Committee Requests to IRS
When Congress first enacted restrictions on the public release of federal tax returns by the Department of the Treasury in 1910 and 1913, discretion to release was placed in the hands of the President with no statutory exception for congressional access to returns. In 1924, however, Congress enacted tax code provisions authorizing release to Congress after several incidents underscored the need for congressional review of tax-related information to carry out its oversight duties. One of these investigations was the Teapot Dome scandal that involved alleged bribery in the administration of President Warren Harding, and the second involved questions regarding whether then-Secretary of the Treasury Andrew Mellon had appropriately released tax returns of a senator and whether he himself had conflicts of interest relating to businesses from which he had not divested his interests. Under the current tax code, the House Ways and Means Committee, Senate Finance Committee, and Joint Committee on Taxation have standing authority to obtain tax return information from the Department of the Treasury. This authority has been used many times.
- The Senate Finance Committee obtained tax records of non-profit hospitals in February of 2019 as part of an investigation into whether non-profit hospitals remain in compliance with the statutory requirements for their tax-exempt status.
- The House Ways and Means Committee obtained tax records of non-profit organizations when investigating allegations of IRS targeting of individuals based on political views in 2013. The Committee publicly disclosed taxpayer information it obtained in this investigation in a referral letter the Chairman issued to the Attorney General in 2014.
- The Senate Finance Committee obtained tax records of oil and gas companies in 2006 as part of a review of federal taxes paid by these companies on their record profits.
- The Senate Finance Committee obtained tax records of the Association of Community Organizations for Reform Now (ACORN) in 2006 as part of an investigation into allegations that the organization was involved in voter fraud.
- The Senate Finance Committee obtained tax records of individual Enron executives in 2004, going beyond the Committee’s previous 2002 request for the tax records of the company to examine any IRS investigations of the individual executives' tax dealings, such as attempts to conceal income.
- The Senate Finance Committee and the Joint Committee on Taxation obtained and publicly disclosed tax return information of Enron Corporation in 2002–2003 when investigating financial abuses and the company’s collapse.
- The House Select Committee to Investigate Covert Arms Transactions with Iran was authorized to obtain, and did obtain, tax records related to participants, beneficiaries, and intermediaries in the transactions under investigation as part of the Iran-Contra scandal in 1987.
- The Senate Permanent Subcommittee of Investigations of the Committee on Governmental Affairs was authorized to obtain in 1985, and did obtain in 1986, tax records as part of its investigation into whether the Department of Justice acted appropriately in declining to prosecute Jackie Presser, President of the International Brotherhood of Teamsters, for fraud for allegedly hiring and paying individuals who performed little or no work.
- The Senate Judiciary Committee’s Subcommittee to Investigate Activities of Individuals Representing the Interests of Foreign Governments was authorized to obtain, and did obtain, tax records related to William E. Carter III (Billy Carter), including any trusts, sole proprietorships, partnerships, corporations, and other business entities in which he and his wife had interests. This 1980 investigation examined the business dealings of Billy Carter.
- The Senate Committee on Government Affairs obtained financial records and took testimony from Bert Lance, one of President Carter's top aides and the Director of the Office of Management and Budget, in 1977 regarding his financial dealings, including extensive questioning regarding his tax returns. The Committee also disclosed an investigative report developed by the IRS regarding activities of the Office of the Comptroller of the Currency related to Lance.
- The Joint Committee on Taxation received tax information from the IRS as part of its examination of President Nixon’s tax returns in 1973–1974. While President Nixon publicly released his tax returns and requested JCT’s review of two specific issues, the Committee did not confine its review to those two issues and the IRS provided additional information to the Committee to assist in the Committee’s investigation.
- The Senate Rules and Administration Committee received tax information from the IRS in 1973 regarding Gerald Ford upon his nomination to serve as Vice President. Ford had also provided the Committee, as well as the House Judiciary Committee, with seven years of federal income tax returns and requested that the IRS conduct an audit on them.
Committee Requests to Accountants
Accountants who assist taxpayers in preparing their submissions to the IRS also hold taxpayer return information and Congress may obtain such information directly from them. Department of the Treasury regulations promulgated in 2008 resolved ambiguity that had previously existed by making clear that disclosures by accountants to Congress are allowed pursuant to “a subpoena issued by the United States Congress.” 26 CFR Part 301.7216-2(f). Addressing and rejecting commentator concern that this provision is inconsistent with 26 U.S.C. § 6103(f)’s protections against congressional abuses, the Department emphasized that Congress is “presumed to act in accordance with the law.” 73 Federal Register, No. 4, pp. 1062-63 (Jan. 7, 2008).
- The Senate Permanent Subcommittee on Investigations received documents and interviews with officials from the major accounting firms of KPMG, PriceWaterhouseCoopers, and Ernst and Young in its 2002-2003 inquiry into abusive tax shelters facilitated by accountants and law firms. Information the Subcommittee obtained from these accounting firms included internal emails and memoranda on the development of tax products.
- The House Education and Labor Committee's Subcommittee on Oversight and Investigations received a range of documents including audit and accounting information in their investigation into the 1996 Teamsters election. The investigation was completed in 1999.
- The Senate Special Committee to Investigate Whitewater Development Corporation and Related Matters deposed the individual who was President Clinton’s personal accountant from many years prior to Clinton’s presidency, deposed an additional accountant who prepared the Clintons’ tax returns from 1985 to 1992, deposed the corporate accountant who handled the Whitewater land development project many years prior to his presidency, and took testimony from two of the accountants in public hearings. The Committee also took testimony about Clinton’s finances from the President’s personal lawyer in public hearings.
Committee Requests to Financial Institutions
Banks and other financial institutions can be another source of tax-related information. For example, the federal district court for the District of Columbia in 2018 rejected a challenge to a subpoena to a bank by the House Permanent Select Committee on Intelligence regarding certain financial transactions of a company, and the bank turned over these records to the Committee.
During the Senate Judiciary Committee’s 1980 investigation into the business dealings of William E. Carter III (Billy Carter), the committee was authorized to obtain from the IRS, and did obtain, Billy Carter’s tax records, including any trusts, sole proprietorships, partnerships, corporations, and other business entities in which he and his wife had interests. The Committee also obtained bank records and other records that provided financial information about Billy Carter. According to the committee report, the Committee was able to obtain from these non-tax records “all the financial information it needed” and used the tax records from the IRS “to verify the completeness and accuracy of information obtained from non-tax sources.”
Committee Requests to Taxpayers
- The Senate Permanent Subcommittee on Investigations, in its 2012-2013 inquiry into off-shore profit shifting to avoid taxes, requested and obtained information about how Apple, Inc., negotiated the tax rate charged by Ireland through interviews with senior company officials and the production by the company of documents including consolidated financial statements. Apple also provided information to the Subcommittee showing that the company did not pay any corporate income taxes to any countries during a specified five-year period of time.
- The Senate Special Committee to Investigate Whitewater Development Corporation and Related Matters was authorized in 1995 to inspect and receive any tax records from the IRS relevant to their investigation of President Clinton and First Lady Hillary Clinton’s real estate investments and other matters. Instead of exercising this authority, however, the Special Committee obtained tax return information directly from President Clinton, including tax records for years prior to those that he had disclosed during his 1992 presidential campaign. The Special Committee also obtained tax information from President Clinton’s accountant, deposed the individual who was President Clinton’s personal accountant from many years prior to Clinton’s presidency, deposed an additional accountant who prepared the Clintons’ tax returns from 1985 to 1992, deposed the corporate accountant who handled the Whitewater land development project many years prior to his presidency, and took testimony from two of the accountants in public hearings. The Committee also took testimony about Clinton’s finances from the President’s personal lawyer in public hearings.
- Some Senate committees request from nominees for presidential appointments past tax return information as part of the vetting process. For example, the Senate Finance Committee examined the tax returns of Henry “Hank” Paulson when he was nominated by President George W. Bush to serve as Treasury Secretary. The Committee also summarized the tax records of Timothy Geithner in a bipartisan Committee staff memorandum that was included in the nomination hearing record as part of its review of his nomination to be Treasury Secretary during the Obama Administration, and reviewed tax records submitted by former Senator Tom Daschle after President Obama nominated him to be Secretary of the Department of Health and Human Services.
Committee Requests to States
State tax returns of an individual or company may contain similar information to what is filed in federal tax returns. State laws differ regarding the circumstances under which tax returns may be disclosed. Some state statutes contain express language authorizing disclosure to legislative entities. For example, in Maryland, state tax return information may be disclosed “in accordance with a proper judicial order or a legislative order.” In New York, the Governor recently signed a law providing that the New York Department of Taxation and Finance must release to the chairs of the Senate Finance Committee, House Ways and Means Committee, or Joint Committee on Taxation the state tax returns of a number of public officials or party leaders, upon request from a chair of such committee for a “specified and legitimate legislative purpose.” Disclosure of tax returns is permitted “under the provisions of Section 6103 of the Internal Revenue Code” in Connecticut. In Tennessee, “[r]eturns and tax information may be disclosed to any person to whom the department is authorized to provide such returns and information by any other law.”
Other state laws, such as in Louisiana, Missouri, Montana, New Hampshire, Oklahoma, South Carolina, Virginia, and Vermont, do not specifically reference legislative bodies but may arguably allow congressional access under more general provisions permitting tax return disclosure as otherwise authorized or provided for by law. North Carolina also allows tax return disclosure “to comply . . . with a law” and Ohio allows disclosure “for official purposes.”