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Internal Revenue Service - Privacy of Tax Returns (4)
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24200861
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Internal Revenue Service - Privacy of Tax Returns (4)
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Philip W. Buchen Files
Philip Buchen's General Subject Files
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Department of the Treasury. Internal Revenue Service. (07/09/1953 - )
Taxation
Privacy, Right of
Legislation
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9
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The original documents are located in Box 20, folder "Internal Revenue Service - Privacy
of Tax Returns (4)" of the Philip Buchen Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 20 of the Philip Buchen Files at the Gerald R. Ford Presidential Library
Tuesday 10/15/74
Meeting
10/18/74
9:30 p. m.
10:05 We have scheduled a meeting on the IRS bill for
Friday 10/18 at 9:30 a.m. -- the foll owing will be
attending:
Larry Silberman
Dick Albrecht
mark Wolf
Geoff Shepard
Stan Ebner
Doug Metz
with mr Silberman
will also attend
Noted. Plexe advise whore
P. Here
FORD is GERALD LIBRARY
Friday 10/18/74
4:15 Mr. Metz said at the meeting this morningthey
discussed the letter for the President to send to
Litton and Weicker. Wondered who would be the
source of the coordination. Several of those at
the meeting have called back to see who is going to
coordinate the letter.
me Bel allet
G.A. Hyil
FORD & LIBRARY GERALD
Some items in this folder were not digitized because it contains copyrighted
materials. Please contact the Gerald R. Ford Presidential Library for access to
these materials.
OF
THE
THE TREASURY
THE GENERAL COUNSEL OF THE TREASURY
WASHINGTON, D.C. 20220
1789
October 22, 1974
Re: Tax Privacy Legislation--Access
to Tax Returns by U.S. Attorneys
Dear Mr. Buchen:
Following our meeting in your office of last Friday, I
ave had further conversations with Commissioner Alexander
and with Meade Whitaker concerning their statements of past
abuses by U.S. Attorneys on the privacy of tax returns.
Commissioner Alexander has asked that I send to you the
enclosed copies of memos which he sent to Secretary Simon
and Deputy Secretary Gardner on the subject last month.
Sincerely yours,
Richard R. Albrecht
The Honorable
Philip Buchen
Counsel to the President
The White House
Enclosures
FORD LIBRARY
Date: SEP 181
MEMORANDUM FOR: SECRETARY SIMON
/s/ D.T.A.,
From: Commissioner of Internal Revenue
Subject: Attached Memorandum Discussing Justice Department
Access to Tax Returns
In view of the fact that Mr. Philip Buchen heard the
Department of Justice pitch about "no problem" and the further
fact that there is indeed a problem -- and a serious one --
I recommend that you send a copy of this memorandum to Mr. Buchen
so that he may have the correct picture.
GERA
LIBRARY
Initiator
Reviewer
Reviewer
Reviewer
Reviewer
Ex. Sec.
Surname
Initials / Date
7
/
Form 0S-3129
SEP 1:
SECRETARY SIMON
//5/
DONALD C. ALEXANDER
Commissioner of Internal Revenue
Justice Department Access to Tax Returns
The Justice Department asserts that the provision in our
recommended legislation limiting their access to tax returns
is unnecessary because we have had no problems under existing
law without such limitations. In fact, however, we have
recently had a number of problems in this area. These prob-
lems frequently arise because the U.S. Attorneys apparently
do not appreciate or understand the various legal and proce-
dural requirements governing the disclosure of tax information
and the prosecution of criminal tax cases. We have attempted
to cope with the problems by limiting Justice Department access
to tax returns and related information, such as by ceasing to
notify U.S. Attorneys of possible criminal tax prosecutions
under development and by refusing to furnish copies of Judges'
tax returns. We took these actions in response to problems
such as the following:
-- A. U.S. Attorney in North Carolina prematurely
disclosed to a newspaper an IRS recommendation for
criminal tax prosecution resulting from an investi-
gation of political activities in the state (Exhibit
1). The prosecution had to be dropped and the U.S.
Attorney resigned after the facts became known by
the Attorney General (Exhibit 2). Thus, it was nec-
essary for us to terminate our practice of notifying
U.S. Attorneys. (Last month this change was severely
criticized by a U. S. Attorney in correspondence
with the Assistant Attorney General.)
--- The U.S. Attorney in Oklahoma demanded a copy of a
U.S. District Court Judge's tax return information
to use as a possible basis for convincing a Court of
Appeals to disqualify the Judge from hearing a case
being handled by the U.S. Attorney. The Judge had
disbarred the U.S. Attorney and several other
Willsey
FORD ; LIBRARY DERALD
- 2 -
attorneys in the case. Although we lacked specific
authority to ão 50, we refused to furnish copies of
the returns in question.
---- A Justice Department Tax Division attorney secured
a copy of a tax return and the related investigative
file of a Judge who indicated that he was under tax
investigation. When local IRS officials sought to
have the material returned, the attorney resisted,
asserting his right to the information. When his
possession of the return became known to the Judge,
the Judge was understandably upset and apparently
informed other Judges in that area who were also
upset. The attorney later returned the materials.
Similarly, Tax Division lawyers attached copies of
tax returns to documents filed in a District Court
case in Florida, and the government was severely
criticized by the Judge.
-- A U.S. Attorney in Pennsylvania introduced a list of
nonfiling taxpayers into evidence in a case he was
trying in an attempt to prove that the defendant
had not filed a return. As a result of this action,
which was not authorized, we are now faced with other
attorneys attempting to secure and use the list.
We also have a continuing problem with U.S. Attorneys who
wish, contrary to current Regulations, to divulge tax infor-
mation to local enforcement agencies for possible use in
investigation of violations of state laws.
-- The U.S. Attorney in Oklahoma is insisting that he
be given part of an IRS investigative file and
authorized to turn it over to the State Attorney
General. When IRS officials informed him that such
disclosure was not permitted, he disagreed and indi-
cated that the Department of Justice would approve
his action. We are informed, however, that the
Department plans to seek our agreement before
approving his request,
A somewhat similar problem exists where U.S. Attorneys
is
FORD
do not follow established procedures.
-- A. U.S. Attorney in Tennessee held a news conference
LIBRARY
to announce an investigation of local political
corruption in which he would use IRS agents and infor-
mation. His announcement conflicted directly with
the established procedures for initiating investigations
of possible criminal tax violations.
- 3 -
- During the last eight months we have received over
twenty requests from various U.S. Attorneys for IRS
participation in various Grand Jury or other criminal
investigations despite the requirement that IRC
initiate criminal tax investigations. Furthermore,
several of these requests have come from U.S. Attorneys
who have previously been informed that their requests
were inappropriate.
In summary, we are convinced that incidents such as these
illustrate the necessity for establishing clear statutory
guidelines for use of tax data by the Department of Justice in
any context. We feel that the relevant provisions in our
recommended legislation establish quite reasonable standards.
We further believe that we should have emergency authority to
withhold the material when we determine that disclosure,
pursuant to the guidelines, would nevertheless seriously impair
the administration of the tax laws.
Furthermore, you should be aware that this has been a
subject of serious concern to the Joint Committee on Internal
Revenue Taxation. As a result of this concern, Joint Committee
representatives met with Justice and IRS in early 1971 and
expressed strong views that the authority for disclosure should
be centralized and guidelines for the use of the information
should be established. Although some preliminary steps were
taken in this direction, enactment of our statutory proposals
is a vital final step.
Attachments
BWillsey/smd
9/11/74
FORD is LIBRARY
AUGUST 22, 1972
IRS Seeks to Indict
13N.C. Democratic
Donors
Those recommended for
prosecution are:
- Charles W. Crone of
Clayton. Crone owns Charles
Crone Associates of Raleigh,
the agency that handled
Scott's campaign advertising.
News and Observer
In the first two years of Scott's
Incraed Monday~that the
administration, the state
federal attorney's recommen-
purchased through the Crone
Scott's
dation had been forwarded to
agency more than SI million
the Justice Department: in
worth of tourist and industrial
Washington. A federal official.
advertising. And the agency
who declined use of his name,
has been awarded another con-
'68 Race
said a final decision would be
tract under which the state is
made there whether to seek to
expected to buy another
indict the men and bring them
million dollars in advertising
Cited
to trial.
in the current two-year budget
The IRS counsel
period.
recommended that all 13 be
- Roy E. Wilder Jr. of
By PAT STITH
prosecuted on charges that
Raleigh. Wilder, an account
Staff Writer
they conspired for the purpose
executive with Crone
The U.S. Internal Revenue
of "defeating" U. S. income
Associates, is a long-time per-
Service's regional counsel in
taxes in connection with the
sonal and political friend of the
"I "IS. Attorney Ousted Over Tax Leak
By Sanford J. Ungar
leak on the North Carolina tax by an unnamed "federal offi-
The action against Coolidge
cial" Included the names of
was much stronger, however,
Washinston Post Staff Writer
Inquiry.
MYRTLE БЕАСИ, S.C.,
He added, however, that "I
the 13 persons under Investi-
than the reprimand given U.S.
Sept. 22-A U.S. attorney for
don't like or approve of per-
gation and some of the
Attorney Harry Steward of
North Carolina was forced to
sons in the Department of Jus-
amounts involved.
San Diego in 1971, when he al-
resign by Attorney General
tice giving out such informa-
In his role as U.S. attorney,
legedly interfered with 2
Richard G. Kleindienst earlier
lion. To let the integrity of
Coolidge was expected to pro-
probe of contributions by
this month after admitting to
these files (be compromised)
secute the case.
prominent California Republi-
FBI agents he had leaked in-
can be harmful."
Scott contended at the time
cans to President Nixon's 1953
formation from the personal
The Attorney General, reit-
of the leak that it was politi-
campaign.
federal income tax returns of
crating his statement in a let-
cally motivated and had jeop-
Steward, who became an
ter to Gov. Scott this week,
ardized the rights of people
issue in last spring's marathon
Commissioner
To DEPUTY SECRETARY Date 9/19/74
GARDNER
More re U. S. Attorney.
This is a particularly flagrant
example of improper action.
1/5/ Don Alexander
Donald C. Alexander
GERALD R FORD AIBRARY
memarandum
to: Commissioner Alexander
from: Assistant Commissioner (Inspection)
subject: Disclosure Concerning Governor DAVID HALL of Oklahoma
We have completed two separate investigations con-
cerning the leak of tax information in the case of Governor
HALL. The first of these was based on two newspaper articles
appearing in The Daily Oklahoman and in the Oklahoma City
Times on May 8, 1974. The articles were written by Reporter
JACK TAYLOR and contained detailed financial information re-
portedly from the 1971 and 1972 Federal Income Tax Returns
of Governor HALL. The newspaper reporter refused to furnish
any information concerning his sources to Inspection. Our
inquiries did not disclose the source of information reported
by JACK TAYLOR. U. S. Attorney WILLIAM R. BURKETT released
Federal Grand Jury evidence, including copies of the Governor's
tax returns, to Oklahoma Attorney General LARRY DERRYBERRY,
pursuant to a Court Order signed by Federal Judge FRED
DAUGHERTY. Several members of Mr. DERRYBERRY's staff, as
well as several State Representatives, had access to copies
of the Federal Grand Jury information.
The second investigation was based upon an article by
Reporter TAYLOR in the Daily Oklahoman on August 22, 1974.
This article contained verbatim excerpts from an Intelligence
Division Memorandum of Interview regarding Governor HALL.
Our investigation disclosed that the Memorandum of Interview
from which the excerpts were taken was contained in the files
of the State Attorney General's office and was received by
that office from the U. S. Attorney's office. U. S. Attorney
BURKETT said that he had intended to furnish a copy of the
memorandum to the State Attorney General but decided not to
do so upon instructions of Mr. KEENEY of the Department of
Justice. However, someone in his office apparently proceeded
to do so, unaware of his decision, although no record was kept
of what material was released. The Attorney General's file,
in which the memorandum was contained, was made available to
several members and committees of the Oklahoma legislature
BERALD FORD LIBRARY
Internal Revenue Service
- 2 -
Commissioner Alexander
Our extensive inquiries disclosed no improprieties on
the part of Internal Revenue Service employees in either of
these cases. Last week, Reporter TAYLOR appeared before a
Federal Grand Jury at Oklahoma City. He declined to identify
his source of information in the Governor HALL tax matters
citing his rights as a reporter under the First Amendment.
U
Hill
F. Geibel
FORD in 018870 LIBRARY
THE WHITE HOUSE
WASHINGTON
10/25/74
To:
Mr. Buchen
From: Eva
I have sent copies
to Timmons and Shepard;
also Doug Metz.
Shall we send a copy to
Albrecht or assume Yes
Geeff will send?
Silberman ?
airs
Yes you Ind
sentetta.
Mr Buchens
THE WHITE HOUSE
copy
WASHINGTON
October 25, 1974
MEMORANDUM FOR:
THE PRESIDENT
FROM:
PHIL BUCHEN P.W.B.
SUBJECT:
Inspection of Tax Returns
Attached are the letters which I have prepared as a follow-up to your
meeting with Senator Weicker and Representative Litton.
These should serve to clear up any ambiguity as to your position, as
matter. well as give the affected agencies appropriate guidance in the subject
Treasury and Justice jointly drafted the letter. Ash, Cole, Timmons and
I all recommend that you sign the letters.
Attachments
BERALD FORD LIBRARY
THE WHITE HOUSE
WASHINGTON
Dear Lowell:
I appreciated the opportunity to discuss with you and Congressman
Litton our mutual interest in legislation to restrict inspection of tax
returns and disclosure of tax return information. I share your
commitment to assuring that such documents and information are
properly protected.
One area of concern to you is the access of the President and White
House staff to tax returns. As you know, I have recently addressed
this concern in Executive Order 11805, which regulates and volun-
tarily restricts White House access to tax returns and return informa-
tion. I believe that the terms of my Executive Order are compatible
with the approach embodied in your bill, and I have asked the
Treasury Department to redraft the legislative proposal submitted
by Secretary Simon to include in the bill the operative provisions
of my Executive Order. In the meantime, White House access will
be strictly limited as provided by my Executive Order until legis-
lation is enacted.
You have also expressed concern regarding the availability of tax
returns for general law enforcement purposes and for statistical
compilations by organizations other than the Internal Revenue Service.
Your proposals in these areas have serious implications with respect
to effective criminal enforcement and efficient development of necessary
economic and statistical information. In my view, the consequences of
restrictive legislation in these areas must be carefully weighed before
proceeding. I have, therefore, requested that the Department of
Justice and the Department of Commerce prepare and transmit on my
behalf, before Congress reconvenes, a report containing our views
on each of these matters. I trust that these reports will be helpful in
defining the issues, and I earnestly hope that the Congress will hold
early hearings to air fully all of the issues.
i
FORD
GERALD
LIBRARY
-2-
I am certain you will do your best to see that this important subject
receives the careful and thoughtful legislative attention that you and
I agree it deserves.
Sincerely yours,
Honorable Lowell P. Weicker
United States Senate
Washington, D. C. 20510
FOND
GENALD
LIBRARY
THE WHITE HOUSE
WASHINGTON
Dear Jerry:
I appreciated the opportunity to discuss with you and Senator
Weicker our mutual interest in legislation to restrict inspection of tax
returns and disclosure of tax return information. I share your
commitment to assuring that such documents and information are
properly protected.
One area of concern to you is the access of the President and White
House staff to tax returns. As you know, I have recently addressed
this concern in Executive Order 11805, which regulates and volun-
tarily restricts White House access to tax returns and return informa-
tion. I believe that the terms of my Executive Order are compatible
with the approach embodied in your bill, and I have asked the
Treasury Department to redraft the legislative proposal submitted
by Secretary Simon to include in the bill the operative provisions
of my Executive Order. In the meantime, White House access will
be strictly limited as provided by my Executive Order until legis-
lation is enacted.
You have also expressed concern regarding the availability of tax
returns for general law enforcement purposes and for statistical
compilations by organizations other than the Internal Revenue Service.
Your proposals in these areas have serious implications with respect
to effective criminal enforcement and efficient development of necessary
economic and statistical information. In my view, the consequences of
restrictive legislation in these areas must be carefully weighed before
proceeding. I have, therefore, requested that the Department of
Justice and the Department of Commerce prepare and transmit on my
behalf, before Congress reconvenes, a report containing our views
on each of these matters. I trust that these reports will be helpful in
defining the issues, and I earnestly hope that the Congress will hold
early hearings to air fully all of the issues.
LIBRARY
-2-
I am certain you will do your best to see that this important subject
receives the careful and thoughtful legislative attention that you and
I agree it deserves.
Sincerely yours,
Honorable Jerry Lon Litton
United States House of Representatives
Washington, D. C. 20510
LIBRARY
Thursday 10/24/74
2:05 Geoff Shepard dropped this by.
If O.K. with you,
he,"lil run it by OMB -- and then they'll have it typed
final.
Nhinok advise
10/24/71
3:50
-5leased
notified Ahepard's shep
LIBRARY office FORDS
THE WHITE HOUSE
WASHINGTON
10/24
TO:
PHIL BUCHEN
FROM: GEOFF SHEPARI
5/5
FYI
COMMENT
The attached is the joint Justice-
Treasury draft. I think the
changes I made are important.
Could I have your response back
as soon as convenient?
OF
THE
THE 1789 TREAMURY
THE GENERAL COUNSEL OF THE TREASURY
WASHINGTON, D.C. 20220
October 23, 1974
Dear Jeff:
Pursuant to our discussions at the meeting in
Mr. Buchen's office last Friday, I am enclosing a draft of
a letter that could be sent by the President to Senator
Weicker and Representative Litton. The enclosed draft has
been reviewed by Larry Silberman and has his concurrence.
Please call me concerning any changes you believe
should be made in the letter. We would appreciate
receiving a copy of any letter that is sent to Weicker and
Litton on this subject.
Sincerely yours,
Dick
Richard R. Albrecht
Mr. Geoffrey Shepard
Associate Director
Domestic Council Committee
on the Right of Privacy
The White House
Washington, D.C. 20500
Enclosure
LIBRISHA
DRAFT:RRA1brecht/MWolfe:js1 10/23/74
Dear Senator Weicker:
I appreciated the opportunity to discuss with you and
Congressman Litton our mutual interest in legislation to restrict
inspection of tax returns and disclosure of tax return information.
I share your commitment to assuring that such documents and informa-
tion are properly protected.
One area of concern to you is the access of the President and
White House staff to tax returns. As you know, I have recently
addressed this concern in Executive Order 11805, which regulates and
voluntarily restricts White House access to tax returns and return
information. I believe that the terms of my Executive Order are
compatible with the approach embodied in your bill, and I have
requested that the Administration's legislative proposal be redrafted
to include in the bill the operative provisions of my Executive Order.
In the meantime, White House access will be strictly limited as
provided by my Executive Order until legislation is enacted.
You have also expressed concern regarding the availability of
tax returns for general law enforcement purposes and for statistical
compilations by organizations other than the Internal Revenue Service.
serious
Your proposals in these areas have important implications with respect
to effective criminal enforcement and efficient development of necessary
the consequences of restrictive
economic and statistical information. In my view, legislation in
weighed before proceeding.
these areas must be carefully considered. I have, therefore, requested
that the Department of Justice and the Department of Commerce prepare
2
and transmit on my behalf, before Congress reconvenes, a report
containing our views on each of these matters. I trust that these
reports will be helpful in defining the issues, and I earnestly hope
that the Congress will hold early hearings to air fully all of the
issues.
I sincerely hope that this important subject will receive the
careful and thoughtful legislative attention that you and I agree it
deserves.
Sincerely yours,
Gerald R. Ford
October 30, 1974
To:
Jerry Jones' office
From: Eva Daughtrey
I have sent copies of the attached to:
Central Files
Douglas Metz (Privacy Committee)
Larry Silberman (Justice)
Dick Albrecht (Treasury)
Bill Timmons
Geoff Shepard
Roy Ash
Ken Cole
FORD is LIBRARY GERALD
THE WHITE HOUSE
WASHINGTON
October 30, 1974
Dear Jerry:
I appreciated the opportunity to discuss with you and Senator
Weicker our mutual interest in legislation to restrict inspection of tax
returns and disclosure of tax return information. I share your
commitment to assuring that such documents and information are
properly protected.
One area of concern to you is the access of the President and White
House staff to tax returns. As you know, I have recently addressed
this concern in Executive Order 11805, which regulates and volun-
tarily restricts White House access to tax returns and return informa-
tion. I believe that the terms of my Executive Order are compatible
with the approach embodied in your bill, and I have asked the
Treasury Department to redraft the legislative proposal submitted
by Secretary Simon to include in the bill the operative provisions
of my Executive Order. In the meantime, White House access will
be strictly limited as provided by my Executive Order until legis-
lation is enacted.
You have also expressed concern regarding the availability of tax
returns for general law enforcement purposes and for statistical
compilations by organizations other than the Internal Revenue Service.
Your proposals in these areas have serious implications with respect
to effective criminal enforcement and efficient development of necessary
economic and statistical information. In my view, the consequences of
restrictive legislation in these areas must be carefully weighed before
proceeding. I have, therefore, requested that the Department of
Justice and the Department of Commerce prepare and transmit on my
behalf, before Congress reconvenes, a report containing our views
on each of these matters. I trust that these reports will be helpful in
defining the issues, and I earnestly hope that the Congress will hold
FORD
early hearings to air fully all of the issues.
GERALD
LIBRARY
-2-
I am certain you will do your best to see that this important subject
receives the careful and thoughtful legislative attention that you and
I agree it deserves.
Sincerely yours,
Good R. Ford
Honorable Jerry Lon Litton
United States House of Representatives
Washington, D. C. 20510
FORDO is LIBRARY
THE WHITE HOUSE
WASHINGTON
October 30, 1974
Dear Lowell:
I appreciated the opportunity to discuss with you and Congressman
Litton our mutual interest in legislation to restrict inspection of tax
returns and disclosure of tax return information. I share your
commitment to assuring that such documents and information are
properly protected.
One area of concern to you is the access of the President and White
House staff to tax returns. As you know, I have recently addressed
this concern in Executive Order 11805, which regulates and volun-
tarily restricts White House access to tax returns and return informa-
tion. I believe that the terms of my Executive Order are compatible
with the approach embodied in your bill, and I have asked the
Treasury Department to redraft the legislative proposal submitted
by Secretary Simon to include in the bill the operative provisions
of my Executive Order. In the meantime, White House access will
be strictly limited as provided by my Executive Order until legis-
lation is enacted.
You have also expressed concern regarding the availability of tax
returns for general law enforcement purposes and for statistical
compilations by organizations other than the Internal Revenue Service.
Your proposals in these areas have serious implications with respect
to effective criminal enforcement and efficient development of necessary
economic and statistical information. In my view, the consequences of
restrictive legislation in these areas must be carefully weighed before
proceeding. I have, therefore, requested that the Department of
Justice and the Department of Commerce prepare and transmit on my
behalf, before Congress reconvenes, a report containing our views
on each of these matters. I trust that these reports will be helpful in
defining the issues, and I earnestly hope that the Congress will hold
early hearings to air fully all of the issues.
LIBRARY
-2-
I am certain you will do your best to see that this important subject
receives the careful and thoughtful legislative attention that you and
I agree it deserves.
Sincerely yours,
Horald R.Ford Ford
Honorable Lowell P. Weicker
United States Senate
Washington, D. C. 20510
FORD
THE WHITE HOUSE
WASHINGTON
October 25, 1974
MEMORANDUM FOR:
THE PRESIDENT
FROM:
PHIL BUCHEN
P.W.B.
SUBJECT:
Inspection of Tax Returns
Attached are the letters which I have prepared as a follow-up to your
meeting with Senator Weicker and Representative Litton.
These should serve to clear up any ambiguity as to your position, as
well as give the affected agencies appropriate guidance in the subject
matter.
Treasury and Justice jointly drafted the letter. Ash, Cole, Timmons and
I all recommend that you sign the letters.
Attachments
1/20/75
THE WHITE HOUSE
JerryLitton
WASHINGTON
Saxlor
Dec 3
-30-40ppgm
FORD : DERALD LIBRARY
Monday 1/20/75
11:55 Checked with Jay Brenneman in OMB
4874
to see if they have an IRS Privacy bill in the
mill for resubmission to Congress and where it
stands.
Mr. Brenneman said he understands there is one,
but they haven't gotten it yet.
From the last
Congress there was a communication between the
administration and Weicker. Brenneman's understanding
is that Treasury would submit a bill, but he will check
on it and let us know.
LIBRARY GERALD R. THOM
N
Monday 1/20/75
1:25 Mr. Brenneman talked to the Associate Tax
Counsel at Treasury (Dale Collinson) and he
indicates they are working on an IRS Privacy bill;
he has already seen a draft it, and from the way
it looks, he feels they are amost ready to send
it over for clearance.
Mr. Brenneman will
keep us advised.
LIBRARA BERALD Y. OFFS
IRS
Monday 1/20/75
1:25 Mr. Brenneman talked to the Associate Tax
Counsel at Treasury (Dale Collinson) and he
indicates they are working on an IRS Privacy bill;
he has already seen a draft it, and from the way
it looks, he feels they are amost ready to send
it over for clearance. Mr. Brenneman will
keep us advised.
GENERA R. FORD LIBRARY
IRS
Privacy
Monday 1/20/75
fill
11:55 Checked with Jay Brenneman in OMB
4874
to see if they have an IRS Privacy bill in the
mill for resubmission to Congress and where it
stands.
Mr. Brenneman said he understands there is one,
but they haven't gotten it yet.
From the last
Congress there was a communication between the
administration and Weicker. Brenneman's understanding
is that Treasury would submit a bill, but he will check
on it and let us know.
Originally called Rommel's office;
they referred me to Martha Ramey
4812,
who in turn referred me to Jay Brenneman.
GERATE FORD LIBRARY
-
THE WHITE HOUSE
WASHINGTON
For return to
regubr Privacy"
file.
THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK
42 West 44th Street, New York, N.Y. 10036
The Privacy of Federal Income Tax Returns
By THE COMMITTEE ON CIVIL RIGHTS
INTRODUCTION
The assumption that the confidential information sent by taxpayers to the
Internal Revenue Service (IRS) is used solely for the purpose of collecting
taxes has been seriously challenged in recent years. In two Executive Orders,
E.O. 11697 and E.O. 11709, President Nixon attempted to require the Treas-
ury Department to turn over the tax returns of 3,000,000 farmers to the
Department of Agriculture, allegedly for statistical purposes. Government
officials acknowledged that the orders were prototypes for future orders di-
rected against other occupational groups.¹ The orders were later rescinded-
after more than 100 members of Congress co-sponsored bills to revoke them
and the Domestic Council on Privacy2 and then Vice President Ford made
similar recommendations.³ Other Presidents have by Executive Order made
tax returns available to the Federal Trade Commission, the Department of
Health, Education and Welfare, the Department of Commerce, and other
agencies.⁴
During the 1974 congressional investigation leading to the Articles of Im-
peachment, the House Judiciary Committee made the following summary of
its findings in Article II, subparagraph 2: President Nixon, "acting personally
and through his subordinates and agents, endeavored to obtain from the In-
ternal Revenue Service, in violation of the constitutional rights of citizens,
confidential information contained in income tax returns for purposes not
authorized by law, and to cause, in violation of the constitutional rights of
citizens, income tax audits or other income tax investigations to be initiated
or conducted in a discriminatory manner." While the extent and results of
these violations of confidentiality cannot be determined, the potential for
abuse under present law is clear.
IRS has recognized that the attempts to make it into an instrument of
political power are a serious danger to the agency and to the public. Two
years ago Commissioner of Internal Revenue Donald C. Alexander asked
Congress "to give the Internal Revenue Service and the taxpayer what they
so badly need-protection against misuse of what should be the most confi-
dential of records-tax returns."⁵
The constitutional rights of citizens to privacy and to due process of law,
and the constitutional privilege against compulsory self-incrimination, are
clearly at issue when confidential tax information obtained from the taxpayer
under compulsion of law is misused. This report will analyze the statutes,
judicial decisions, Executive Orders, and proposed new legislation which are
relevant to these rights. We conclude that comprehensive and effective
changes in the law are overdue.
I. THE PRESENT LAW
A. The Internal Revenue Code
The startling fact is that the current internal revenue statutes and regula-
tions do not prohibit, or discourage, Government employees from rummag-
Federal Legislation Report No. 75-2 (April 15, 1975)
GERALL
LIBRARY
ing through tax returns en masse or on a particularized basis. Under the In-
Executive Branch follows the terms of its own orders and the treasury regula-
ternal Revenue Code, 26 U.S.C. §6103, income tax returns are "public rec-
tions approved by the President, there is no meaningful limit upon the use
ords" open to inspection "upon order of the President and under rules and
or misuse of confidential income tax information.
regulations prescribed by the Secretary [of the Treasury] or his delegate and
approved by the President." The returns can also be furnished to tax officials
C. Executive Order 11805
of the states, to the Joint Committee on Internal Revenue Taxation, and to
Despite the reported excesses of the previous Administration, President
other congressional committees. 26 U.S.C. §6103(b), (d). Since 1957 there
Ford has expressly broadened his authority to obtain income tax returns for
have been more than 70 Executive Orders allowing inspection of tax returns
any purpose. Under E.O. 11805, dated September 20, 1974,8 IRS must deliver
by various agencies of the Government.⁶ From the 72nd Congress to date,
the tax returns of any person to the President if he personally signs a written
Congress has passed at least 47 resolutions authorizing committees to obtain
request. The President is not required by the Order to give a reason for
and inspect tax returns.⁷
the request, and he may designate a White House employee to inspect the
26 U.S.C. 87213 makes it unlawful for any federal officer or employee to
returns, provided that the employee has a Presidential commission and is
divulge "in any manner whatever not provided by law" the amount or source
paid at an annual rate equal to or exceeding the basic pay of $28,000. The
of income, profits, or losses shown in any income tax return, and for any
designated employee may disclose information in the returns to persons other
person to print or publish any such information "in any manner whatever
than the President if he has the President's written permission to do so. Thus,
not provided by law." Violation of the statute is a misdemeanor. If the of-
the President and commissioned employees he has designated are free to ob-
fender is a federal officer or employee, upon conviction "he shall be dis-
tain, inspect, and divulge information in the tax returns of any person, for
missed from office or discharged from employment."
any purpose, without making any disclosure to the taxpayer, to Congress, or
to the courts.
B. Judicial Decisions on the Use of Tax Information
In September, 1974 the President proposed legislation restricting Govern-
The courts have not, in general, tried to prevent the Government from
ment agencies, but not the President or White House employees, in their ef-
using or divulging income tax information. The discussion of a few cases will
forts to obtain tax-return information. The Administration bill would have
illustrate the point. In United States v. Sapp, 371 F.Supp. 532 (S.D. Fla. 1974),
required IRS to furnish any return or other tax information to the President
the Government attached taxpayers' returns to a memorandum of law filed
and to "such employees of the White House office as the President may
in support of a motion to obtain a ledger of the taxpayers' financial trans-
designate."⁹
actions. The court characterized the Government's conduct as "a shocking
and high-handed treatment of taxpayers and a complete evasion of Congres-
D. The Relevant Constitutional Principles
sional purpose in 26 U.S.C. 87213," but refused to abate the Government's
In Olmstead V. United States, 277 U.S. 438, 478 (1928) (dissenting opinion),
investigation of the taxpayers. The court said that if the Attorney General
Mr. Justice Brandeis defined the right of privacy as "the right to be let alone
declined to prosecute the officials responsible for the violation but "ade-
-the most comprehensive of rights and the right most valued by civilized
quately explain[ed] such action to the court," the court would permit the
man."
Government to have the ledger for use in its investigation. Subsequently the
While the majority of the recent Supreme Court cases vindicating the in-
court said it had received a satisfactory explanation from the Attorney General.
dividual's right of privacy have involved marital privacy and the right to con-
In United States v. Tucker, 316 F.Supp. 822 (D. Conn. 1970), the court held
trol of one's own body, the Court has made it clear that the fundamental
that the disclosure of tax records by IRS to the Federal Bureau of Investiga-
constitutional principle is not limited to protection against physical intru-
tion did not violate 26 U.S.C. 87213. Accordingly, the defendants' motion to
sions into one's home or unwarranted interference with marital or sexual
suppress the tax records was denied. In Laughlin V. United States, 474 F.2d
matters. The Court held in Terry v. Ohio, 392 U.S. 1, 9 (1968), quoting Mr.
444, 453, note 12 (D.C. Cir. 1972), cert. denied, 412 U.S. 941, the appellate
Justice Harlan's concurring opinion in Katz V. United States, 389 U.S. 347,
court found that the Government's disclosure of income tax information to a
361 (1967), that "wherever an individual may harbor a reasonable 'expecta-
grand jury was lawful under 87213 and under a Treasury Regulation allow-
tion of privacy'.
he is entitled to be free from unreasonable governmental
ing IRS to furnish income tax returns to United States Attorneys for use be-
intrusion."
fore grand juries, or in litigation in any court if the Government is interested
Information contained in a tax return will often reveal the taxpayer's mem-
in the result of the litigation. Cf. United States V. Fruchtman, 421 F.2d 1019,
bership in, or contributions to, political, social or other private organizations.
1022 (6th Cir. 1970), cert. denied, 400 U.S. 849, in which the court held that
In NAACP V. Alabama, 357 U.S. 449, 462 (1958), and again in Bates V. Little
so long as an IRS investigation is within its statutory authority, "there is no
Rock, 361 U.S. 516, 523 (1960), the Court held that preservation of the free-
prohibition against another department of government having the benefit of
dom of association guaranteed by the First Amendment may often depend
information developed in the IRS investigation."
upon "inviolability of privacy in group association."
It is clear that the applicable statutes, regulations, and Executive Orders
The inter-relationship between the right of privacy and the privilege
provide virtually no restriction upon the power of the Executive Branch to
against self-incrimination guaranteed by the Fifth Amendment has also been
obtain and use information contained in income tax returns. As long as the
emphasized in a number of Supreme Court opinions. Mr. Justice Stewart,
2
3
writing for the Court in Tehan V. Shott, 382 U.S. 406, 416 (1966), observed
the bill S. 3982 relating to tax returns. The amendment passed the Senate
that the privilege against self-incrimination "stands as a protection of
but was deleted in the House-Senate conference (CONG. REC., Nov. 21, 1974,
values reflecting the concern of our society for the right of each individual to
S19851).
be left alone." And in Bellis V. United States, 417 U.S. 85, 88 (1974), the Court
II. PROPOSED LEGISLATION
said that the constitutional privilege protects certain business records and
"personal documents containing more intimate information about the in-
A. The Provisions of S. 199
dividual's private life."
After the Privacy Act was passed, the Weicker-Litton bill was re-introduced
E. The Privacy Act of 1974
in virtually identical form in the 94th Congress on January 17, 1975. The
bill, known as S. 199 in the new Congress, now has a total of 35 co-sponsors
The Privacy Act became effective on December 31, 1974 (P.L. 93-579, 5
in the Senate. 11 A subcommittee of the Senate Finance Committee will hold
U.S.C. §552a). Congress determined, as stated in its Findings and Statement
hearings on the bill in April and perhaps again in May, 1975. If the bill is
of Purpose of the Act, that the right of privacy is a personal and fundamental
amended in consonance with the suggestions developed later in this report
right protected by the Constitution, that the right has been violated by the
and is enacted, misuse of tax-return information will be effectively curtailed.
compilation, use, and dissemination of personal information by Government
The bill would repeal the current §6103 of the Internal Revenue Code
agencies, and that Congress has the right and the duty to regulate the prac-
which, as previously noted, provides that income tax returns are public rec-
tices of the agencies to prevent further harm.
ords open to inspection upon order of the President. As the sponsors of the
Briefly stated, the Privacy Act regulates the maintenance of personal in-
bill have indicated, the new §6103 would change the inherent legal character
formation by Government agencies and prohibits disclosure of information
of the tax return. The President's authority to order inspection is removed.
about any individual without his or her written consent. 10 There are a num-
Tax returns are declared confidential records. They cannot be inspected by
ber of exceptions and exemptions in the statute. Confidential information
anyone-and the information they contain cannot be disclosed by or to any-
can be disclosed within the agency that has it; to another agency "for a pur-
one-except as provided in the new statute. Section 7213 of the Internal Rev-
pose which is compatible with the purpose for which it was collected"; to the
enue Code is amended to make unauthorized disclosure a felony rather than
Bureau of the Census; under certain conditions, to any governmental juris-
a misdemeanor and to add the felony of knowing receipt of unauthorized
diction "for a civil or criminal law enforcement activity" (provided, however,
tax information.
that if an individual is denied a federal right or benefit as a result of the
Under the bill S. 199, the right to inspect a tax return would be restricted
maintenance of certain "investigatory material," the material must be dis-
to the following persons:
closed to the individual unless it was furnished to the Government by a con-
(1) The taxpayer who filed the return or his authorized representative.
fidential source); to anyone showing "compelling circumstances" affecting
(2) Officers and employees of IRS, the Treasury Department, and "with
the health or safety of an individual; to either House of Congress or any
respect to matters referred to the Department of Justice by the Commissioner
committee or subcommittee of either House; to the General Accounting
[of Internal Revenue], the Department of Justice, in each case solely for
Office; or pursuant to a court order. 5 U.S.C. §552a(b), (k)(2).
purposes of the administration and enforcement of this title."
The Privacy Act will undoubtedly reduce the misuse of private informa-
(3) Officers and employees of the Department of Justice, with respect to
tion by Government agencies. However, the protections afforded by the Act
matters other than those referred by the Commissioner, only upon the written
are not complete. There are several exceptions to its provisions and although
request of the Attorney General specifically naming the taxpayer whose re-
the Executive Office of the President is subject to the Act, the President him-
turn is to be inspected and again, "solely for purposes of the administration
self probably is not. Moreover, while income tax returns are not expressly
and enforcement of this title."
excepted from the statute, certain federal agencies may take the position that
(4) Officials who administer state tax laws, in certain limited circumstances.
tax information is not covered by the Act. According to the Senate Committee
(5) The President "upon his written request specifically naming the tax-
Report (S.Rep. No. 93-1183), a law enforcement agency covered by the Act
payer whose return is to be inspected, provided that the inspection of such
need not secure an individual's permission to obtain his or her file from a
return is necessary in the performance of his official duties.
non-law enforcement agency, "e.g., FBI access to a tax return."
(6) The Joint Committee on Internal Revenue Taxation, which may in
Several bills designed to protect the confidential nature of income tax in-
turn disclose tax information to either House of Congress and their commit-
formation were introduced in the second session of the 93rd Congress (Sep-
tees, but only in statistical form "without disclosing the identity of any tax-
tember, 1974) before the Privacy Act was signed into law. Under one of the
payer or of any return."
bills, S. 3935, the taxpayer would be notified of any request to IRS for infor-
The bill provides that IRS shall, each quarter, list for the Joint Committee
mation and the information could not be released without the taxpayer's
the returns furnished pursuant to paragraphs (3), (4) and (5) and the date of
prior written consent. Another bill, S. 3982, H.R. 16602, was introduced on
each request, and with respect to returns furnished pursuant to paragraph
September 11, 1974 by Senator Weicker of Connecticut and Representative
(4), the name and position of the individual who made the request. "The
Litton of Missouri. During the debates on the Privacy Act, Senator Weicker
Joint Committee may make public such portions of such reports, or informa-
offered an amendment that would have achieved some of the objectives of
tion derived therefrom, as it deems advisable."
4
5
The bill would allow IRS to furnish statistical information obtained from
tax returns to federal agencies and state tax officials on request, but "no in-
ceipt of a request for a tax return from any person not engaged in an official
formation so furnished shall disclose the identity of any taxpayer or of any
tax investigation of the taxpayer, IRS must, not less than 30 days prior to
return." Also, IRS would be required to state, upon inquiry being made,
complying with the request, notify the taxpayer of the identity of the person
whether a particular person did or did not file an income tax return in a
making the request and the reason therefor if one is stated, so that the tax-
particular internal revenue district for a particular tax year.
payer will have an opportunity to apply to the District Court for a temporary
restraining order and preliminary injunction against disclosure, subject to
B. Analysis of the Bill
the procedural requirements of Rule 65 of the Federal Rules of Civil
Procedure.¹⁶
S. 199 is a significant step in the right direction. The Government's access
The bill in its present form requires IRS to furnish tax information to the
to income tax information is sharply restricted. The Government officials
Social Security Administration and the Railroad Retirement Board, as under
who are allowed access to tax returns (other than officials engaged in tax in-
present law. It is submitted that the bill should also require IRS to furnish
vestigations originating with IRS) will know that their actions are subject to
a return to another federal agency, solely for the purpose of verifying rep-
review by the respected Joint Committee on Internal Revenue Taxation.
resentations made by the taxpayer when applying for federal employment,
The President, too, can be held accountable, although it is doubtful that
insurance, scholarship aid, or some other federal benefit, if the agency informs
there is a remedy under the bill if he obtains a tax return for illegal pur-
the taxpayer-applicant in writing, at the time of the application, that (1) the
poses. The bill would certainly prevent the random examination of re-
agency may wish to verify the applicant's representations by inspecting his or
turns for questionable purposes.14 If the Justice Department or the White
her federal income tax returns, (2) the applicant is free to consent or refuse
House want access to tax information, the Attorney General or the President
to consent to such inspection, and (3) if consent is refused or withdrawn, the
must "specifically name" the taxpayers whose returns are needed.
agency may not deny the application for that reason unless it can show that
Perhaps the most beneficial feature of the bill is that the circumstances
it was not able to verify the applicant's representations by other reasonable
under which tax information may be disclosed, and the persons and agencies
means.
to which disclosure may be made, are set out in a statute-not in Executive
Finally, it should be made clear that the bill is not intended to enlarge or
Orders and administrative regulations subject to revocation or modification
restrict judicial authority to require the production of income tax returns in
at the behest of the Executive. This is consonant with the cardinal principle
litigation between private parties. That question should be left to case-by-case
that our country shall have a government of laws, not of men.
adjudication of the particular need for such evidence, its availability to the
If, however, the proposed statute is to provide effective protection and re-
parties in some other form, possible prejudice to the taxpayer, and similar
lief from violations, criminal penalties alone are plainly insufficient. Pros-
considerations.
ecutions for illegal disclosure or receipt of tax information will be at the
discretion of the Attorney General and the various United States Attorneys,
CONCLUSION
who are appointees of the President. Under federal law, the refusal of the
Executive Branch to bring a prosecution is not reviewable by the courts. A
The Privacy Act of 1974, although it provides significant protection to
federal prosecutor may even refuse to sign an indictment returned by a law-
citizens, does not unequivocally prohibit misuse of tax return information.
fully constituted grand jury.18
S. 199, the Weicker-Litton bill re-introduced in the 94th Congress, will meet
Congress recognized, when it adopted the Privacy Act in December, 1974,
this problem effectively if it is amended, inter alia, to add private enforce-
that criminal sanctions cannot assure compliance with a statute if most vio-
ment rights. It is essential that the present provisions permitting disclosure
lations are likely to be committed by Government officials. The Privacy Act
of confidential tax information be brought into conformity with constitu-
imposes criminal penalties for illegal revelation or receipt of personal infor-
tional guarantees.
mation, but it also creates a right of action in any aggrieved individual to
enforce the provisions of the Act in a federal civil suit. The federal courts
COMMITTEE ON CIVIL RIGHTS
are authorized by the Privacy Act to grant injunctive relief in appropriate
cases and to impose costs and attorneys' fees against the Government if the
MARIA L. MARCUS, Chairman
complainant should prevail. 5 U.S.C. §552a(g).
ANN THACHER ANDERSON
GEORGE M. HASEN
The bill S. 199 should be amended to include similar provisions. Any tax-
CHARLES R. BERGOFFEN
DAVID L. KATSKY
PAUL H. BLAUSTEIN
payer whose return has been illegally inspected should have a right of action
ALEXANDER A. KOLBEN
FRANKLIN S. BONEM
LARRY M. LAVINSKY
in the federal courts. Damages and injunctive relief should be available
CONSTANCE P. CARDEN
JOSEPH H. LEVIE
against (a) the agency or individual who disclosed the return or data in the
SEYMOUR CHALIF
EDITH LOWENSTEIN
return, and (b) the agency or individual who requested and received the re-
ROBERT J. EGAN
BRUCE RABB
turn or the information. A right of civil action will not be meaningful, more-
JAMES J. FISHMAN
JERRY SLATER
over, if the taxpayer is not aware that his or her return has been, or is about
BENJAMIN IRA GERTZ
WILLARD R. SPROWLS
to be, examined. For this reason, the statute should provide that upon re-
JOEL B. HARRIS
WILLIAM STERLING, JR.
FRANKLIN E. WHITE
6
7
FOOTNOTES
1 CONG. REC., Sept. 11, 1974, S16308, 16310; Jan. 17, 1975, S376.
2 The Domestic Council on Privacy, established by President Nixon, was chaired
by the Vice President.
3 CONG. REC., Sept. 11, 1974, S16308; Jan. 17, 1975, S376.
4 Id. at S16309, S377.
5 Id. at E5739.
6 See Title 26, United States Code Annotated §1603, p. 484 and 1975 Supp., p.135.
7 CONG. REC., Sept. 11, 1974, S16309; Jan. 17, 1975, S377.
8 39 Fed. Reg. 34261.
9 The New York Times, Sept. 11, 1974.
10 See Government Databanks and Privacy of Individuals (H.R. 16373 and S. 3418),
Committee on Federal Legislation, 30 Record of the Association of the Bar of the
City of New York 55 (1975).
The Administration opposed many provisions of the Privacy Act. CONG. REC.,
Nov. 21, 1974, S19833-34.
11 The co-sponsors include Senators Weicker, Humphrey, McGivern, Kennedy,
Hartke, Mondale, Symington, Tunney, Percy, Baker, Javits, Buckley, Dole, Taft
and Goldwater.
12 A modification of this proposed language would be to provide that wherever
possible, the President will be given a report answering narrowly drawn questions,
rather than the entire return. This would facilitate response to legitimate inquiries
without revelation of unnecessary confidential information.
Senator Weicker said when introducing S. 199 and its predecessor in the 93rd
Congress: " [W]hat a President does with a taxpayer's return will be known to
the Nation. Thus, his constitutional powers are not restricted, but his ability to
move in secret is." (CONG. REC., Jan. 17, 1975, S377; Sept. 11, 1974, S16307). Under
the bill in its present form, the President's request for a return will be reported to
the Joint Committee but the Committee need not make any further disclosure.
13 Senator Weicker said when introducing S. 199 that the President must merely
"certify that he needs the return in the performance of his official duties." (CONG.
REC., Jan. 17, 1975, S376).
14 The bill would bar the Department of Justice from requesting tax returns in
order to review them for evidence of violations unrelated to enforcement of the
Internal Revenue Code. The potential for abuse or disclosure of information for
political purposes, and for harassment, is accordingly reduced.
15 United States V. Cox, 342 F.2d 167, 171 (5th Cir. 1965), cert. denied, 381 U.S.
935; see also United States V. Berrigan, 482 F.2d 171, 180-181 (3d Cir. 1973).
16 The suggested amendment would relieve the Joint Committee of the burden
of determining when public disclosure of requests for tax returns is advisable. The
Committee would retain the authority to determine when the fact of a request
should be disclosed to anyone other than the taxpayer whose return has been
requested.
If the taxpayer is being considered for appointment to a federal position, the ap-
pointing authority may inquire, as noted above in Point II(A), whether the taxpayer
filed a tax return for a particular year, and need not give the taxpayer notice of
the inquiry. However, if the appointing authority requests the return itself, or in-
formation in the return, notice of the request must be given. One possible modi-
fication would be to shorten the notice period from 30 days to 15 days in such
instances.
8
Areeda
Chapman
THE WHITE HOUSE
WASHINGTON
March 4, 1975
MEMORANDUM FOR:
BILL NICHOLS
FROM:
PHIL BUCHEN
SUBJECT:
Request of Senate Permanent
Subcommittee on Investigations
for Access to Files of the
Internal Revenue Service
Attached to this memorandum is a request by the Chairman of the
Senate Permanent Subcommittee on Investigations for the issuance
of a new Executive Order providing access of the kind authorized
in E. O. 11711 of April 13, 1973. I understand that both executive
and legislative actions since E. O. 11711 was issued have tightened
restrictions on access to income tax records for the purpose of
protecting individual privacy. Your memorandum to Dudley Chapman
of March 4, 1975, also notes that, at a minimum, some changes
in the form of E. O. 11711 would be necessary to comply with the
Privacy Act of 1974. In addition, you should consult with IRS to
determine if additional restrictions consonant with E. O. 11805
would be appropriate.
Would you, therefore, please initiate, on an expedited basis, the
preparation of a new Executive Order that will (a) satisfy the
requirements of the Privacy Act of 1974, and (b) be consistent
with the spirit of Executive Order 11805.
BERALD FORD LIBRARY
NC. CHAIRMAN
CHAN H. PF RCY, ILL.
SUBCOMMITTEE:
WASH.
JACOB K. JAVITS. N.Y.
MAINE
ARD J. GURNEY, FLA.
HENRY M. JACKSON, WASH. CHARMAN
disc. CONN.
WILLIAM V. RQTH, JR., DEL.
JOHN L. MCCLELLAN ARK.
BILL BROCK, TENN.
A PUBICOFF,
CHARLES H. PERCY, ILL.
MON
---: E. ALLEN,
JAMES a. ALLEN. ALA.
JACOB x. IVITS, N.Y.
TLES, FLA.
WALTER D. HODDLESTON, KY,
EDWARD J. GURNEY. FLA.
NUNN, GA.
SAM NUNN, GA.
WILLIAM V. ROTH, JR., DEL.
WALTER D. HUDDLESTON, KY.
HOWARD J. FELDMAN
ROBERT BLAND WITH, JR.
United States Senate
CHIEF COUNSEL
CHIEF COUNS IL 500 STAFF DIRECTOR
STUART M. STATLER
CHIEF COUNSEL TO THE MINORITY
COMMITTEE ON
GOVERNMENT operations
SENATE PERMANENT SUBCOMMITTEE
ON INVESTIGATIONS
(PURSUANT TO SEC. i, S. RES. 233, NO CONGRESS)
WASHINGTON, D.C. 20510
February 4, 1075
My dear Mr. President:
The Senate Permanent Subcommittee on Investigations of the Com-
mittee on Government Operations has been established for the purpose
NE
of making investigations into and studying matters affecting the
efficiency and economy of the executive departments of the Government.
Subcommittee is of the opinion that it would be most helpful to have
In order to fulfill adequately its investigative responsibilities, the
access to Federal income tax returns and other related documents in
the files of the Internal Revenue Service. During the 93rd Congress this
Subcommittee had access to these records under the authority contained
in Executive Order 11711, signed April 13, 1973.
The Subcommittee, therefore, respectfully requests that you
issue an appropriate Executive Order pursuant to the provisions cf the
Internal Revenue Act, ordering that any income, excess profits, capital
stock, estate or gift tax returns and related documents for the years
1950 to 1975, inclusive, shall be open to inspection by the Senate
Committee on Government Operations or the duly authorized Subcommittee
thereof, namely, the Senate Permanent Subcommittee on Investigations
during the 94th Congress. This Subcommittee has been established pur-
Standing Rules of the Senate.
suant to and operates under paragraph (1) (j) (2) (B) of Rule XXV of the
I would appreciate your favorable consideration of this request
this Subcommittee.
soon in order to avoid delay in certain important and pending work of
Sincerely yours,
Abraham Ribicoff his
Chairman
LIBRARY GERALD ? FORD
The President
of the United States
DOMESTIC COUNCIL COMMITTEE ON THE RIGHT OF PRIVACY
WASHINGTON, D.C. 20504
March 4, 1975
MEMORANDUM FOR:
PHIL BUCHEN
FROM:
DOUG METZ
Dum.
SUBJECT:
Treasury Taxpayer Privacy
Legislation
The current situation in respect to the above-referenced legislation
is reflected in my attached memorandum to Dick Albrecht, Treasury.
We are coordinating with OMB, which shares our view on the issues
needing resolution before presenting final recommendations to
you -- hopefully by the end of next week.
DWM/fme
Attachment
FORD
LIBRARY
DOMESTIC COUNCIL COMMITTEE ON THE RIGHT OF PRIVACY
WASHINGTON, D.C. 20504
March 3, 1975
MEMORANDUM FOR:
RICHARD R. ALBRECHT
FROM:
DOUGLAS W. METZ
Dam
SUBJECT:
Treasury Proposed Legislation on
Privacy of Tax Returns
Pursuant to our telephone conversation, I am noting below some questions
we have concerning the tax return privacy bill currently in the OMB
clearance process.
Our basic concern is the adequacy of the justification for an approach which
supersedes the Privacy Act of 1974; thus opening the door for other agencies
to seek similar legislation. The Treasury bill appears to be inconsistent
with P.L. 93-579 in the following respects:
(1)
It treats all of Treasury as a single agency so that any
officer or employee of the Department could have "need
to know" access to tax returns and tax return information;
(2)
It has no public notice requirement and no requirement
to inform taxpayers of the uses that may be made of the
information they are required to provide;
(3)
It does not require an accounting of disclosures made
(a) to anyone within the Treasury Department, (b) to the
Justice Department for tax administration purposes,
(c) at the discretion of the Secretary (i. e., to recipients
other than those expressly authorized in the bill), (d) for
non-tax purposes, and (e) in responses to requests for
taxpayer identification information.
(4)
It, in effect, forbids taxpayer access to the limited
accounting that is required to be made of disclosures
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of return and return information;
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(5)
It permits the withholding of return information from the
taxpayer to whom it pertains at the discretion of the
Secretary or his delegate, rather than requiring the
Secretary to go through an exemption by rule-making
procedure like that provided in subsection (k) (2) of
P.L. 93-579;
(6)
It says that determinations to withhold return information
shall not be subject to judicial review;
(7)
It seeks to regulate the behavior of contractors through
regulations whose content shall be decided at the dis-
cretion of the Secretary;
(8)
It establishes the IRS as a whereabouts "locator" service
for Federal and State agencies;
(9)
It would exempt IRS and other units of the Treasury
Department from the requirement in P.L. 93-579 to
report to OMB, the Congress, and the Privacy Commission
on new systems and changes in systems that contain tax
returns and return information;
(10)
It would naysay a recent court decision on public access
under the FoIA to so-called "private tax rulings"; and
(11)
Its provision allowing disclosures to correct misstatements
of fact in the press has no readily recognized precedent.
As agreed, we should meet after you have reacted to the above points. In
summary, our current thinking leans toward a legislative proposal governing
third-party access, i.e., leaving the individual access, correction, and
challenge provisions of P.L. 93-579 intact but tightening the "conditions
of disclosure" as they would apply to IRS records on individuals.
cc: Robert P. Bedell
CC: Mr. Buchen
DOMESTIC COUNCIL COMMITTEE ON THE RIGHT OF PRIVACY
WASHINGTON, D.C. 20504
April 17, 1975
MEMORANDUM FOR:
DICK ALBRECHT
FROM:
DOUG METZ Dum
SUBJECT:
Treasury Taxpayer Privacy Legislation
At today's meeting of Treasury and IRS officials with
representatives of the Domestic Council, OMB, Vice
President and Privacy Committee, it was decided that
Treasury should develop several issues and options
papers as vehicles for early resolution of questions
concerning needed additional confidentiality safeguards
for tax returns and tax information to be implemented
by way of either administrative or legislative action.
Among the questions identified as candidates for individual
papers were:
(1)
The utilization of the Privacy Act for
collateral attacks on determinations of
individual tax liability.
(2)
The appropriateness of having Congress alone
determine the conditions of 3rd party access
to tax returns and tax return information.
(3)
The appropriateness of circumscribing tax-
payer access to IRS records pertaining to
him in a way that narrows the provisions
of the Privacy Act, the IRS Code and existing
Executive orders and regulations.
FOHDS
(4)
The appropriateness of single or separate
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standards of confidentiality protection for
individual and non-individual tax returns and
tax return information.
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(5)
The adequacy of the Privacy Act's "routine use"
exception as a vehicle for providing third-
party access to income tax returns and
return information.
(6)
The adequacy of the Privacy Act's criminal
penalties and civil sanctions on improper
disclosures by agencies which obtain individ-
ual tax returns and tax return information
from IRS.
(7)
Any specific limitations deemed desirable
by Treasury on current access by third
parties to tax returns and tax return
information.
This list should be supplemented by you to assure that all
issues of concern to the Treasury and IRS are raised and
evaluated.
We can talk further about the list on Monday at 5:00 pm in
your office.
As discussed at the meeting we should target receipt of the
issue papers by this office by C. o.b. May 1.
DWM/crs
FORD
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DEPARTMENT OF COMMERCE
GENERAL COUNSEL OF THE
DEPARTMENT OF COMMERCE
UNITED STATES OF AMERICA
Washington, D.C. 20230
May 12, 1975
Honorable Calvin J. Collier
General Counsel
Office of Management and Budget
Washington, D. C. 20503
Dear Cal:
As you recall, last fall Senator Weicker and others were vigorously
pursuing an amendment to pending "privacy" legislation that would, for
all practical purposes, have limited access to and use of Federal income
tax data to the IRS alone. At President Ford's request, Commerce
prepared a full white paper on the historic and essential use of selected
tax information in the census and economic analysis work of SESA, for
use in discussions with the Congress.
Notwithstanding the President's concern and our efforts, Senator Weicker
prevailed in the form of an undebated, last-minute floor amendment of
the privacy legislation which would have cut off this essential and ancillary
use of tax information.
While the amendment was deleted from the final enactment, new bills,
S. 199, H.R. 616 and duplicate House bills, which seek again to cut off
even legitimate statistical use of tax information, now enjoy a total of
247 sponsors. As one approach to meeting this threat, Secretary Morton
has sent to these sponsors an abbreviated version of the white paper,
per enclosure.
A further essential step is early agreement upon and introduction of
Treasury's omnibus measure on use of tax information which is now
pending in OMB. Commissioner Alexander recently testified against the
"meat-axe" approach of S. 199 and the companion House bills, urging,
instead, the Treasury bill as the right place to start. Assistant Secretary
for Economic Affairs Jim Pate, together with Jim Ravlin of my office,
FORD
GERALD
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REVOLUTION
AMERICAN
BICENTENNIAL
1776-1976
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are available at any time to assist in resolving whatever differ-
ences may be holding up transmittal of that important bill to the Hill.
I understand that Phil Buchen is also interested in moving that legis-
lation along.
Sincerely,
KarlE. Bakke
Karl E. Bakke
General Counsel
Enclosure
Copy to:
Philip W. Buchen, Executive Director, Privacy Committee
Richard C. Albrecht, General Counsel, Department of Treasury
Meade Whitaker, General Counsel, Internal Revenue Service
Harold R. Tyler, Jr., Deputy Attorney General
Douglas Metz, Deputy Executive Director, Privacy Committee
GERNIO
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USE OF TAX DATA IN THE STRUCTURING OF BASIC ECONOMIC TOOLS
The Job of the Bureaus of Census and Economic Analysis
The Bureaus of the Census and Economic Analysis, comprising the
Social and Economic Statistical Administration of the Department of
Commerce, necessarily use selected tax return information, principally
corporate, in structuring such basic and complex economic tools as the
- Quinquennial Economic and Agricultural Censuses,
- the critical National Economic Accounts, including the "GNP"
and Balance-of-Payments Accounts and related key economic
indices,
- the several essential Industrial, Wholesale and Trade Censuses,
- the Current Economic Indicators in both the industrial and
distributive areas, and
- revenue sharing data which now control the distribution of over
$5 billion in Federal funds annually.
This highly confidential and strictly statistical ancillary use of tax infor-
mation dates back over a quarter of a century. It is subject to tight
statutory controls (13 U.S.C. 9 and 15 U.S.C. 176(a)) geared expressly
to these strictly statistical and economic analyses mandated by Congress.
Neither Bureau is involved in direct determinations about either individual
people or individual businesses. Neither has fiscal, regulatory, promo-
tional, or revenue authority. This emphasis upon, and restriction to,
statistical and analytical function is unique in the Government; and the
25-year long record of confidential use of tax information is spotless.
Together, Census and BEA are the Government's centralized statistical
source. They serve the Joint Economic Committee--the Joint Committee
on Internal Revenue Taxation--the Senate Committees on Banking, Housing,
and Urban Affairs; Finance; Foreign Relations; and Public Works--the
House Committees on Ways and Means, International Relations, Labor and
Education, and Public Works--the President--the Council of Economic
Advisers--the Federal Reserve Board--the Domestic Council--and the
Treasury, Labor, and other Departments--as well as industry, agriculture,
and labor. There is no broader constituency.
The sole mandate and mission of Census/BEA is to produce statistical
tools of ever finer precision, on ever accelerated schedules, reflecting
critical movements in our ever more complex economy. In meeting this
requirement, two additional Congressional conditions are assiduously
observed--also largely through the limited use of tax information- -namel
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- The reporting burden on all respondents is to be minimized by
cutting out needless duplication of Governmental information
solicitation--particularly in the small business area.
- The spiralling costs and wide errors which characterize the
direct canvass of information in many sectors of the economy
are also to cut to the minimum.
The need for both precision and timeliness was never greater than in
today's troubled and contradictory domestic economy, amidst wide
and deep international change. Yet both quality and worth are now
seriously threatened by legislative proposals which would cut off the
essential nucleus of tax information on which these economic tools now
absolutely depend.
Denial of Tax Information Will Deteriorate Economic Intelligence
A few deplorable insensitivities and abuses in the use of tax return infor-
mation have led to such stringent, far-reaching legislative proposals as
S. 199 and H.R. 616. While the Census/BEA record is inviolate, these
backlash measures would nonetheless incisively cut off the highly confi-
dential and selective use of tax information in the structuring of these
basic economic tools. They would in today's economic adversity--
turn the calendar back to the much cruder tools of years past.
Yet there has been no single instance--over decades - in which these
solely statistical uses of tax data violated the privacy of any individual
or the confidentiality of any tax return information. With no abuse to
remedy, the wide sweep of these measures, as applied to Census/BEA,
would nonetheless
- seriously deteriorate the quality of both the Economic and
Agricultural Censuses,
- materially impair the reliability of such critical economic tools
as the "GNP" and Balance of Payments Accounts,
- significantly delay the availability of essential economic data,
- force discontinuation of some of the Current Economic Indicators,
- necessitate devising new revenue sharing mechanisms,
- render "before" and "after" economic data non-comparable,
destroying vital trend information,
- substantially increase the cost of inferior statistical and economic
products, and
- impose burdensome multiplicity of reporting on the full spectrum
of the business community.
GENAL
LIGRARY
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The heart of the Federal statistical system is truly at stake--and for no
reason at all. All identifiable information which is provided to Census/BEA,
the government's economic toolmaker, whether through direct canvass
or from such other sources as IRS and the Social Security Administration,
is protected by strict and specific legal safeguards against either improper
use or disclosure. They date back to 1879--long predating either the income
tax or Social Security. These special statutory safeguards are unique.
Both the long-standing record of fidelity and quality of statistics and the
imperative need for continuing access to tax return information for statis-
tical purposes were affirmed by the Congress only weeks ago in the trans-
fer exemption included in enacting the Privacy Act of 1974. It expressly
and specifically permits the transfer of information about individuals
to Census for statistical purposes. The recognition of, and provision for,
this need is unique.
Census is authorized by law to solicit directly the same information now
derived from tax returns. Years ago Census used direct canvass methods.
But that duplication today would be costly, less accurate, and needlessly
burdensome on respondents, particularly upon small business. Cutting off
the IRS source would, however, abrogate neither the need for, nor the use
of, the information in question.
y
The narrow statistical and analytical role of Census/BEA is unique. The
service role to the entire Government--all levels--is unique. The special
long-standing safeguards for data obtained either directly or from other
agencies are unique, as is the continuous record of unbroken trust. The
new Privacy Act exception is unique. None of the privacy, political, or
proliferation concerns which gave rise to the pending legislative proposals
is involved. The case is sui generis.
Integrated Analytical Responsibilities Cannot Be Splintered
S. 199, H.R. 6167, and related bills incorrectly assume that the IRS could
meet the requirements of Census and BEA simply by providing tabulations
or aggregations of data. That simply would not be a workable substitute
for direct access by Census/BEA to selected identifiable tax information.
The use of tax data is an organic part of a whole mix of information (which
includes confidential Census data that, by law, are not available to IRS),
of specialized technical and analytical skills, and of resources fully dedi-
cated specifically to these statistical and analytical requirements. Only
serious deterioration of these basic statistical and economic products could
result from endeavoring to fragmentize what has always been an integrated
responsibility.
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The Economic and Agricultural Censuses
Tax lists accurately define the population for the Economic and Agricultural
Censuses. No other source can approach either their accuracy or the time-
liness for this purpose. Only these lists accurately reflect business and
agricultural entries and quits. They enable Census readily and scientifically
to select and apply efficient sampling procedures. They permit automatic
elimination of millions of businesses thus determined not to be within the
scope of a particular census. They eliminate need for cumbersome enumera-
tion by direct canvass. The Agricultural Census, for example, is now handled,
on the basis of tax lists and other information, entirely by mail.
Census needs neither hard copy tax returns nor reproductions of returns on
tape or disc. Subject to an exception to be noted, Census does not require
figures on corporate net income, tax liability, costs, investment, deprecia-
tion, borrowing, net worth, and so on. Census is advised by IRS simply of
the business type and size codes, gross receipts, dollar payroll and number
of employees. This limited information enables Census to extrapolate from
its own samplings to the universe. This is not tax information, and there
are no voices from either business or agriculture which object to the effici-
ency of this integration of economic data.
Data Essential to Structuring the "GNP"
Census needs more detailed financial data on the 100, 000 or so corporations
covered by the IRS publication "Statistics of Income. 11 Again, this data does
not and cannot involve Census access to, or probing of, taxpayer data of
its own selection. The reason Census needs this selective data is somewhat
complex, but nonetheless very important. IRS data is based on a "legal
entity" or taxpayer concept. Thus, a conglomerate in many lines of business
with many plants and outlets is one taxpayer to IRS. But Census, for many
reasons, reports on an "establishment"" basis--and establishment data and
data refined as to type of business are essential to "GNP" and other basic
economic analyses. Again, a mix of confidential data is involved.
The availability of identifiable data behind the "Statistics of Income" publi-
cation also enables Census to create a critical "link" which permits trans-
lation by economists between "legal entity" and "establishment" data. This
is not an esoteric exercise; on the contrary, it is indispensable to the creation
and use of basic economic indicators.
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Bureau of Economic Analysis
BEA's professional economists and statisticians draw on many sources
for essential information for the National Economic Accounts, but their
primary sources are Census and, in a limited but important way, IRS.
BEA requires and has access to full tax information on less than 1, 000
corporations. There is no other way the "GNP" and other critical accounts
could be accurately structured.
These data are also needed by BEA for necessary adjustments when sig-
nificant changes in tax accounting practice and tax law interpretation distort
the reflection of underlying economic facts and impair comparability of
data over time. Access to these data enables BEA to construct extrapo-
lators to move rapidly from sample to universe without duplicative reporting
burden on the corporate community. Both Census and tax data are also
essential to fixing critical benchmarks for economic analysis work. Limited
IRS information is also essential in the conduct of statutorily mandated
surveys of U.S. foreign investment and foreign investment in the U.S.
Some of this very basic product would come to a standstill if BEA were to
be deprived of access to corporate tax data, and other elements of the
product would be seriously degraded.
Use of Tax Information about Individuals
Finally, Census (but not BEA) uses personal income tax data in three ways.
First, minute samplings of individual returns are used in evaluation of
Decennial Censuses and various statistical surveys. To effect this essen-
tial evaluation, the data necessarily include Social Security numbers and
addresses, but not taxpayer names. Second, the same low level of sample
is used for Current Population Surveys, which include per capita income
data and serve periodically to update the Decennial Census. Being only
partial data, as to a very small number of taxpayers, selected by random
methods, the information is not amenable to political or other abuse.
Given the usefulness of, and need for, both functions, either this miniscule
access to partial tax data on individuals must be available to Census or
the law must be changed to permit full disclosure of confidential Census
data to IRS. IRS would then have to be staffed to handle these Census
functions.
The third use of individual tax data is made in preparing and updating
?
revenue-sharing bases keyed to population, per capita income by areas,
and other fixed factors. While this statutory function necessarily covers
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the full spectrum of the population (hence all individual taxpayers, rather
than a sample), this use involves only selected information. Use of Social
Security numbers is necessary to determine migration patterns and volume.
The resulting revenue-sharing data are, of course, important to and used
by Federal, State and local governments. Perfection of the techniques
involved is evolutionary, and again a meld of confidential information is
involved.
Conclusion
The Department of Commerce agrees unqualifiedly that misuse of tax infor-
mation, personal or corporate, is reprehensible and that any such invasions
of privacy and violations of trust should be subject to severe statutory sanc-
tions.
The Privacy Act is a long step forward in this direction, and the strict
administrative safeguards contained in Executive Order 11805 pertaining to
Presidential access is open to codification if Congress wishes.
Congress long since put a strong statutory band around all confidential infor-
mation used by Census and BEA, regardless of source. There has not been
a single instance of abuse by either Census or BEA, and there is abundant
evidence that the data compiled by these agencies are indispensable and that
the accuracy and completeness of such data are of direct concern across the
entire spectrum of Federal, State, and local government economic analysis,
planning, and action.
Finally, there is simply no way to bifurcate the highly specialized and tech-
nical economic analyses of Census and BEA. Seeking surgically to sever
parts of integrated procedures and to graft them onto the IRS, the Social
Security Administration, or any other agency will not work. Nor is there
either abuse or complaint to be addressed.
This case is not made on account of particular bureaus--rather, it is an
urgent pleading on behalf of the Nation's economy.
PORD
The United States Department of Commerce
May 2, 1975
LISA
June 3, 1975
To:
George Trubow
From: Phil Buchen
FYI
(Hi from Eva)
May 29, 1975
Dear Tom:
Thank you for your May 20 letter to the President
expressing your concern over provisions of Exe-
cutive Order 11859, providing for the inspection
of income. estate, and gift tax returns by the
Senate Committee on Government Operations.
Please be assured that your letter will be called
to the attention of the President and the appropriate
members of the staff. You will hear further as soon
as possible.
With kindest regards,
Sincerely,
Vernon C, Leen
Deputy Assistant
to the President
The Honorable Themas N. Eindness
House of Representatives
Washington, D.C. 20515
bee: w/incoming to Fred Webber, Dept. of the Treasury, for DRAFT REPLY
bee: w/incoming to Philip Buchen - - FYI 2
VCL:EF:VO:kt
FORD is 938879 LIBRARY
522
THOMAS N. KINDNESS
8TH DISTRICT, OHIO
WASHINGTON OFFICE:
BUILDING 1011859
COMMITTEES,
JUDICIARY
SMALL BUSINESS
1440 LONGWORTH HOUSE OFFICE
Congress of the United States
DISTRICT OFFICES:
WASHINGTON, D.C. 20515
801 HIGH STREET
(202) 225-6205
HAMILTON, OHIO 45011
house of Representatives
(513) 895-5656
JAMES T. CHRISTY
234 EAST MAIN STREET
ADMINISTRATIVE ASSISTANT
Washington, D.C. 20515
GREEWILLE. OHIO 45331
ROGER W. GILLESPIE
(513) 548-8817
DISTRICT ASSISTANT
May 20, 1975
The Honorable Gerald R. Ford
President
The United States of America
Washington, D.C.
20500
Dear Mr. President:
ME
I am greatly concerned that criticism will be justly aimed
at Executive Order 11859 of May 7, 1975, published in the Federal
Register, Volume 40, No. 91, at page 20265, on May 9, 1975.
As a citizen, I am offended by the concept of such a broad
and sweeping Executive Order dealing with private matters. As
a Representative of over 460,000 constituents in the Eighth Con-
gressional District of Ohio, I feel that a protest must be stated.
The scope of the Executive Order in question seems very
broad and inclusive, in that it covers all income, estate and
gift tax returns for a twenty year period of time, and the pur-
poses to be served by this sweeping authority are not clearly
stated in the Executive Order. In fact, upon inquiry, I have
discovered that the purposes of this disclosure that are sought
to be served differ quite sharply from the statement contained
in the Executive Order.
Although the Executive Order is based upon the authority
contained in Section 6103 (a) of the Internal Revenue Code of
1954, it would seem proper that it should be limited by provi-
sions similar to those contained in Section 6103 (d), which
would require a resolution by the Senate authorizing such a
study by the Senate Committee on Government Operations.
Under this Executive Order a Subcommittee of the Senate
could furnish a written statement specifying the purpose of the
inspection, and all that would then be required is that the Com-
missioner of Internal Revenue establishes that the inspection
relates to a matter within the jurisdiction of that Subcommittee.
is
ruro
GERALD
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.page 2
May 20, 1975
The alternative is that the Commissioner has received the written
consent of the taxpayer; and I would submit that this alternative
would seldom be employed. I believe that this alternative should
be employed in every case. That is, the consent of the taxpayer
should be obtained in every single incident of the use of the
authority in Executive Order 11859.
Please reconsider the content of Executive Order 11859.
I believe, 0 along with many others, that the American public is
entitled to a far greater degree of protection of its privacy
that is provided for in Executive Order 11859. Income tax returns,
as well as estate and gift tax returns, are submitted by U.S.
citizens with the understanding that the returns and their
contents are not to be disclosed except in certain ways expressly
provided by law. Regrettably, the ways provided by law may not
be adequate to properly protect their rights and interests.
I stand ready to be of such service as you may deem appro-
priate in this matter.
Respectfully yours,
Jom Kindness
THOMAS N. KINDNESS
Member of Congress
TNK/ns
FORD is LIBRARY
September 15, 1975
TO:
Mr. David Martin
Research Director
Administrative Conference
of the United States
Suite 500
2120 L Street, N. W.
Washington, D. C. 20037
FROM: Eva Daughtrey
Sorry to be so long in getting this to you.
Say hello to Carole for me, please!
E.O. 11805
7
9/20/74
FORD is 076870 LIBRARY
FOR IMMEDIATE RELEASE
SEPTEMBER 20, 1974
Office of the White House Press Secretary
THE WHITE HOUSE
FACT SHEET
On Executive order entitled "Inspection by President and
Certain Designated Employees of the White House Office of
Tax Returns Made Under the Internal Revenue Code of 1954"
An Executive order limiting White House access to tax
returns was issued by the President today. The order
was Constitution. issued under authority vested in him by the
In the past, regulations issued by the Treasury Department
and approved by the President pursuant to Section 6103 of
the Internal Revenue Code have placed strict limitations
upon agency and public access to tax return information.
However, there have been no explicit legal restrictions
upon White House access.
The Executive order sets forth strict and legally binding
procedures by which the President's access will be governed
as well as access by members of his staff. Under this
Order, the President must personally specify in writing
the returns desired and must personally designate in
writing the member of his staff who is authorized to see
the returns on his behalf.
On September 11, 1974, the Secretary of the Treasury
submitted to Congress proposed legislation to limit
generally access to tax returns and related information.
The Order issued today complements this proposal, but
is effective immediately.
#####
FOR IMMEDIATE RELEASE
September 20, 1974
Office of the White House Press Secretary
THE WHITE HOUSE
EXECUTIVE ORDER
INSPECTION BY PRESIDENT AND CERTAIN DESIGNATED
EMPLOYEES OF THE WHITE HOUSE OFFICE OF TAX
RETURNS MADE UNDER THE
INTERNAL REVENUE CODE OF 1954
By virtue of the authority vested in me as President
of the United States, and in the interest of protecting
the right of taxpayers to privacy and confidentiality
regarding their tax affairs consistent with proper internal
management of the Government, and in the further interest
of maintaining the integrity of the self-assessment system
of Federal taxation, it is hereby ordered that any return,
as defined in Section 301.6103(a) -1 of the Treasury
Regulations on Procedure and Administration (26 CFR Part 301)
as amended from time to time, made by a taxpayer in respect
of any tax described in Section 301.6103 (a)-1(a) (2) of such
regulations shall be delivered to or open to inspection by
the President only upon written request signed by the
President personally.
Any such request for delivery or inspection shall be
addressed to the Secretary of the Treasury or his delegate
and shall state: (i) the name and address of the taxpayer
whose return is to be inspected, (11) the kind of return
or returns which are to be inspected, and (111) the taxable
period or periods covered by such return or returns.
In any such request for delivery or inspection, the
President may designate by name an employee or employees
of the White House Office who are authorized on behalf of the
President to receive any such return or make such inspection,
provided that the President will not so designate an employee
unless such employee is the holder of a Presidential
commission whose annual rate of basic pay equals or
exceeds the annual rate of basic pay prescribed by
5 U.S.C. 5316. No disclosure of such return, or any
data contained therein or derived therefrom shall be
made by such employee except to the President, without
the written direction of the President.
All persons obtaining access to such return, or any
data contained therein or derived therefrom shall in all
respects be subject to the provisions of 26 U.S.C. 6103,
as amended.
GERALD R. FORD
THE WHITE HOUSE,
September 20, 1974
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