Congressional Access to Tax Returns Under 26 U.S.C. § 6103(f)

• Court: Department of Justice Office of Legal Counsel
• Decided: May 2, 1977
• Status: Published

Opinion

M ay 2, 1977

77-23 MEMORANDUM OPINION FOR THE ACTING COMMISSIONER OF THE INTERNAL REVENUE SERVICE

Congressional Access to Tax Returns—26 U.S.C. § 6103(f)

This is in response to your Agency’s request for our interpretation of § 6103(0 ° f the Internal Revenue Code of 1954, as amended, 26 U.S.C. § 6103(f). This section, by reason of § 1202(a) of the Tax Reform Act of 1976, now deals with the question of congressional access to Federal tax returns and tax return information. We believe that we can best respond to this inquiry by addressing the three major issues presented by the request. These issues are: (1) whether, and under what authority, a subcommittee might inspect returns and return information; (2) whether a subcommittee, acting pursuant to a delegation of authority from the committee chairman, might request returns or return informa­ tion directly from the Internal Revenue Service (IRS); and (3) whether a subcommittee, acting pursuant to a request from the committee chair­ man to the IRS, might obtain returns or return information directly from the IRS. For the reasons that follow, it is our conclusion that subcommittees may inspect Federal tax returns and return information, but only upon a request to the IRS by the chairman of the pertinent committee, which request specifies at least the particular line of inquiry to which the information must relate.

I. Inspection by Subcommittees We shall first discuss the issue of a subcommittee’s inspection of Federal tax returns and return information. The two provisions of § 6103(f) pertinent to this issue provide: Upon written request from the chairman of the Committee on Ways and Means of the House of Representatives, the chairman o f the Committee on Finance of the Senate, or the chairman of the Joint Committee on Taxation, the Secretary shall furnish such 85 committee with any return or return information specified in such request . . . 26 U.S.C. § 6103(0(1). Any committee described in paragraph (1) or the Chief of Staff of the Joint Committee on Taxation shall have the authority, acting directly, or by or through such examiners or agents as the chair­ man of such committee or such chief o f staff may designate or appoint, to inspect returns and return information at such time and in such manner as may be determined by such chairman or chief of staff 26 U.S.C. § 6103(0(4)(A). It is apparent at once that subcommittees are not explicitly authorized in either of these provisions to inspect tax returns or return information. Because disclosure of tax records is prohibited “except as authorized by this title,” 26 U.S.C. § 6103(a), it might be thought that there is no basis in the statute for allowing subcommittees access to such records. Even though we are mindful that the application penalties warrant a cautious interpretation of the statute, see 18 U.S.C. § 1905, 26 U.S.C. §§ 7213, 7217, we think that the statute, considered as a whole, shows that Congress meant for subcommittees to be able to inspect tax returns and return information. We cannot imagine that Congress intended to prohibit disclosure to the subcommittees, and yet at the same time allow inspection by both the members o f the subcommittees as members of the committee and by members of the subcommittees’ staffs—or even to those further removed from the daily work of Congress—as “agents.” The purposes underlying § 6103 do not require, and would even refute, such a proposition. While Congress was concerned about the citizens’ right to privacy, it was also concerned about the Govern­ ment’s need for the tax information, see S. Rep. No. 938 (Part I), 94th Cong., 2d Sess. 318 (1976), and was very much aware of its own needs in this regard. Id. at 319-320. In this light, we do not think it a reasonable assessment of Congress’ intent to say that the subcommit­ tees—which do much of the Congress’ work—cannot inspect the mate­ rials necessary to their functions. Although the statutory text does not mention subcommittees, ii none­ theless offers strong support for our conclusion here. Under the prior law, the subcommittees of the House Ways and Means Committee and the Senate Finance Committee had requested, and received, access to returns and return information held by the IRS. The language of the prior law under which such access was authorized—/.a, “the Secretary . . . shall furnish such committee” and “any such committee shall have the right, acting directly as a committee, or by or through . . . examin­ ers or agents . . . to inspect any or all o f the return”—has been largely retained in the new provisions. See 26 U.S.C. § 6103(0(1) and (4)(A). This reenactment o f the prior provisions would suggest that the law was to remain the same and that the interpretation thereof—displayed by those subcommittees most closely associated with the tax laws— should continue. 86 We thus come to the question of how subcommittees are to fit within the statutory structure—i.e„ whether they should be regarded as “com ­ mittees” or as “agents” of the committees. We would note at the outset that, under the provisions relevant here, it does not appear to be a matter of great importance whether a subcommittee is found to satisfy one term or the other; both a committee and its agents are to proceed “at such time and in such manner as may be determined by such chairman . . .” 26 U.S.C. § 6103(f)(4)(A). Nevertheless, it is our view that subcommittees are best regarded as “agents” within the meaning of the statute. Although neither the statute nor its legislative history offer much guidance on this issue, we think this result most naturally follows from the statutory language. While the term “committee’ may be given a broad reading if the congressional purpose warrants it, see, e.g., Barenblatt v. United States, 240 F. 2d 875, 878 (D.C. Cir. 1957), vacated on other grounds, 354 U.S. 930 (1957), a ffd on rehearing, 252 F. 2d 129 (1958), affd, 360 U.S. 109 (1959), its usage here is with reference to specifically named full committees. Rather than contort the statutory language so that it would encompass an entity normally thought to be apart from the full committee, we prefer to view the subcommittee as coming within the term “agents.” While this terminology was most probably designed with staff personnel in mind, it is certainly broad enough to encompass subcommittees whose function is to act on behalf of the full committee. The final question that remains to be considered is whether the subcommittee may inspect tax returns and return information directly, or whether such materials must be first handed over to the full commit­ tee. Although the statute refers to the Secretary’s furnishing such infor­ mation to the committee, 26 U.S.C. §6103(0(1), we believe that direct access is permissible here. The subcommittees are themselves permitted to inspect this information, and it seems wasteful to interject a require­ ment that such access is allowed only after it goes to the full commit­ tee. Moreover, the provision providing for inspection o f returns by agents “at such time and in such manner as may be determined by such chairman,” 26 U.S.C. § 6103(0(4)(A), seems broad enough to permit the chairman to decide to allow an immediate inspection by the subcommit­ tee.

II. Disclosure by Way of Delegated Authority The second issue to be addressed is whether delegated authority under the rules of the pertinent committees is sufficient to permit a subcommittee to initiate a request for returns or return information. As we understand it, both from your letter and our conversations with members of the congressional staffs, the old law had been interpreted to allow subcommittees acting under a delegation of authority to request such material directly from the IRS. We do not believe, however, that this practice can continue under the present law. Section 6103(0(1) 87 provides that the Secretary shall furnish the tax information “upon written request from the chairman o f the Committee on Ways and Means of the House of Representatives [or] the chairman of the Com­ mittee on Finance of the Senate . . . The lack of grant of authority to the chairmen o f the subcommittees, when considered in light of the general approach that “returns and return information shall be confi­ dential” and should not be disclosed “except as authorized by this title,” 26 U.S.C. § 6103(a), would indicate that they are not authorized to make requests for tax records. O f course, as with the problem of subcommittee inspection, the lack of a specific grant of authority to the subcommittee chairmen need not be determinative. Other factors relevant here— e.g., legislative history, indications in other parts o f the statute, or even other provisions of law—could give rise to a conclusion that Congress intended to permit a delegation of authority. However, we do not believe that such factors lead to such a result here; rather, it is our conclusion that all such indicia are to the contrary. Nothing in the provisions authorizing disclosure of tax information to Congress would appear to impliedly authorize a delegation of authority here. The other provisions that authorize congressional access to tax information do so only upon the written request o f a specifically desig­ nated person—i.e., the Chief of Staff o f the Joint Committee on Tax­ ation, or the chairman of a nontaxwriting committee that is authorized by the Senate or House to inspect tax information. See 26 U.S.C. § 6103(f) (2) and (3). The designation o f a specific high-ranking person in each instance would suggest an intent on the part of Congress that, even among those in Congress who were authorized to inspect such material upon disclosure, only a few—those in overall charge of a particular committee’s operations—could actually initiate a request for disclosure. O ther parts of § 6103 reinforce this conclusion. The statute in many instances requires that disclosure to other parts o f the Government be made upon the written request of the highest-ranking official in the particular office making the request. F o r example, the President himself must sign a request for a tax return to be made available to the White

88 House, 26 U.S.C. § 6103(g)(1);1 similarly, the heads of various State or Federal agencies appear to be required to sign requests before disclo­ sure can be made to those agencies. See, e.g., 26 U.S.C. §§ 6103(j)(l) and (2), 6103(k)(5), 6103(1)(5).2 The apparent purpose underlying such requirements would be that, in order to ensure that disclosure is w ar­ ranted, the highest-ranking official of a particular governmental unit would have to pass upon and approve any request for disclosure. This purpose would be no less forceful with respect to Congress, and the fact that the provisions applicable to Congress adhere to the approach of specifically designating a high-level official would suggest an intent to adopt the same means—i.e., personal authorization—in achieving the overall goal. This point is highlighted by the fact that, when Congress deemed it necessary to allow for a subordinate official’s authorization, it did so explicitly. For example, various provisions allow subordinate D epart­ ment of Justice officials to request disclosure, see 26 U.S.C. §§ 6103(h)(3)(B), 6103(i)(l)(B); the same is true with regard to other departments. See, e.g., 26 U.S.C. §6103(j)(3) (relating to subordinate officials of the Department of the Treasury). The existence of such provisions demonstrates that the need for allowing subordinates’ author­ ization of disclosure was considered, and passed upon by Congress; the fact that no such authorization was provided the chairmen o f subcom­ mittees must indicate that it was not intended that they have such authority. C f, Cudahy Packing Co. v. Holland, 315 U.S. 357, 365-66 (1942). The legislative history is not very informative on this question. The legislative reports, in addressing this issue, simply state that the commit­ tees will have access to tax information “upon written request of their

1T h e fact that the statute requires the President to “ personally” sign such requests does not, in our view , imply that such authority can be delegated in the absence of such a requirem ent. T his requirem ent was first adopted in E xecutive O rder No. 11805, 3 C F R 896 (1971-75 com pilation); the legislative history o f the statute makes clear th at the statute was largely designed to codify the provisions o f the E xecutive order. See S. Rep. No. 938 (Part I), supra at 322 M oreover, in view o f the broad pow ers o f delegation conferred on the President by other provisions o f law, see 3 U.S.C. §§ 301-302, such term inology was necessary to ensure that the President him self sign the pertinent re­ quests. In light o f these considerations, w e do not believe the absence o f such an explicit requirem ent w ith respect to the com m ittee chairm en can be taken as an indication that C ongress did not intended to require them to sign requests for disclosure. Indeed, the fact that the President him self must sign such requests w ould suggest that a similar require­ m ent w ould attach to all officials w ho w ere specifically designated to sign w ritten requests. 2 It seems clear that agency heads are required by the statute personally to sign requests for disclosure. Previously, T reasury regulations had allow ed for disclosure upon the w ritten request or notice by the heads of various agencies, see, e.g., 26 C F R § 301.6103(a)— 102, 103, and 104 (1975). This requirem ent had been interpreted to require that the head o f the departm ent actually sign the request, see Hearings on Federal Tax R eturn Privacy before the Subcom m ittee on A dm inistration o f the Internal R evenue C ode o f the Senate C om m ittee on Finance, 47-48 (1975). T he present law, by enacting in m any instances language similar to that used in the regulations, presum ably did so in light o f this interpretation—particularly in view o f the fact that the underlying purpose w as to tighten up on the disclosure o f tax records.

89 respective chairmen.” H.R. Rep. No. 1515, 94th Cong., 2d Sess. 476 (1976); see also S. Rep. No. 938 (Part I), supra at 320. This statement, by itself, is not particularly helpful, since it merely restates the language that is at issue here. It does serve, however, to rebut the proposition that Congress meant to allow for more persons to authorize disclosure than it provided for in the statute itself. The absence o f any other references to the question of delegation in the legislative materials is even more telling. It seems to us most unreasonable to assess congres­ sional intent as allowing for delegation where, in a statute meant to restrict even congressional access, see S. Rep. No. 938 (Part I), supra at 319-20, Congress clearly did not provide for delegation in the statute and said nothing on the m atter in the legislative record. O f course, if there had previously existed a provision explicitly al­ lowing for a broad delegation of the chairmen’s authority, it could perhaps be said that the present legislation contemplated that such a provision would be applicable here. However, our research has uncov­ ered no such general authority. To the contrary, it appears that, in matters akin to the one at issue, Congress’ practice is to provide specifically for a delegation where it wishes to allow for one. For example, in legislation providing for congressional subpoenas, the stat­ utes often provide explicitly that the subpoenas may be signed by either the chairman or another member designated by him or the pertinent committee, see, e.g., 2 U.S.C. §§413, 473(d). In contrast, other provi­ sions lack such an authorization of delegation and allow only specifical­ ly named persons to sign subpoenas. See, e.g., 26 U.S.C. § 8021(b)(2). It is evident that Congress chose to adopt this latter approach with respect to committee access to tax records; we thus do not believe it appropriate here to allow for a delegation where Congress itself, in contrast to the pattern adopted in other instances, has not seen fit to provide one. T he fact that it was the past practice of the committees involved to delegate authority to subcommittees to request information directly from the IRS is not enough, in and of itself, to justify continuing such a practice under the new law. The statute here was designed to tighten the rules for disclosure, and a reference to past practice therefore provides little in the way o f guidance under the new law. While we have relied on past practices in determining that subcommittees were to continue to have access to tax returns and return information, our rationale for doing so was that such practices reflected Congress’ inter­ pretation of language carried over into the present statute. In contrast, the language relating to requests by Congress for tax information has been changed, and thus past practice is of little help in determining Congress’ view o f the present wording. It has been suggested by members of congressional staffs that the statutory language allowing examiners and agents “to inspect returns and return information at such time and in such manner as may be 90 determined by such chairman” might allow delegation of authority here. It seems to us, however, that this provision relates to the persons to whom tax information might be disclosed, and does not address the question of which persons might request disclosure from the IRS. This latter issue is specifically dealt with by other language in the statute, and to give the above-quoted language its suggested broad sweep would simply disregard that more specific language. We recognize that subcommittees of the Senate Finance Committee and the House Ways and Means Committee are authorized to “require by subpoena or otherwise . . . the production of such correspondence, books, papers, and documents . . . as it deems advisable.” 2 U.S.C. § 190b(a). See also House Rule XI(m)(l)(B). While this provision could obviously be read to encompass tax records, we believe that Section 6103, both in its terminology—“upon written request from the chair­ man”—and in its evident purpose to restrict even congressional access to tax information, necessarily delimits the grant of authority specified in these provisions insofar as tax records are concerned.

III. Disclosure by Way of a Chairman’s Request to the IRS Your letter further inquires whether the chairman of a committee might request the IRS to furnish the subcommittee such returns or return information as the subcommittee might request. There are two different situations where this problem might develop; the first is where , a chairman would make one “blanket” request that the IRS thereafter comply with any request on any matter made by the subcommittee. We do not believe that either the language of the statute, or the purpose underlying it, would allow for such an approach. Section 6103(0(1) provides for the disclosure of “any return or return information speci­ fied in such request.” [Emphasis added.] This would appear to require that the request of the chairman mention or name in a specific or explicit manner the information sought. A request by a chairman that the IRS comply with a certain subcommittee’s subsequent requests would not, in our view, meet this requirement; while the chairman could perhaps be said to have “specified” that certain information—Le., that requested by the subcommittee—be furnished, he has hardly identi­ fied that information precisely or in detail. A more important factor here, however, is that such a request by the chairman would depart from Congress’ apparent purpose of having the chairman pass upon each request and, in effect, would amount to a delegation o f authority to the subcommittee to proceed on its own. We have in the discussion set forth above concluded that this is not within Congress’ intent, and as such do not believe that it can be accomplished under the form of such a “request” to the IRS. The chairman could, however, at times make a more limited request that the IRS furnish a subcommittee with materials pertinent to a particularized inquiry; we believe that this would be permissible under 91 the statute. A request for materials relating to a particular line of inquiry seems to us to comport sufficiently with the statutory require­ ment that requested information be “specified.” While the chairman may not know at the time o f the request the exact information sought, he will be informed of the general nature of the information to be requested and the reasons for doing so—thereby fulfilling, in our view, the purposes served by the requirement of personal approval. The purposes of the statute also support this approach in a broader sense. As a practical matter, it is necessary to proceed in this manner if subcommittees are to function effectively; the need for certain informa­ tion may not become apparent until a subcommittee’s hearings have already begun, and it is simply not practical to have the chairman sign a request for information each time this occurs. As we discussed above, the general thrust o f the statute is to reconcile the need for confidential­ ity of tax returns with the need for disclosure to further the Govern­ m ent’s work. A determination here that would effectively curtail the subcommittee’s work would not comport with this overall goal; rather, we think the underlying aim of a balance is achieved by requiring the chairman to pass upon the subcommittee’s requests, and yet allowing those requests to specify information relating to a particular line of inquiry rather than setting forth exactly the returns and return informa­ tion sought. Conclusion We conclude that subcommittees are entitled to inspection of tax returns and return information directly, provided that the committee chairman’s request for such information specifies at least what line of inquiry the information is to relate to. A delegation of authority from the chairman to the subcommittee, or a “blanket” request from the chairman to the IRS, is not sufficient under the statute to allow the subcommittees access to the relevant materials. John M. H armon Acting Assistant Attorney General Office o f Legal Counsel