IRS draft memo found that agency must provide tax returns to Congress: report

A draft memo written by an IRS lawyer last fall found that the agency has to provide tax returns sought by Congress's tax committees unless executive privilege is invoked, The Washington Post reported Tuesday.

The document obtained by the Post, which doesn't directly mention President TrumpDonald John TrumpWarren unveils Native American policy plan Live-action 'Mulan' star spurs calls for boycott with support of Hong Kong police Don't let other countries unfairly tax America's most innovative companies MORE, stated that the tax code provision directing the Treasury secretary to provide tax returns requested by the chairmen of Congress's tax committees is "mandatory."

The memo also said that the only basis for the IRS to refuse to comply with a subpoena for tax returns "would be the invocation of the doctrine of executive privilege."

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News of the memo comes as Democrats are preparing to pursue a court case to obtain Trump's tax returns. Treasury Secretary Steven MnuchinSteven Terner MnuchinThe Hill's Morning Report — Trump and the new Israel-'squad' controversy Trump pressured Mnuchin on labeling China a currency manipulator: report Business groups to Trump: Tariff delay isn't enough MORE last week rejected a subpoena for the documents and earlier rejected a request made in letters from House Ways and Means Committee Chairman Richard NealRichard Edmund NealNY files motion to keep Trump tax returns lawsuit out of DC court Democrats give cold shoulder to Warren wealth tax Senate Dems urge Mnuchin not to cut capital gains taxes MORE (D-Mass.) in April that cited the tax code provision.

Mnuchin has said the Treasury Department determined after consulting with the Justice Department that Neal's request lacks a legitimate legislative purpose. Trump has not invoked executive privilege in the tax return fight, officials said.

The draft memo is not in line with Mnuchin's reasoning for denying Democrats' request, and it signals there may be disagreement within the executive branch on the tax return issue, the Post reported.

The document states that the statute doesn't require the chairs of Congress's tax committees to provide a reason for a request for tax returns. The document states that "on its face, the statute does not allow the Secretary to exercise discretion to disclosing the information provided the statutory conditions are met."

The IRS told the Post that the document was authored by a lawyer in the chief counsel's office. The document isn't signed, and the newspaper said it has not learned who wrote and reviewed it.

The IRS said in a statement provided to The Hill that "the memo in question is a draft background paper that was never finalized" and "is not the official position of the IRS."

"The document was prepared last fall. The IRS Commissioner and the Chief Counsel were unaware of the paper until this week’s media inquiry. The document was not sent to Treasury," the agency added.

IRS Commissioner Charles Rettig and IRS Chief Counsel Michael Desmond are the only two people at the IRS who hold positions requiring Senate confirmation, and Desmond wasn't confirmed until this year.

A Treasury spokesperson said in a statement provided to The Hill that "neither the Secretary nor senior Treasury leadership has seen any such memo."

"Regardless, the analysis described to us does not appear to address the Constitutional impediments preventing Treasury from disclosing the requested tax information," the spokesperson added. "The Justice Department’s Office of Legal Counsel has reviewed those Constitutional issues and advised the Treasury that it may not produce the requested private tax return information."