/The Trumpification Of The IRS

The Trumpification Of The IRS

WASHINGTON ― The Internal Revenue Service is starting to look like the partisan tool that Republicans accused it of being during the Barack Obama administration.

The Donald Trump administration has assumed more control than its predecessors over how the agency writes tax regulations, ordered unpaid IRS workers to process tax refunds during the government shutdown, intervened to block Democrats’ request for the president’s tax returns, and, as we learned this week, buried a staff memo outlining how the agency should respond to such requests.

Under federal law, when certain members of Congress ask for private tax information, the IRS has no choice but to hand it over, according to that legal analysis, which The Washington Post exposed Tuesday. That’s contrary to the administration’s position, which is that the disclosure would be unconstitutional.

An IRS spokesperson said that the memo is not the agency’s position, that it hadn’t been finalized, that Commissioner Charles Rettig hadn’t seen it before, and that the IRS never sent the document to its parent agency, the Treasury Department.

The memo was written by unnamed staffers sometime in the fall ― when the prospect of Democrats retaking the House of Representatives and using their power to seek Trump’s taxes was already a major news story. The president has long refused to make his returns public.

“I suspect that that memo was not drafted by a summer intern,” said Jeff Hauser, director of the Revolving Door Project, an anti-corruption initiative of the liberal Center for Economic and Policy Research.

Democrats asked last month for six years of Trump’s personal and business tax returns, only to have Treasury Secretary Steve Mnuchin rebuff their request ― even though the request was addressed not to him but to Rettig, since it’s the commissioner who traditionally handles requests for private tax information. The tax code says that if the treasury secretary wants to step in and enforce tax laws himself, he’s supposed to give Congress 30 days notice that he plans to revoke responsibilities previously delegated to the commissioner.

Mnuchin did not give any notice before taking command of the tax return request, nor has he justified not giving notice. In response to queries from Democrats at committee hearings, both Mnuchin and Rettig have simply said that the Treasury supervises the IRS. Rettig has said little else.

“Charles Rettig has taped his mouth, or maybe Mnuchin taped his mouth,” Rep. Bill Pascrell (D-N.J.), a member of the tax-writing Ways and Means Committee, told HuffPost this week. “He’s out of the picture. He’s irrelevant.”

Treasury’s bigfooting of the tax return request is typical of how the Trump administration has treated the IRS, said Mark Mazur, a former assistant secretary for tax policy at Treasury and current co-director of the nonpartisan Tax Policy Center.

“What you’re seeing here is much more of the smaller decisions being run through a process that includes people outside the IRS,” Mazur said.

IRS Commissioner Charles Rettig arrives to testify about the budget during a Senate hearing on May 15.

IRS Commissioner Charles Rettig arrives to testify about the budget during a Senate hearing on May 15.

In another example of the Trumpification of the IRS, the White House assumed more power over tax regulation so it could control implementation of the Tax Cuts and Jobs Act, the president’s biggest legislative accomplishment.

Since the Ronald Reagan administration, tax regulations have essentially been exempt from central control by the White House’s Office of Management and Budget, which has final say on most agencies’ regulations. An April 2018 memorandum of understanding between Treasury and OMB brought tax regulation under closer control of the White House. Record requests from reporters at Tax Notes reveal the administration’s hand in several new rules, including one designed to stop Democratic state legislatures from dodging the law’s limit on state and local tax deductions.

The rushed tax law exemplifies the sort of slapdash governance that is a hallmark of Trumpism. After the law passed at the end of 2017, the IRS needed to update the tables that employers use to withhold federal income tax from their workers’ paychecks. Republicans had scrambled the deductions underlying the tables, but instead of coming up with a new formula and giving employers time to adjust, Treasury told the IRS to go ahead with the old tables ― even though the department knew doing so might result in more workers owing money at tax time. So far, 1 million fewer households have gotten refunds this year.

Of course, the IRS is not an independent agency. It is run by a political appointee and has not been immune to claims of partisan bias. During the Obama administration, Republicans accused the IRS of excessively questioning conservative groups that wanted the agency to certify their nonprofit status.

Republicans were so mad that in 2014 they used the federal tax disclosure law ― the same one Democrats are now using to ask for Trump’s taxes ― to obtain and expose the private tax information of several dozen entities as part of a report referring an IRS official to the Justice Department for prosecution. (An internal watchdog’s investigation later revealed that the IRS had also improperly targeted liberal groups.)  

The fight over Trump’s tax returns is just one part of a broader battle between Congress and the administration, which has argued that it should not be subject to any oversight at all because Democrats only care about tearing down the president. More Democrats came out in favor of starting impeachment proceedings against the president this week as administration officials continued to defy subpoenas requesting documents and testimony.

Rep. Dan Kildee (D-Mich.), an ally of House Speaker Nancy Pelosi (D-Calif.), has been skeptical of impeachment, which the speaker thinks would be a tactical mistake. But Kildee said this week that the hidden IRS memo regarding tax return requests had made him more open to the idea.  

“It sort of begs the question of the larger issue we’re trying to examine, and that’s whether the president is somehow unduly influencing the IRS,” Kildee said.

The IRS automatically audits the president every year, and Democrats based their requests for Trump’s taxes on a need to evaluate the scope of the audit. The IRS memo said the law “does not allow for discretion as to whether to comply with a proper request for returns or return information.” But the Trump administration has given itself that discretion.  

“All he’s doing now is reinforcing our suspicion that he might be unduly trying to influence the IRS,” Kildee said.