Disclosure of Tax Division Files for Purposes of 

General Accounting Office Audit

Under 31 U.S.C. §67 and 26 U.S.C. §6103, the Tax Division of the Department of 

Justice may disclose to the General Accounting Office (GAO) case files containing tax 

returns and related information for the purpose of and to the extent necessary in 

GAO’s audit of Internal Revenue Service operations.

January 13, 1981

MEMORANDUM OPINION FOR TH E ASSISTANT ATTORNEY 

GENERAL, TAX DIVISION

This responds to your request for the opinion of this Office as to 

whether it is permissible for you to disclose to the General Accounting 

Office (GAO) your files concerning certain tax cases. On October 17, 

1979, the Chairman of the Subcommittee on Commerce, Consumer, and 

Monetary Affairs of the House Committee on Government Operations 

requested the Comptroller General to review the activities of the Internal Revenue Service (IRS) with respect to tax protester activities. The 

review is designed to assess the nature and scope of the tax protester 

problem and to evaluate the actions taken by the IRS in dealing with 

that problem. As part of its review, GAO has requested that the Tax 

Division of the Department of Justice furnish its files with respect to 16 

test cases involving alleged “vow of poverty” protester schemes. Prosecution has been declined in eight cases and authorized in the others. 

Your inquiry relates specifically to your files, each of which you state 

contains tax returns and return information.1 We believe that the Tax 

Division is permitted to disclose such material to GAO under the 

provisions of 31 U.S.C. § 67 and 26 U.S.C. § 6103.

I. Background

The Tax Reform Act of 1976 enacted into law 26 U.S.C. § 6103, 

whose principal purpose is to establish “a general rule that tax returns 

and return information are to be confidential and not subject to disclosure except as specifically provided by statute.” House Committee on 

Ways and Means, 94th Cong., 2d Sess., Summary of the Conference

1 We are informed that GAO does not seek grand jury material, whose disclosure is governed by 

Fed. Rule Crim. Proc. 6(e).

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Agreement on the Tax Reform Act of 1976 (H.R. 10612), 43 (Comm. 

Print 1976). Under 26 U.S.C. § 6103(a), no officer or employee of the 

United States is permitted to “disclose any return or return information 

obtained by him . . . in connection with his service as such an officer 

or an employee . . . .” The term “return” is defined as any part of a 

“tax or information return, declaration of estimated tax, or claim for 

refund ....”§ 6103(b)(1). The term “return information” is defined as 

“a taxpayer’s identity, the nature, source, or amount of his income, 

payments, receipts, deductions, exemptions, credits, assets, liabilities, net 

worth, tax liability, tax withheld, deficiencies, overassessments, or tax 

payments, whether the taxpayer’s return was, is being, or will be 

examined or subject to other investigation or processing . . . .” 

§ 6103(b)(2).

Section 6103 contains a number of limited exceptions to the general 

rule of confidentiality. The exception relevant for purposes of the 

present inquiry appears in § 6103(i)(6). That provision states, in pertinent part, that “upon written request by the Comptroller General of the 

United States, returns and return information shall be open to inspection by, or disclosure to, officers and employees of the General Accounting Office for the purpose of, and to the extent necessary in, 

making—(i) an audit of the Internal Revenue Service . . . which may 

be required by section 117 o f the Budget and Accounting Procedures 

A ct of 1950 (31 U.S.C. 67) . . . .” The relevant provision of 31 U.S.C. 

§ 67 in turn empowers the Comptroller General to “make, under such 

rules and regulations as he shall prescribe, audits of the Internal Revenue Service.” It authorizes G A O representatives to inspect returns and 

return information “[f]or the purposes of, and to the extent necessary 

in,” making those audits. G A O representatives are also permitted access 

“to all other books, accounts, financial records, reports, files, papers, 

things, and property belonging to or in use by the Internal Revenue 

Service . . . .” 31 U.S.C. § 67(d) (Supp. I 1977).

For present purposes, the principal questions are (1) whether the 

G A O ’s requested examination of Tax Division files would be “for the 

purpose of, and to the extent necessary in, making an audit of the 

Internal Revenue Service”; and (2) whether § 6103(i)(6) contemplates 

disclosure by any agency having lawful possession of returns and return 

information. We believe that the answer to both questions is in the 

affirmative.

II. Discussion

Under § 6103(i)(6), returns and return information may be disclosed 

to the G A O only “for the purpose of, and to the extent necessary in,” 

making an audit of the IRS. This provision was enacted to carry out a 

general congressional goal o f “permit[ting] the GAO to independently 

conduct management audits to review IRS administration of the tax

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laws.” H.R. Rep. No. 480, 95th Cong., 1st Sess. 6 (1977). The provision 

resolved a longstanding dispute between GAO and IRS with respect to 

GAO’s authority to examine IRS files. The legislation was designed to 

enable the “GAO . . . [to] serve as a means of identifying alleged IRS 

abuses and weakness,” id., for Congress believed, that “as a consequence 

of [its] refusal [to allow inspection], IRS’ . . . management practices 

and administration of the tax laws have not been as efficient as they 

otherwise would have been.” Id. at 7. Congress thus intended “that the 

GAO examine returns and individual tax transactions only for the 

purpose of, and to the extent necessary to serve as a reasonable basis 

for, evaluating the effectiveness, efficiency and economy o f IR S operations

and activities. ” General Explanation of the Tax Reform Act of 1976, 

Joint Committee on Taxation, H.R. Rep. No. 10612, 94th Cong., 2d 

Sess. 337 (1976) (emphasis added). See also S. Rep. No. 42, 95th Cong., 

1st Sess. 1 (1977). Congress’ authorization of disclosure of returns and 

return information to the GAO must be read in light of this overriding 

purpose.

The Tax Division files contain two principal items: (1) tax returns 

and (2) files of the Division that contain returns and return information. 

The first question is whether disclosure of that material is justified as 

“for the purpose of, and to the extent necessary in,” auditing the IRS. 

We believe it is so justified. We note, first, that both the IRS and 

GAO 2 are agreed that disclosure of the documents at issue is properly 

regarded as “necessary in” making an audit of the IRS. This construction of the statute, agreed upon by the two agencies responsible for 

administering the statute’s relevant provision, “is entitled to deference 

unless it can be said not to be a reasoned and supportable interpretation 

of the Act.” Whirlpool Corp. v. Marshall, 445 U.S. 1, 11 (1980). The 

IRS and GAO state that review of the Department’s files may well aid 

GAO in assessing the effectiveness of the IRS’ operations. The files 

may themselves evaluate IRS actions and will in all likelihood indicate 

whether the IRS has been referring cases to the Department of Justice 

in appropriate circumstances. GAO’s task would be facilitated if, for 

example, the Department has concluded that the IRS has compiled 

insufficient evidence in cases in which it has recommended prosecution. 

GAO would also be aided if the files showed that IRS recommendations were being followed in most cases or that the reasons why 

prosecution was declined had nothing to do with the IRS’ performance. 

The files may well show whether the IRS has properly selected, investigated, developed, and referred criminal cases. For these reasons, we 

believe that the interpretation offered by GAO and IRS is a “reasoned 

and supportable” one.

2 The IRS and GAO were requested to provide memoranda expressing their views on the questions 

presented, and they reached identical conclusions.

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The second question is whether § 6103(i)(6) contemplates disclosure 

by any agency having lawful possession of returns and return information, or whether the disclosure must be made solely by IRS personnel. 

In this context as well, the IRS and GAO are agreed that the statute 

permits disclosure by the Tax Division. We believe that the language, 

history, and structure of the statute are compatible with this view. 

First, § 6103(i)(6) states in broad terms that returns and return information “shall be open to inspection by, or disclosure to” GAO. The 

statute does not state that the materials should be disclosed only by the 

Secretary of the Treasury. This is a significant factor, for a number of 

the tax disclosure provisions state in plain terms that it is “the Secretary” who “may” or “shall” disclose returns or return information. See

26 U.S.C. § 6103(c), (0, (g)- Similarly, the legislative history contains 

no indication that disclosure under § 6103(i)(6) was to be made solely 

by the IRS. See S. Rep. No. 938, 94th Cong., 2d Sess. 341 (1976). 

Finally, the structure of the statute supports the interpretation offered 

by the GAO and IRS, for, as noted, Congress made explicit who the 

releasing party must be when it intended that disclosure be made only 

by that party.3

We conclude by observing that anomalous results would be produced 

if the interpretation proposed by G A O and the IRS were rejected. 

There is no dispute that the relevant returns and return information 

may be obtained from the IRS, which has copies of the tax returns in 

question. The intention underlying the tax disclosure provisions of the 

A ct—to limit undue circulation of returns and return information— 

would plainly not be furthered if § 6301 (i)(6) were interpreted to preclude disclosure of the Tax Division’s files, for the same information 

protected by the tax disclosure provisions is available to GAO in any 

event. The statutory purpose of preventing disclosure of returns and 

return information would not, therefore, be served if GAO’s request 

were denied. As a result, we see no sufficient basis for rejecting the 

interpretation offered by GAO and IRS. We conclude that you are 

permitted to disclose the files in question.

L e o n U l m a n

Deputy Assistant Attorney General

Office o f Legal Counsel

3 W e also note that the Secretary o f the Treasury has promulgated regulations permitting disclosure 

by other federal agencies in lawful possession of returns and return information even when the statute 

on its face requires disclosure by the Secretary See Treas. Reg. § 301.6103(p)(2)(B)-l(a).

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