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Democrats seize on IRS memo in Trump tax battle

Democrats on Wednesday seized on a newly surfaced IRS draft memo about congressional access to tax returns, saying the document makes it clear that they are in the right in their fight with the administration over President TrumpDonald John TrumpAppeals court OKs White House diverting military funding to border wall construction Pentagon: Tentative meeting between spy agencies, Biden transition set for early next week Conservative policy director calls Section 230 repeal an 'existential threat' for tech MORE’s tax filings.

The draft memo, prepared last fall and first reported by The Washington Post on Tuesday, stated that the agency has to provide requested tax returns to Congress unless executive privilege is invoked.

While the unsigned document did not directly mention Trump, Democrats see it as backing up their position that the IRS is required by law to comply with their demands for the president’s returns.

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“It seemed to confirm the position that we’ve had, and that is that the law is unambiguous,” House Ways and Means Committee Chairman Richard NealRichard Edmund NealHoyer releases 2021 House calendar A need for reauthorization of the Elder Justice Act Biden names Janet Yellen as his Treasury nominee MORE (D-Mass.) told reporters on Wednesday.

Neal has already issued letters and subpoenas seeking six years of Trump’s personal and business tax returns, from 2013 to 2018, all of which Treasury Secretary Steven MnuchinSteven Terner MnuchinThe Hill's Morning Report - Presented by Mastercard - Dem leaders back smaller COVID-19 relief bill as pandemic escalates Sweeping financial crimes bill to hitch a ride on defense measure On The Money: Funding bill hits snag as shutdown deadline looms | Pelosi, Schumer endorse 8 billion plan as basis for stimulus talks | Poll: Most Americans support raising taxes on those making at least 0K MORE has rejected. Mnuchin has said Treasury determined that Neal’s requests lack a legitimate legislative purpose, after discussing the matter with the Department of Justice.

House Democrats are expected to file a lawsuit over Trump’s returns, and Neal said the memo doesn’t change his strategy.

“We’ve got a strategy for the last four months and we intend to stick to it,” he said.

Some Democrats said the memo could be helpful for them as they pursue a court case. It’s one of the latest developments that could bode well for Democrats as they seek Trump’s tax returns, along with two rulings this week by separate judges that sided with Democrats in their efforts to obtain other financial information from Trump.

“I think that you’re going to see a series of court decisions, rulings, memos, letters, that all confirm that the Constitution requires that we have a duty of oversight of the executive branch,” said Rep. Tom Suozzi (D-N.Y.), a Ways and Means Committee member.

Another new development that could help Democrats in the tax fight is that the New York state legislature on Wednesday sent Gov. Andrew Cuomo (D) legislation that would allow Congress to request the president’s state tax returns. Neal, however, may opt against requesting the state returns.

The IRS memo, which the agency told the Post was written by a lawyer in the chief counsel’s office, said the language in the tax-code provision Neal cited in requesting Trump’s federal returns is “mandatory.” That provision states that the Treasury secretary “shall furnish” tax returns requested by the chairmen of Congress’s tax committees, provided that the documents are viewed in a closed-door session.

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Additionally, the memo said the Treasury secretary doesn’t have discretion and that Congress’s tax committees do not have to provide a reason for their request.

At a House Financial Services Committee hearing Wednesday, Mnuchin dismissed the idea that the memo contradicts his conclusions on Trump’s returns.

“That memo, I understand, is addressing a different issue and is not addressing the issue that we and the Department of Justice looked at,” he said.

Later in the hearing, Mnuchin said that the Treasury Department would look at the document but that there is “no smoking gun here.”

“We did a very thorough legal analysis with the Department of Justice,” he said.

Mnuchin also said he wasn’t aware of the document until the Post asked about it, and that to the best of his knowledge no one in Treasury’s senior leadership had seen it before then. He said Treasury is trying to figure out who authored the draft memo.

The IRS also said that Commissioner Charles Rettig and chief counsel Michael Desmond were unaware of the draft document until contacted by the Post.

Some Democrats are skeptical.

“It’s hard to believe that Secretary Mnuchin, Commissioner Rettig and other political appointees did not know about the existence of this memo,” Senate Finance Committee ranking member Ron WydenRonald (Ron) Lee WydenHillicon Valley: Government used Patriot Act to gather website visitor logs in 2019 | Defense bill leaves out Section 230 repeal, includes White House cyber czar position | Officials warn hackers are targeting vaccine supply chain Government used Patriot Act to gather website visitor logs in 2019 Despite veto threat, Congress presses ahead on defense bill MORE (D-Ore.) said in a statement.

He added that “Congress needs answers as to who knew about this memo and when, and why Secretary Mnuchin ultimately did an end run around the IRS to get the answer President Trump wanted.”

Rep. Lloyd DoggettLloyd Alton DoggettCongress must repeal tax breaks for the wealthy passed in CARES Act Ocasio-Cortez, progressives call on Senate not to confirm lobbyists or executives to future administration posts Trump order on drug prices faces long road to finish line MORE (D-Texas), a member of the Ways and Means Committee, reiterated his call for Congress to consider using its inherent contempt powers against Mnuchin, which could involve fines and confinement.

“It’s long past time for Congress to stop letting the Trump Administration run out the clock on any accountability for its continued abuse of power,” he said in a statement.

The memo became public amid growing calls among House Democrats to begin an impeachment inquiry against Trump, which Speaker Nancy PelosiNancy PelosiOn The Money: Unemployment gains lower than expected | Jobs report lights fire under coronavirus relief talks Hillicon Valley: Senate Intelligence Committee leaders warn of Chinese threats to national security | Biden says China must play by 'international norms' | House Democrats use Markup app for leadership contest voting Bipartisan governors call on Congress to pass coronavirus relief package MORE (D-Calif.) appears to have tamped down for now.

Rep. Mark PocanMark William PocanBattle for Pentagon post in Biden Cabinet heats up Capitol's COVID-19 spike could be bad Thanksgiving preview Katherine Clark secures No. 4 leadership spot for House Democrats MORE (D-Wis.), a co-chairman of the Congressional Progressive Caucus who has called for an impeachment inquiry, said the draft memo and Mnuchin’s assertions that he hadn’t reviewed it is “one more reason why when the president obstructs or tries to cover up things that we’re trying to get, we’re going to push back. And I think you’re going to find more and more members pushing back.”

Key Republicans maintained their support for Mnuchin in the tax return fight.

Rep. Kevin BradyKevin Patrick BradyRaising the required minimum distribution age for America's seniors On The Money: Biden, Democratic leaders push for lame-duck coronavirus deal | Business groups shudder at Sanders as Labor secretary | Congress could pass retirement bill as soon as this year Top Democrat: Congress could pass retirement bill as soon as this year MORE (Texas), the ranking member on the Ways and Means Committee, said he thinks the draft IRS memo is “meaningless” and misses the constitutional issues Mnuchin took into account.

Brady said he’s not sure the memo even has the value of “a discarded soup can on the side of the road that’s suddenly been put in the Smithsonian.”