Treasury, IRS set to miss subpoena deadline on Trump tax returns

The Treasury Department and IRS are set to miss a Friday deadline to comply with subpoenas for Trump’s tax returns, setting up a prolonged legal battle.

Democrats are examining options for their next steps. But both sides agree the matter is headed to the courts.

“I think Friday is the turning point,” said Rep. Bill Pascrell (D-N.J.). “There’s no more letters to be written.”

{mosads}House Ways and Means Committee Chairman Richard Neal (D-Mass.) issued subpoenas to Treasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig last week for 6 years of Trump’s personal and business tax returns, giving them a deadline of Friday at 5 p.m.

All indications are that Treasury and the IRS won’t provide the requested documents, since Mnuchin already rejected Neal’s requests for the returns made in letters that cited Section 6103 of the federal tax code. Mnuchin said Wednesday that he expects Treasury to provide some type of response by the deadline and that “you can guess which way we’re leaning on our subpoena.”

Neal has long said that he expects the dispute over Trump’s tax returns to result in a court case, and Mnuchin also said Wednesday that he thinks the issue will end up in the courts. Those closely following the issue expect that Democrats will pursue a lawsuit to enforce their subpoenas and Section 6103.

A court case could be lengthy, but legal experts say it could be effective in achieving Democrats’ goal of obtaining Trump’s returns.

In order to pressure Treasury and the IRS to comply with their request, Democrats “need leverage from an outside source that they don’t have right now,” said University of Pittsburgh law professor Philip Hackney.

It’s not certain exactly what the process for Democrats to bring a lawsuit would look like, but they would be expected to get authorization.

Legal experts say that there have been questions about whether the full House would need to vote to authorize a lawsuit, or whether the House’s Bipartisan Legal Advisory Group (BLAG) could do so. The experts say that it would be best for the House to vote to authorize a lawsuit, since it’s unclear whether House rules allow the BLAG to authorize lawsuits to enforce subpoenas.

“I would imagine that if they try to do that, there would be protests from the minority and appeals to the parliamentarian,” Mike Stern, a former senior counsel in the House counsel’s office, said of using the BLAG.

In addition to filing a lawsuit, there have been growing calls for action to be taken against Mnuchin if he doesn’t comply with the subpoena. Earlier this month, the House Judiciary Committee voted to hold Attorney General William Barr in contempt for failing to comply with a subpoena for special counsel Robert Mueller’s unredacted report on the Russia investigation.

{mossecondads}Ryan Thomas, spokesman for the progressive group Stand Up America, said he hopes Democrats start contempt proceedings against Mnuchin on top of filing a lawsuit. He said that contempt proceedings would help to ensure that the public knows that Mnuchin didn’t comply with the demands for Trump’s tax returns.

“Creating additional visibility I think is important,” he said.

The House could vote to refer a criminal contempt citation against Mnuchin to the Justice Department, but the department would be unlikely to prosecute him. House Democrats could also try to impeach Mnuchin, but the GOP-controlled Senate would be unlikely to vote to convict him.

Neal told reporters last week that holding Mnuchin or Rettig in contempt hadn’t been discussed.

Another option would be for Congress to use its inherent contempt authority to detain or fine Mnuchin until he complies with the subpoena for Trump’s tax returns.

When asked Thursday about using inherent contempt to fine people who are defying subpoenas, Speaker Nancy Pelosi (D-Calif.) said that “nothing is off the table” but did not say that the House was planning it.

University of Southern California law professors Samuel Erman and Edward Kleinbard suggested in a Washington Post op-ed this week that Congress use its inherent powers in order to put the burden on seeking court action on the administration rather than on Congress.

“Congress should not be required to go cap in hand to go to the judicial system,” Kleinbard told The Hill.

But some don’t think Democrats will ultimately pursue inherent contempt since Congress hasn’t pursued it in years.

“I don’t see the IRS commissioner or Secretary Mnuchin in jail,” said University of Iowa professor Andy Grewal.

Democrats could also obtain some of Trump’s tax documents if the state of New York enacts a law that allows the chairmen of Congress’s tax committees to request state tax returns from New York’s commissioner of taxation and finance. The state senate passed the bill last week, and New York Gov. Andrew Cuomo (D) backs it.

University of Chicago law professor Daniel Hemel called the New York bill “an ace in the hole” for Democrats.

He said the documents that could be turned over to New York wouldn’t tell Democrats everything they want to know about Trump’s taxes, but would tell them if Trump has reported an adjusted gross income of zero in recent years. A New York Times story published earlier this month found that Trump’s large business losses from 1985 to 1994 meant that he only paid income taxes in two of those years.

The New York returns would show “whether there are any real whoppers,” Hemel said.

Neal may opt against seeking Trump’s state tax returns if the bill allowing him to request them becomes law. Neal’s stated purpose for requesting Trump’s federal returns focuses on interest in oversight about the IRS’s audits of sitting presidents.

“Our request is in furtherance of the committee’s investigation into the mandatory presidential audit program and to decide whether that program needs to be codified into federal law,” Neal spokesman Dan Rubin said. “This is part of our oversight over the IRS. State returns from NY would not help that investigation.”

Many of Democrats’ options are not mutually exclusive, and they could take multiple approaches in their effort to obtain Trump’s tax returns.

Recent polling from Morning Consult and Politico found that about half of registered voters support Democrats’ efforts, with responses divided along party lines.

Some see a fight over Trump’s tax returns as a political winner for Democrats, particularly those in predominantly Democratic districts.

“For Chairman Neal, there are only political pros to filing a lawsuit,” Hemel said, adding that if you are a House Democrat who stands in the way of the public seeing Trump’s tax returns, “that’s an uncomfortable place to be in.”

But others suggested that Democrats would be better-served if they focused more on policy matters such as middle-class tax cuts, rather than Trump’s tax returns.

Democratic strategist Brad Bannon said that Trump tends not to be hurt by the various scandals associated with him.

“I think it’s time for Democrats to focus on issues,” he said.