In 2018, as part of its work to identify questionable financial dealings that threaten democratic institutions, EPIC filed a Freedom of Information Act request and lawsuit to obtain certain tax records pertaining to then-President Donald J. Trump and more than 300 associated business entities. Specifically, EPIC requested from the Internal Revenue Service all “offers-in-compromise” used to satisfy a tax debt owed by President Trump or one of his businesses. This was the second FOIA request and lawsuit, following EPIC v. IRS I, that EPIC brought concerning the President’s tax records.
An offer-in-compromise is “an agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer’s tax liabilities for less than the full amount owed.” Under section 6103(k)(1) of the Internal Revenue Code, taxpayer “return information shall be disclosed to members of the general public to the extent necessary to permit inspection of any accepted offer-in-compromise[.]” The records EPIC has requested—accepted offers-in-compromise and related return information pertaining to the President—are therefore public as a matter of law.
EPIC filed its FOIA request on February 5, 2018. After the IRS failed to issue a final determination on EPIC’s request for more than two months, EPIC filed suit against the agency on April 17, 2018 in the U.S. District Court for the District of Columbia. On February 11, 2019, the IRS withdrew its motion to dismiss EPIC’s case in light of the D.C. Circuit’s decision in EPIC v. IRS I. On March 4, the IRS filed a second motion to dismiss. EPIC filed its opposition on March 18.
On December 4, 2021, the court roundly rejected the IRS’s arguments and denied its motion to dismiss. The court agreed with EPIC that the tax code “creates a FOIA obligation for the IRS to disclose return information to EPIC, to the extent that information is necessary to permit inspection of an accepted offer-in-compromise.” In late 2021 and early 2022, the IRS finally completed searches for records responsive to EPIC’s request, identifying none.
Section 6103(k)(1) is one of several provisions from the Tax Reform Act of 1976 through which Congress has determined that certain “returns or return information should be public as a matter of policy[.]” According to the Treasury Inspector General for Tax Administration:
As one tax official wrote of § 6103(k)(1), “Presumably, the public policy behind the federal exemption from confidentiality of return information is a Congressional belief that the compromise of tax liabilities is affected with significant public interest, to the extent that all taxpayers are affected by such a compromise.” Disclosure of offer-in-compromise information is also mandated by Exec. Order No. 10,386, which separately requires that “income, excess profits, declared value excess profits, capital stock, estate or gift tax returns for any taxable” be open “to the extent necessary to permit the inspection of any accepted offer in compromise”).
The IRS, in furtherance of § 6103(k)(1), has set up two separate mechanisms for the public to obtain offers-in-compromise and the relevant return information. First, for a year after a given taxpayer’s offer-in-compromise is accepted by the IRS, the taxpayer’s Form 7249 (“Offer Acceptance Report”) and associated “sanitized account transcript” is made available for public inspection at the geographically corresponding IRS field office. Taxpayers are permitted to copy and retain these documents; however, the “inspection file” at each IRS office only contains records specific to that IRS region, and only records that are a year or less old. Second, the Internal Revenue Manual states that requests for offers-in-compromise and associated return information may be made in pursuant to the FOIA.
EPIC’s FOIA Request
On February 5, 2018, EPIC submitted a FOIA request to the Internal Revenue Service seeking:
EPIC also submitted an appendix (“Appendix A”) of several hundred business entities in which the President is, or has been, involved. With respect to these entities, EPIC sought:
On February 8, 2018, the IRS responded to EPIC by letter, agreed to expeditiously process EPIC’s request, and committed to searching for responsive records.
On April 17, 2018—after the IRS had unlawfully failed to make a final determination on EPIC’s request for fifty working days—EPIC filed suit in the U.S. District Court for the District of Columbia. On June 15, 2018, the IRS moved to dismiss EPIC’s suit and attempted to retroactively reverse its agreement to process EPIC’s request.
There is widespread concern that the former President’s private financial interests may have conflicted (and may still conflict) with the national interests of the United States and the integrity of U.S. democratic institutions. There is simply no way to tell without the release of Mr. Trump’s tax records. The public has the right to know.
In addition to this case, EPIC has brought several other FOIA lawsuits concerning the preservation of democratic institutions: EPIC v. IRS I (concerning release of the President’s tax returns under § 6103(k)(3)), EPIC v. FBI (concerning a request for records related to the hack of the DCCC, DNC, and RNC systems), and EPIC v. ODNI (concerning a request for the full report on “Russian Activities and Intentions in Recent US Elections”).
U.S. District Court for the District of Columbia (No. 18-902)