By Allyson Versprille and Colleen Murphy
The Electronic Privacy Information Center sued the IRS for failing to release President Donald Trump’s tax returns, but several tax professionals said they don’t think the group’s argument holds water.
The lawsuit is the latest development in a debate that has continued since the election.
“The public interest in disclosure of this information could not be greater,” the group said in its April 15 complaint ( Elec. Privacy Info. Ctr. v. IRS , D.D.C., No. 1:17-cv-00670, 4/15/17 ).
The document was filed in the U.S. District Court for the District of Columbia the same day that Tax March events took place across the country, with individuals gathering to call for the release of Trump’s returns. Democratic lawmakers have also jockeyed for the returns repeatedly during markups and votes.
In the court filing, the group cited a provision in tax code Section 6103 as the basis of its argument for why the IRS should release Trump’s returns.
Section 6103 bars the Internal Revenue Service from disclosing tax information about individual taxpayers. Commissioner John Koskinen has repeatedly referred to that section when asked about Trump’s returns. However, an exemption in the statute under Section 6103(k)(3) says that taxpayer information may be disclosed “for tax administration purposes to correct a misstatement of fact” with the approval of the Joint Committee on Taxation. EPIC said this provision provides grounds for the IRS to release Trump’s returns because of comments the president has made about audits he’s undergone.
“As much as I support full disclosure of presidential tax returns, this case is based on a poor foundation,” said Jeffrey S. Trinca, vice president at Van Scoyoc Associates in Washington.
The EPIC lawsuit stems from a Feb. 16 Freedom of Information Act request seeking all of Trump’s returns since 2010 as well as “any other indications of financial relations with the Russian government or Russian businesses.” The group renewed its request on March 29, which the IRS subsequently denied.
“Please be advised that such records, to the extent that they exist, would be confidential and may not be disclosed unless specifically authorized by law,” the IRS said in the April 6 response.
A Treasury spokesman declined to comment on the case. The IRS said it doesn’t comment on pending litigation. The White House didn’t immediately return requests for comment.
Floyd L. Williams, a senior tax counsel at Public Strategies Washington Inc., said he would be surprised if the group’s Section 6103(k)(3) argument could be used as a way to obtain Trump’s tax returns. “I don’t think it rises to the level of what Congress intended that portion of the statute to be used for,” said Williams, who has formerly worked for both the IRS and the JCT.
Section 6103(k)(3) was put in the law to give the IRS the ability to rebut erroneous statements regarding tax administration being made by the taxpayers in their disputes with the agency, said George K. Yin, a tax law professor at the University of Virginia School of Law.
“Prior to that provision in the law, taxpayers could make all sorts of assertions in the public record about what may or may not have happened to them and what the agency may or may not have done. And the agency for the most part was unable to say anything in response,” Yin, who previously served as the JCT’s chief of staff and as tax counsel to the Senate Finance Committee, told Bloomberg BNA.
Yin said he doesn’t see a clear tax administration claim that the agency is looking to dispute provided in EPIC’s complaint. On top of that, Yin said he doesn’t know of any instance where Section 6103(k)(3) was used to empower a third-party group like EPIC.
Its use, in general, is also very rare. Yin only recalled one instance about 20 years ago where it was used, and EPIC—in its complaint—only pointed to two situations.
Marc Rotenberg, president and executive director of EPIC, said the fact that Trump has repeatedly said the IRS is unfairly targeting him for audit is means for invoking Section 6103(k)(3). “I think that’s on the bull’s-eye for what (k)(3) originally contemplated,” Rotenberg told Bloomberg BNA.
EPIC’s April 15 complaint points to a February 2016 CNN interview where Trump said: “I’m always audited by the IRS, which I think is very unfair—I don’t know, maybe because of religion, maybe because of something else.”
The only factual assertion in that statement is: “I’m always audited by the IRS,” Yin said.
The rest is just Trump’s opinion, he said. “For all we know, the assertion is true. The claimants certainly don’t know if it’s true or not. And even if it’s not true, use of 6103(k)(3) is a matter of discretion for the IRS,” he said. “Surely no one thinks that the IRS must monitor and correct every untruthful statement that anyone may make about one’s taxes,” he said.
“The argument’s a dead end,” Yin said. “It’s a shame,” he said. “They’ve put in some time and effort on this, but I think if they had given it a moment’s thought, they would have realized there’s not much future in this lawsuit.”
Trinca said the lawsuit borders on being frivolous. Clearly Section 6103(k)(3) is directed at taxpayers, not third-party FOIA requests, he said, “and—and it is a big ‘and'—the IRS must receive approval by the Joint Committee on Taxation.”