(Photo by Al Drago/Bloomberg via Getty Images)
On Monday, President Joe Biden’s son Hunter Biden filed a federal lawsuit against the IRS. This comes soon after being indicted on gun charges after a possible plea deal fell apart.
The complaint alleges that IRS agents Gary Shapley and Joseph Ziegler and their attorneys illegally disclosed the younger Biden’s private tax information to the public between April and August 2023.
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Shapley’s legal team issued a statement saying that they never released any confidential taxpayer information except through whistleblower disclosures authorized by statute. They also stated that when Congress released Shapley’s previously confidential testimony to the public, he had a right to discuss that public information.
On May 26, 2023, the House Ways and Means Committee secretly interviewed Shapley. He told the committee that he was part of a special investigation of Hunter Biden who was code named “Sportsman.” He testified that Hunter Biden’s case was handled differently than any investigation he handled during his 14-year career with the IRS. Actions included slow-walking investigative steps, not allowing enforcement actions to be executed, limiting investigators’ line of questioning for witnesses, misleading investigators on charging authority, and delaying any and all actions months before elections.
At the beginning of the hearing, the committee counsel advised Shapley that the information discussed is confidential. He told Shapley that Section 7213 of the Internal Revenue Code makes it unlawful to make unauthorized disclosures of tax returns and return information. The committee counsel advised Shapley not to speak about what was discussed to individuals not designated to receive such information.
On June 22, 2023, the Ways and Means Committee released the transcript of the confidential hearing to the public on its website.
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Hunter Biden’s complaint stated that Shapley violated confidentiality by talking to the press on multiple occasions. I was able to verify one interview Shapley did with CBS News on May 24, 2023, which was before the hearing transcript was released to the public.
Section 6103(a) of the Internal Revenue Code generally prohibits IRS employees from disclosing a taxpayers’s tax return or return information to the public unless an exception applies. “Return information” means a taxpayer’s identity, financial information such as income, deductions, tax liabilities and payments, and whether the taxpayer’s return will be audited or subject to other investigations.
So what is the whistleblower law they are referring to? According to the IRS website, Section 6103(h)(4) authorizes the disclosure of tax returns and return information in administrative or judicial proceedings pertaining to whistleblowers. Also, Section 6013(f)(5) (Disclosure By Whistleblower) states that any person who has access to a tax return or return information can disclose it to the House Ways and Means Committee if the information may relate to possible misconduct, maladministration, or taxpayer abuse.
Generally, the Ways and Means Committee can release tax information to the public. A few years ago, the committee released former President Donald Trump’s tax returns to the public.
The judge will have to decide whether Shapley’s, Ziegler’s, and their lawyers’ public statements on the Hunter Biden investigation, particularly the ones made before the hearing transcript was made public, violated tax return confidentiality laws.
Hunter Biden’s complaint demands damages, costs and attorney’s fees, a declaration that the IRS unlawfully disclosed his tax information, and ordering the IRS to implement a data security plan.
The IRS has issued no comment on the litigation. Probably because doing so could also violate confidentiality.
Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at [email protected]. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.