As the Wall Street Journal recently uncovered in the latest chapter of the “Lois Lerner Scandal,” in the run-up to the 2010 election, the IRS transmitted a 1.1 million-page database of confidential tax return information to the FBI. The IRS’s idea – which, to its credit, the FBI apparently immediately and rightly rejected – was to use this information to criminally investigate nonprofit groups’ political activity, according to House Republican legislators investigating the IRS who cited internal emails between the two federal agencies.
Congress compelled disclosure of this information by subpoena, which the IRS complied with after more than one year, ultimately owning up to the fact that the IRS disclosed the confidential taxpayer information without any authority to do so and explaining that this was really no big deal because most of the information sent to the FBI was publicly available.
It is black letter federal law that an IRS official may not unlawfully disclose confidential tax return information for an improper purpose. 26 U.S.C. 6103actually makes it a federal felony for a government official to willfully disclose confidential taxpayer information. The tax secrecy laws stemmed from President Richard Nixon’s corrupt use of the IRS to further his political purposes, permitting disclosure of taxpayer and tax return information only for legitimate, proper purposes (such as a specific criminal investigation requiring a specific referral of a specific criminal case by the IRS to the U.S. Department of Justice’s Tax Division). Each unlawful disclosure constitutes a felony.
So why is this significant?
First of all, the IRS regularly uses this same statute – perhaps reasonably – to hide information from criminal tax attorneys and from the press, so if it is to be used as a shield, IRS employees should be criminally prosecuted when they violate this statute and use confidential taxpayer information as a sword. This is especially true when IRS officials do exactly as President Nixon did — attempt to use the IRS to criminally investigate political opponents.
Second, as a former federal tax prosecutor who worked regularly with the IRS on the majority of cases I handled, I can assure you that the IRS and its employees are acutely aware of the limitations imposed by 26 U.S.C. 6103. Training on Section 6103 is frequent and voluminous, government officials are regularly reminded of the criminal and civil ramifications of violating the statute, and the bottom line is that it is highly unlikely that a disclosure of this magnitude was inadvertent or accidental.check this website!
In the criminal tax context, the IRS and DOJ regularly say that willful violations of the federal tax laws will not go unpunished. So that begs the question: when the IRS and its employees violate tax secrecy statutes, why do those violations go uninvestigated and unpunished?
The paradox is that if the media were to ask the IRS or DOJ whether these possible violations are being investigated, the answer would probably be that Section 6103 prohibits the government from answering that question.