Mnuchin is saying the House Ways and Means Committee has not asserted a legitimate legislative purpose. The memo says they don’t have to assert a legitimate legislative purpose — or any purpose at all.”

The administration has resisted a range of House inquiries, although a federal judge on Monday ruled the president’s accounting firm must turn over his financial records to Congress.

Treasury Department officials said there had been extensive discussions about the tax return issue, with one official saying the issue put the agency in a difficult spot because Trump has predetermined the outcome — and because Mnuchin is a Trump ally who was the finance chair of his 2016 campaign.

The decision has been made,” this official said, who spoke on the condition of anonymity to discuss private conversations. “Now it’s up to us to try to justify it.”

Trump has told advisers he will battle the issue to the Supreme Court, according to people familiar with the matter. Trump recently has argued that the tax returns were an issue in the 2016 election but that because he won they should no longer be of concern.

Last week, Mnuchin told a Senate panel that Treasury Department lawyers held an early discussion about disclosing the tax returns long before Democrats officially demanded the documents in April. He did not reveal details of that deliberation or say what, if any, legal memos he had reviewed.

Some legal experts have held that the law is clear in giving Congress the power to compel the provision of the returns. But other former government lawyers, including two who served in the Reagan and George H.W. Bush administrations, have argued that the law is unconstitutional and could lead to widespread abuses of taxpayer privacy for political aims.

The IRS memo describes how and why Congress has the authority to access tax returns, explaining the origin of the provision and how it has been interpreted over the decades.

It highlights the special powers given to three committees for compelling the release of tax returns: the House Ways and Means Committee, the Senate Finance Committee, and the Joint Committee on Taxation. Other congressional committees, the memo emphasizes, do not have the same authority.

When it comes to the Ways and Means Committee, the obligation to divulge the returns “would not be affected by the failure” to give a reason for the request. By contrast, other committees “must include a purpose for their request for returns and return information when seeking access,” the memo states.

“One potential basis” for refusing the returns, the memo states, would be if the administration invoked the doctrine of executive privilege.

But the IRS memo notes that executive privilege is most often invoked to protect information, such as opinions and recommendations, submitted as part of formulating policies and decisions. It even says the law “might be read to preclude a claim of executive privilege,” meaning the law could be interpreted as saying executive privilege cannot be invoked to deny a subpoena.

Earlier this month, the nonpartisan Congressional Research Service published a review of Section 6103 of the Internal Revenue Code that found the code “evinces no substantive limitations” on the Ways and Means Committee’s authority to receive the tax returns.

But, the CRS report added, the committee’s authority “arguably is subject to the same legal limitations that generally attach to Congress’ use of other compulsory investigative tools,” including the need to serve some “legislative purpose” and not breach constitutional rights.

Tensions quickly spiral as Democrats ramp up investigations of Trump administration

Among Schiff’s new committee hires is Abigail C. Grace, who served as an Asia policy staffer on the National Security Council during the Trump administration until departing last spring for a Washington think tank.

At the Center for a New American Security, Grace worked as a research associate in the Asia-Pacific Security Program, a relatively junior-level position. She published essays on Asia policy and was quoted in news articles, including in The Washington Post, offering analysis about Trump’s Asia strategy. She announced her departure from the think tank last week and began work Monday on Schiff’s team, specializing in East Asia affairs, said people who know her.

.. “Although none of our staff has come directly from the White House, we have hired people with prior experience on the National Security Council staff for oversight of the agencies, and will continue to do so at our discretion,” the aide said.

A fluent Chinese speaker who accompanied Trump on his visit to five Asian countries in November 2017, Grace is expected to help the committee conduct oversight as the administration pursues high-stakes negotiations over North Korea’s nuclear weapons program and a trade war with China.

Grace was not a political appointee but rather a civil servant who started at the NSC working on Middle East affairs during the Obama administration in 2016, before switching to a focus on East Asia, said those familiar with her work. Her duties included assisting Matt Pottinger, the NSC’s senior Asia director who helps national security adviser John Bolton coordinate policy among the federal agencies and advise Trump.

.. Some senior Trump aides have privately expressed concern that Schiff’s hiring of former White House staff members is a bid for inside information that could be particularly damaging — a sign of the growing alarm over the president’s vulnerability in a new era of divided government.

But former staffers from the George W. Bush and Obama administrations, as well as longtime civil servants, said it was not unusual for government policy experts to leave and wind up advising or working for lawmakers.

“It happens every day,” said a Capitol Hill staffer who is not on Schiff’s committee. The staffer, who spoke on the condition of anonymity because of the sensitivity of the matter, rattled off a number of former Hill aides who had worked as policy experts in past administrations. “My understanding is that Schiff was going from the minority to the majority and had to staff up more fully. It’s the normal way things operate.”

.. Also on Thursday, the House held a hearing on obtaining Trump’s tax returns, listening to tax experts who discussed the impact of legislative language that would force presidential candidates to release 10 years of tax returns after they win their party’s nomination.

Three congressional officials are empowered legally to seek taxpayer information from the Treasury Department: the chairman of the Ways and Means Committee, the chairman of the Senate Finance Committee and the chairman of the Joint Committee on Taxation. But Rep. Mike Kelly (Pa.), the ranking Republican on the subcommittee that held the hearing, said Congress is barred from releasing tax returns for political purposes.

House Speaker Nancy Pelosi (D-Calif.), responding to criticism from liberals that the House leadership has not moved quickly enough to obtain Trump’s tax returns, said, “You have to be very, very careful if you go forward.”

“In terms of the tax issue, it’s not a question of just sending a letter,” Pelosi said. “I know there’s this impatience because people want to know, that answers the question, but we have to do it in a very careful way.”

House Democrats unveil bill to obtain Trump’s tax returns, put checks on White House

A day after assuming the majority, House Democrats on Friday unveiled a sweeping ethics reform package that would put new checks on the White House and require President Donald Trump to release his tax returns.

House Democrats mostly presented the package — which contains numerous changes to campaign finance and ethics law — as a set of popular good-government reforms during a Friday press conference on Capitol Hill. But the bill’s proposed checks on Trump also will make it a useful cudgel for the new majority, even though the legislation is unlikely to be approved by the GOP-held Senate.

Rep. Elijah Cummings (D-Md.), incoming chairman of the House Committee on Oversight and Government Reform, indicated he will be stepping up oversight of Trump in the coming weeks.

.. The new bill would mandate that the president and vice president release 10 years of their tax returns. It would also enhance ethics rules for White House employees and give the Office of Government Ethics more enforcement power.

.. Another change to campaign-finance law in the bill: A requirement that super PACs and other groups that spend more than $10,000 in an election disclose their donors within 24 hours. Nearly 70 super PACs found ways to delay disclosing their donors during the 2018 elections, according to a POLITICO analysis. The issue has gotten little attention from lawmakers, and activists in contact with House Democrats initially said it wouldn’t be addressed in the bill.

The Tribal Appeal of Conspiracy Theories

But one of the key points at which superstition and reason part company is the fact that superstition is non-falsifiable. If the king sacrifices an ox to Baal in the hope he will end the draught, and it rains, Baal will get the credit for the rain. If it doesn’t rain, Baal doesn’t get the blame. Instead, it must be that Baal wanted two oxen — or maybe a virgin maiden or the head of Alfredo Garcia, whatever. If you keep offering sacrifices, it will eventually rain, and when it does, “Praise Baal!”

.. The central fallacy here is the idea that conspiracy theories are reasoning toward anything at all. It is in fact a form of pseudo-reasoning: thinking backward from the proposition that a bad event must have been caused by dark forces, which (allegedly) benefit from it. Like the drunk who only looks for his car keys where the light is good, the truth-seeker only looks for evidence to support the proposition. The levees in New Orleans did not hold, Spike Lee observed, so it must be because George W. Bush had them bombed.

Of course, everything becomes so much more complicated by the fact that sometimes there are conspiracies. But they are rare, they are almost never vast, they usually fail, and when they succeed it is most often more from luck than will. Whenever you hear someone insist that “there are no coincidences,” they are revealing that they live in a world of magical realism where powerful unseen forces are treating us all like pawns. It’s a form of secular demonology.

I’ll be honest: I am far more annoyed by conservatives who traffic in conspiracy theories than liberals who do so. My reasons are twofold. As a practical matter, it bothers me because they make conservatives look bad, and I consider myself more invested in protecting my “side” from making an ass of itself. More generally, it bothers me because conservatives are supposed to understand, as a matter of philosophy, the limits of planning.

For instance, it’s one thing for liberals to claim simultaneously that George W. Bush was an idiot and that this idiot nonetheless managed to orchestrate a massive conspiracy to attack the United States on 9/11. It’s another for conservatives, presumably trained in the laws of unintended consequences, the limits of reason, and the fatal conceit of planning, to argue that the hijackers were just a bunch of patsies for an operation that would have involved hundreds or thousands of American agents — without a single whistleblower among them. This can best be visually represented by someone turning Occam’s Razor into a heavy spoon or soup ladle and beating Friedrich Hayek about the head and neck with it. But that’s what happened to people such as Morgan Reynolds and Paul Craig Roberts. Worse, these people have to believe their colleagues and ideological comrades — whom they knew and for whom they often worked — were in fact brilliant mass murderers.

.. I increasingly feel more like a spectator to American politics than I ever have before. It’s really quite liberating, if exhausting. Because I have zero personal loyalty to, or emotional investment, in Donald Trump, I feel no need to defend him from legitimate criticism, never mind bend my understanding of conservatism to his behavior and rhetoric.

.. Because humans are wired to believe that their leaders are worthy of being the leader, they bend their views to extol the character traits and priorities of the leader. Today, definitions of good character are being bent to fit Trump’s character, and the yardstick of what amounts to being presidential is being shaved down to a nub to match Trump’s conduct.

.. Newt Gingrich is a great example of how everything must be bent to the president’s personal needs. The man who led the expansion of NATO and the passage of NAFTA long ago cast aside these essential parts of his legacy, like so much ballast, in order to stay afloat on the Trumpian tide. But on Thursday, he reached a new low. When asked about a possible Supreme Court fight to release Trump’s tax returns, Gingrich said, “We’ll see whether or not the Kavanaugh fight was worth it.”
.. I’m sorry, the 40-plus-year fight to get constitutionalists on the Court wasn’t about protecting Donald Trump from embarrassment or criminal jeopardy. The reason why the Kavanaugh fight united nearly the entire conservative and Republican coalition wasn’t about circling the wagons around Trump. Indeed, the only reason the Right unified around Kavanaugh was that it wasn’t about Trump. If Trump had picked Jeanine Pirro, you would not have seen the Federalist Society, The Weekly StandardCommentaryNational Review, et al. rush to support her.
.. During the confirmation fight, before the sexual-McCarthyism phase, conservatives — including, most emphatically, Kavanaugh himself — insisted that the charge that Kavanaugh would be a Trump crony on the bench was everything from wrong to an outrageous slander. Newt himself described the stakes very differently. When the fight was on, it was all about decency and patriotism.Now that the fight is over, Newt is saying “never mind.” None of it would be “worth it” if Kavanaugh doesn’t protect the president’s tax returns — which candidate Trump said he would release! It profits a man nothing to lose his soul for all the world, but for Trump’s tax returns?

.. Transactional Shmansactional

This is the fatal flaw with the “transactional” defense of Trump. Very few people seem capable of sticking to it. The transactional argument holds that one can be critical of the man while celebrating what he is accomplishing (or what is being accomplished on his watch by Cocaine Mitch and others). In private, most of the conservatives I talk to around the country offer some version of this defense. And I find it utterly defensible, as far as it goes. Indeed, my own position of praising the good and condemning the bad is a version of the transactional defense, even if I was a critic of making the transaction in the first place.

.. Indeed, the president’s job description is being retroactively rewritten as Media Troll in Chief.