Judge gives Democrats one week for next move in Trump tax return case

A federal judge on Thursday gave House Democrats one week to figure out how they want to move forward in their lawsuit to obtain President TrumpDonald John TrumpMulvaney: 'We've overreacted a little bit' to coronavirus Former CBS News president: Most major cable news outlets 'unrelentingly liberal' in 'fear and loathing' of Trump An old man like me should be made more vulnerable to death by COVID-19 MORE’s tax returns from the administration.

Judge Trevor McFadden, a federal district court judge in Washington, D.C., appointed by Trump, held a hearing in the tax return case following a ruling in another major case that touched on some of the same legal questions.

McFadden's hearing came less than one week after a three-judge panel at the U.S. Court of Appeals for the D.C. Circuit in a separate lawsuit ruled that House Democrats cannot sue to enforce a subpoena of former White House Counsel Don McGahn. The ruling said federal courts can’t resolve disputes between the executive and legislative branches.

ADVERTISEMENT

McFadden had put the tax return case on hold until a ruling was issued in the McGahn case.

House Democrats are seeking Trump's returns both under a subpoena from House Ways and Means Committee Chairman Richard NealRichard Edmund NealHouse Democrats' bill would create a second round of direct coronavirus relief payments Lawmakers question why dead people are getting coronavirus checks Congress, Treasury tussle over IRS guidance on .2T COVID-19 package MORE (D-Mass.) and through a provision under the federal tax code.

During Thursday’s hearing, the House’s lawyers argued that the D.C. Circuit ruled incorrectly in the McGahn case and that they are planning to ask the full D.C. Circuit to rehear that case. 

House lawyers also said that, at a minimum, the part of their lawsuit relying on the tax code provision could proceed.

McFadden said he’s not inclined to handle the case on a “piecemeal” basis, and said that it would be of interest to him if the House wanted to file an amended complaint that just includes the claims relating to the tax-code provision.

ADVERTISEMENT

The House’s lawyers said they need time to confer with their client about how they wanted to proceed on their subpoena-enforcement claim. 

In the tax return case, the Trump administration is arguing the case should be dismissed because the federal courts can’t take a side in the dispute. Lawyers for the administration argued the ruling in the McGahn case requires McFadden to dismiss the entirely of the House’s tax return lawsuit. The administration also argued that if the tax return case is put on hold while the full D.C. Circuit reviews the case, it should be stayed until the Supreme Court rules.

McFadden asked the House’s lawyers and the Trump administration’s lawyers to submit a joint status report in one week.

The Ways and Means Committee had filed the tax return lawsuit against the Treasury Department and IRS in July, after the agencies rejected Neal’s requests and subpoenas for six years of Trump’s federal tax filings and related IRS audit papers. In September, the administration and Trump’s personal lawyers filed a motion to dismiss the case, arguing that the House lacks standing to sue.

Democrats have said that the law is clear that they can obtain Trump’s tax returns, because a section of the federal tax code states that the Treasury secretary “shall furnish” tax returns requested by the chairs of Congress’s tax committees. They have said they want to see Trump’s tax returns because they are considering legislative proposals and conducting oversight about how the IRS audits presidents.

ADVERTISEMENT

But the administration argues that Democrats lack a legitimate legislative purpose for the tax returns. They argue that Democrats’ stated purpose for the documents is pretextual and their real reason for wanting the documents is to expose the tax information of a political rival.

Trump is the first president in decades who hasn’t made any of his tax returns public. He has said he won’t release them while he’s under audit, but the IRS has said that audits don’t prevent people from making public their own tax information.

House Democrats’ lawsuit against the administration is one of several lawsuits related to Trump’s financial records. Later this month, the Supreme Court will hear oral arguments in cases in which Trump’s personal lawyers have sued to block subpoenas for the president’s financial records that were issued by House Democrats and the Manhattan District Attorney’s office to Trump’s accounting firm and banks.