What Is the Presidential Tax Transparency Act?

Proposed legislation, known as the Presidential Tax Transparency Act, is designed to formalize a long-standing tradition of financial disclosure by the nation’s highest elected officials. For decades, presidents and candidates often voluntarily released their tax returns to the public, but this practice has been a norm rather than a legal mandate. The proposed bills aim to codify this tradition into law, establishing a clear requirement for the disclosure of tax information.

The primary purpose is to promote transparency, allowing the public and Congress to review the financial activities, potential conflicts of interest, and tax compliance of these leaders. By making tax return information accessible, the proposals aim to ensure that those in the highest positions of power are held accountable for their financial dealings. The bills set forth specific requirements for who must disclose, what information is included, and the process for making it public.

Individuals Covered by the Proposal

The proposed Presidential Tax Transparency Act would apply to a specific group of individuals holding or seeking the highest offices in the executive branch. The legislation would mandate disclosure for the sitting President and Vice President of the United States. This requirement would ensure that for the duration of their time in office, their financial information is subject to public and congressional scrutiny.

Beyond those currently in office, the proposal would extend its requirements to major party nominees for President. This provision would be triggered once an individual has officially secured the presidential nomination of a major party. The timing would ensure that voters have access to this financial information during the general election campaign. The bill would define “major party” based on criteria related to past election performance.

The scope of the proposed act is intentionally narrow, targeting only those individuals at the apex of the executive branch and their immediate challengers. It would not extend to candidates in primary elections or nominees for other federal offices. The proposal also includes provisions for the Vice President in the event they assume the presidency, ensuring a seamless continuation of disclosure.

Required Tax Return Disclosures

The proposed legislation specifies a comprehensive set of documents to provide a thorough financial picture of the covered individuals. The core of the disclosure is the individual income tax return. This includes the main form and all accompanying schedules and statements that report various types of income, deductions, and credits. Examples include:

• Schedule A for itemized deductions
• Schedule B for interest and dividend income
• Schedule C for profit or loss from a business
• Schedule D for capital gains and losses

The disclosure requirements would extend beyond the most recent tax year. The bill would mandate a look-back period, requiring the release of returns for up to ten of the most recent taxable years. This multi-year requirement would allow for an analysis of financial trends and patterns of tax planning over time, offering a more complete view than a single year’s return could provide.

Furthermore, the disclosure would not be limited to the tax returns themselves. It would also include any related audit or examination information from the Internal Revenue Service (IRS) for the specified period. This means any correspondence or findings from an IRS review of the returns would also be made public. The proposal would also require disclosure of returns for entities controlled by the individual, such as corporations, partnerships, or trusts.

The Proposed Examination and Disclosure Process

The process for releasing tax information under the proposed act would be a multi-step procedure involving the IRS, the Department of the Treasury, and Congress. The sequence would begin with a mandatory examination, or audit, of the tax returns of a sitting President and Vice President. The legislation aims to make this a statutory requirement, codifying a long-standing internal IRS policy that these returns are subject to mandatory review.

Once the tax returns and any associated audit information are compiled, the Treasury Secretary would be legally obligated to transmit them to designated congressional committees. Specifically, the materials would be sent to the House Committee on Ways and Means and the Senate Committee on Finance, which have jurisdiction over tax matters.

After the committees receive the tax information, it would be prepared for public release. This final step would involve redacting certain sensitive, personally identifiable information to protect the privacy and security of the filers. Information such as Social Security numbers and bank account numbers would be removed before the documents are made available to the public. The redacted returns and audit reports would then be released within a set number of days after the return is filed.

Proposed Enforcement

The proposed act’s enforcement mechanisms would be rooted in its status as a federal law that amends the Internal Revenue Code. The primary enforcement tool would be the legal obligation it places on the Treasury Department and the IRS. By amending the tax code, the bill would remove any ambiguity about the authority of congressional committees to obtain this information.

Should a covered individual, such as a presidential candidate, fail to disclose their returns voluntarily within the specified timeframe, the proposal provides a clear remedy. The Federal Election Commission (FEC) would be empowered to formally request the tax returns directly from the Treasury Secretary. The Treasury would then have to provide the returns to the FEC, which would then handle the redaction and public release.

The proposal also includes penalties to ensure compliance. Willful failure by officials to provide the required information could lead to legal consequences. Conversely, the act would reinforce penalties for any official who makes an unauthorized disclosure of the tax information, protecting against leaks or the release of unredacted, sensitive data.