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Disclosure of Donald Trump’s Tax Returns

downloadThe New York Times recently published excerpts from Donald Trump’s 1995 tax returns.  Soon thereafter, Mr. Trump’s spokesmen charged that the Times violated federal law by   illegally disclosing Mr. Trump’s returns.  Invoking the First Amendment, the Times defended the publication.  Which side correctly read the tax law?

The public generally believes that federal tax returns are confidential and that disclosure of a taxpayer’s return or return information is illegal.  Indeed, Code Section 6103(a) provides that returns and return information are “confidential” and that government employees are prohibited from disclosing returns and return information.  Section 7431 authorizes civil damage claims for unauthorized disclosures and Section 7213 establishes criminal penalties for unauthorized disclosures.

Those general principles are qualified, however, by the specific language of the statute.  Section 6103(b) defines “return” as those returns filed with the Service.  Distinguishing between the signed return formally filed with the Service and other copies of the return, the courts have ruled that, when a government employee obtains a copy of a taxpayer’s Form 1040 from a source other than the Service, that tax form is not protected by Section 6103.  For example, where naval investigators obtained a copy of a return from a briefcase stored in the taxpayer’s government workspace, the Ninth Circuit held that Section 6103 did not apply because the return was not obtained from the Service.  See Stokwitz v. United States, 831 F.2d 893 (9th Cir.1987)cert. denied, 485 U.S. 1033 (1988).   Copies of returns obtained from the taxpayer’s accountant or through a grand jury subpoena are likewise not protected.

Similarly, the statutory language of the Section 6103 applies only to disclosures by federal employees and state employees.  Similar limiting language can be found in the statutes authorizing civil suits for unlawful disclosure and imposing criminal sanctions for unlawful disclosures.   The statutes simply do not reach publications of returns by persons other than government employee, such as the Times.

Section 6103 is not implicated by publication of Mr. Trump’s returns unless he can establish that the published actually came from the Service.  That issue of proof is complicated by the fact that a laundry list of regulatory agencies, lenders, and litigants, including Mr. Trump’s former spouses (and their representatives) have probably obtained copies of the returns during the past two decades.  Because the Times’ documents did not bear any IRS file-stamps and the fact that the disclosures included state tax returns which would not have been filed with the Service strongly suggests that the source was not the IRS.

Bottom line.   Section 6103 almost surely did not protect Mr. Trump’s returns and he has no wrongful disclosure claim against the Times or anyone else.