The House Ways and Means Committee granted two attorneys representing the Internal Revenue Service whistleblower authority to inspect Hunter Biden’s tax returns and related information. This development promises to accelerate the unraveling of the Justice Department’s Biden family protection racket.
Understanding why requires a fuller understanding of IRS privacy law, so here’s your “lawsplainer.”
A Look at the Law
Section 6103 of the Internal Revenue Code provides that federal tax returns and “return information” “shall be confidential” and makes it illegal for an IRS “officer or employee” to disclose such tax information. In fact, many view Section 6103’s confidentiality mandate as even precluding a government employee from revealing the existence of an investigation into a taxpayer. However, because in December of 2020, Hunter Biden publicly acknowledged the existence of an investigation into his tax matters after federal prosecutors subpoenaed his business records, the public has long known of the investigation into the president’s son.
Several exceptions to the confidentiality provisions of Section 6103 exist, though. Relevant here is the statutory exception authorizing whistleblowers to disclose confidential information to the House Committee on Ways and Means or the Senate Committee on Finance. That exception guarantees whistleblower protection to government agents who reveal confidential information concerning tax issues to either of those committees.
But because the Section 6103 exception does not also allow a whistleblower the right to disclose the information to his attorney, the whistleblower would be forced to face the committees without the benefit of legal counsel. Further, because Section 6103 defines “return information” broadly to include the nature and sources of income, data collected by the IRS, and “any background file document” or “written determination” prepared by the IRS, the whistleblower also could not legally discuss with his attorney many aspects of an investigation to prepare to testify before the congressional committees.
This backdrop explains the purpose of the letter Mark Lytle, one of the lawyers representing the IRS whistleblower, sent to the chairs and ranking members of several congressional committees. In that letter, Lytle conveyed his client’s offer to share information establishing that politics improperly infected the criminal investigation of a “high-profile, controversial subject” — again, widely believed to be Hunter Biden because of the Biden son’s confirmation in 2020 of an ongoing federal investigation into his tax matters.
The letter stressed that because of tax privacy laws, the IRS whistleblower, “out of an abundance of caution,” had “refrained from sharing certain information” with Lytle while seeking his legal advice. Lytle then explained that lacking a full understanding of the situation made it “challenging” for him “to make fully informed judgments about how to best proceed.”
Lytle closed his letter by asking the committees to work with him so his client could share the “information with Congress legally and with the fully informed advice of counsel,” adding: “With the appropriate legal protections and in the appropriate setting, I would be happy to meet with you and provide a more detailed proffer of the testimony my client could provide to Congress.”
Again, to grasp the significance of both this language and last week’s development, it is imperative to understand Section 6103.
The Workaround
As explained above, while Section 6103 authorized the whistleblower to share confidential taxpayer information with two specific committees, he or she could not give that information to Lytle or any other attorney. Section 6103(f)(4), however, provides an important workaround by allowing the chairman of the Ways and Means Committee and Finance Committee to “designate or appoint” an “agent” to inspect the tax returns and return information.
In other words, the committees could appoint the whistleblower’s attorneys as their “agents,” which would allow the whistleblower to discuss freely and fully the tax information with his lawyers. In turn, the whistleblower’s lawyers could brief the committees on those details, albeit in a closed session, which is precisely what Lytle suggested when he wrote that “with the appropriate legal protections and in the appropriate setting,” he would “provide a more detailed proffer of the testimony my client could provide to Congress.”
Thus, that last week the Ways and Means Committee authorized two of the whistleblower’s attorneys to inspect the tax material is huge: It sidestepped a protracted battle over the circumstances under which the whistleblower would testify. It also ensures the House committee can learn, on an expedited basis, the whistleblower’s accusations.
Given that the Republican-controlled House granted the whistleblower’s lawyers authority to access and discuss the tax returns and tax information, authorization by the Democrat-controlled Senate Finance Committee would not be needed. It seems likely, however, that the Finance Committee followed suit to ensure a role in the investigation. Senate Finance Committee Chair Ron Wyden, D-Ore., has yet to state whether he granted the whistleblower’s attorneys Section 6103 authority.
What’s Next?
No timetable has been announced for the next steps, but a source familiar with the investigation indicated a proffer by the whistleblower’s attorneys to the House Ways and Means Committee could occur as early as this week, with the whistleblower testifying soon after. The closed-door testimony could then become public, either because the House Committee concludes it is not confidential information under Section 6103 or because it votes to release it publicly, as allowed by statute.
Likely sensing the inevitable public airing of the purported political protection racket that allegedly saw two Biden-appointed U.S. attorneys declining to seek a grand jury indictment against the president’s son, lawyers for Hunter Biden reportedly met with federal prosecutors last Wednesday. Whether they were on a fishing expedition or attempting to hurriedly negotiate a plea agreement to short-circuit the scandal is unclear, but cutting a deal is unlikely to cap the fallout for two reasons.
First, it seems likely the statute of limitations will have run on some of the tax claims, in which case the congressional oversight committees will probably seek to understand whether politics resulted in lost opportunities to prosecute potentially more serious crimes. Second, the whistleblower’s claims reach beyond the tax case against Hunter Biden.
Specifically, Lytle’s letter states the whistleblower has detailed “examples of preferential treatment and politics improperly infecting decisions and protocols that would normally be followed by career law enforcement professionals in similar circumstances if the subject were not politically connected.” “People directly familiar with the case” provided more texture to this accusation, stating that “specific DOJ employees placed strictures on questions, witnesses and tactics investigators may be allowed to pursue that could impact President Biden.” The unnamed sources also stressed the improper politicization of the case came from the Justice Department and FBI headquarters.
The whistleblower’s accusations thus extend far beyond the tax case against Hunter Biden. Although unraveling the scandal will start there, it won’t end there. With the whistleblower’s attorneys now able to coordinate directly with the House Ways and Means Committee, the timeframe for exposing those complicit in covering for the Bidens just shrunk substantially.
Margot Cleveland is The Federalist’s senior legal correspondent. She is also a contributor to National Review Online, the Washington Examiner, Aleteia, and Townhall.com, and has been published in the Wall Street Journal and USA Today. Cleveland is a lawyer and a graduate of the Notre Dame Law School, where she earned the Hoynes Prize—the law school’s highest honor. She later served for nearly 25 years as a permanent law clerk for a federal appellate judge on the Seventh Circuit Court of Appeals. Cleveland is a former full-time university faculty member and now teaches as an adjunct from time to time. As a stay-at-home homeschooling mom of a young son with cystic fibrosis, Cleveland frequently writes on cultural issues related to parenting and special-needs children. Cleveland is on Twitter at @ProfMJCleveland. The views expressed here are those of Cleveland in her private capacity.
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