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Trump Agreements With IRS, But Not Tax Returns, Must Be Released

Dec. 6, 2021, 6:34 PM

Information tied to any compromise agreements that former President Donald Trump made with the IRS over his personal and business tax returns must be released, even though the underlying returns are protected, a federal court ruled.

The decision included partial wins for both the IRS and the Electronic Privacy Information Center, a nonprofit that requested personal and business tax records tied to Trump under the Freedom of Information Act. The center argued that an exception under tax code Section 6103(k)(1) to the general law protecting tax return privacy applied pertaining to return information that is necessary to allow for an inspection of any accepted offer-in-compromise between a taxpayer and federal tax authorities.

Such agreements fall under tax code Section 7122, which allows the government to compromise any civil or criminal case arising under federal tax laws before referring the case to the Justice Department.

The information request is one of several fights tied to Trump’s tax records, including a legal fight in a D.C. court between a House committee and the Treasury Department over subpoenas for tax information. A New York grand jury has also indicted the Trump Organization and its former chief financial officer Allen Weisselberg, for alleged tax law violations.

The center described the Friday decision as a victory in a statement released Saturday, and said the IRS must now conduct a search that may include a tentative agreement with Trump over a disputed tax refund of about $70 million that was reported by the New York Times.

The court’s ruling granted the IRS’s motion to dismiss the center’s complaint only in part, noting that some disclosure is required because Section 6103(k)(1) says return information needed for inspecting offers-in-compromise “shall” be released. However, the court said the IRS isn’t authorized to disclose tax returns because a taxpayer’s “return” is defined differently from “return information” under the law.

“We’re very pleased with the court’s decision,” which confirms “that these tax settlements are public records,” said John Davisson, who is senior counsel at the Electronic Privacy Information Center.

“We believe that accountability and transparency at the highest levels of government is essential, and that the public has a right to know, you know, what sorts of financial entanglements and dealings the president has had specifically here with the IRS,” Davisson added.

The Justice Department didn’t immediately return a request for comment.

The case is Electronic Privacy Information Center v. IRS, D.D.C., No. 18-902, 12/3/21.

To contact the reporter on this story: Aysha Bagchi in Washington at abagchi@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Jeff Harrington at jharrington@bloombergindustry.com