Balkinization: Does New York State Have a Copy of President Trump’s Federal Returns?, by Gregory Klass (Georgetown):
There has been a lot of talk about the new role state attorneys general have been taking on as a check on federal overreach. ... There is something else state attorneys general might do. It is now absolutely clear that the President will not release his federal tax returns.
Any state with a copy of those returns could choose to share them with Congress.
Section 6103(f)(1) of the Tax Code gives House Ways and Means Committee, the Senate Finance Committee, and the Joint Committee on Taxation the power to request individual returns from the IRS. Representative Bill Pascrell is a member of the House Ways and Means Committee. On February 1, he sent a letter to the Chairman, Republican Kevin Brady, requesting that that the Committee obtain from the IRS President Trump’s returns. Last week Brady rebuffed Pascrell.
But there is another option. Since 1998, another subsection of section 6103 has given whistleblowers permission to share federal returns with Congress. Section 6103(f)(5) provides:
Disclosure by whistleblower.—Any person who otherwise has or had access to any return or return information under this section may disclose such return or return information to [the House Ways and Means Committee, the Senate Finance Committee, and the Joint Committee on Taxation] . . . if such person believes such return or return information may relate to possible misconduct, maladministration, or taxpayer abuse.
Persons who have access under section 6103 include IRS and Treasury officials. They also include state tax officials. Subsection (d)(1) provides that state tax authorities may obtain federal returns to assist in the administration of state tax laws.
As far as I can tell, courts have yet to construe section 6103’s whistleblower provision. A tax scholar has suggested to me in conversation that “misconduct, maladministration, or taxpayer abuse” might have been intended to refer only to misdeeds by the IRS, and not abuses by individual taxpayers themselves. But other tax scholars I’ve spoken to have observed that is not what the statute says. On the face of it, the whistleblower provision applies to any misconduct, maladministration, or taxpayer abuse. In the general course of things, the committees with access to the returns do not investigate individual taxpayer misconduct. But when the returns provide evidence of misconduct by a taxpayer who happens also to be a high-ranking federal official, there is a good argument that the whistleblower provision not only applies, but ought to be invoked. ...
If New York State does have copies of the President’s federal returns, and if the New York Commissioner and AG believe those returns “may relate to possible misconduct, maladministration, or taxpayer abuse,” the plain meaning of section 6103(f)(5) authorizes them to forward the returns to one or more congressional committees. Of course the decisions to share the returns with Congress would be more than a legal one. Such an act would have important political repercussions. And it would be another tremor in what seems to be a tectonic shift in the states’ role as checks on the executive branch. But I hope folks in the New York OAG are at least considering this option, and that attorneys general in other states that might have copies of the returns are too.