Finance

One year in, Democrats frustrated by fight for Trump tax returns

One year after House Democrats requested President Trump's tax returns from the IRS, the chances of the public seeing the documents prior to the 2020 election are slim.

The administration rejected the request from House Ways and Means Committee Chairman Richard Neal (D-Mass.), prompting him to file a lawsuit. But the court case has moved slowly, with a Trump-appointed federal judge putting it on hold while a separate lawsuit moves through the legal system.

Other court cases over Democrats' efforts to obtain Trump's financial records are further along in the legal process, and oral arguments in those cases were originally scheduled to take place before the Supreme Court this week. But the Supreme Court postponed arguments due to the coronavirus, and no new date has been set.

Supporters of the efforts to obtain Trump's financial documents are frustrated that the court cases haven't moved at a quicker pace. They note that time is of the essence, because the current Congress ends in January.

"It's a black mark against the judiciary that these cases have been bottled up in the courts for many months," said Seth Hanlon, a senior fellow at the left-leaning Center for American Progress.

In 2016, Trump became the first major-party presidential nominee in decades to not release any of his tax returns. Democrats identified obtaining Trump's returns as a key oversight priority after taking control of the House in the 2018 elections.

On April 3, 2019, Neal formally requested six years of Trump's personal and business tax returns from the IRS, as well as administrative files associated with the documents, under a section of the federal tax code that states that the Treasury secretary "shall furnish" tax returns requested by the chairs of Congress's tax committees.

The tax-code section states tax returns have to be reviewed by the committee in a closed session. But the committee could vote to send a report to the full House, which could make some or all of the requested returns public.

Neal said in his letter that he wants the documents because his committee is conducting oversight and considering legislative proposals relating to how the IRS audits presidents.

But Treasury Secretary Steven Mnuchin rejected Neal's request, arguing that the request lacks a "legitimate legislative purpose" and that Democrats' real purpose is to make a political rival's tax information public.

Neal then issued subpoenas to Treasury and the IRS for Trump's tax returns, but those were also rejected. In July, the Ways and Means Committee filed a lawsuit in order to get the courts to direct the administration to comply with their request and subpoenas.

The case is still at the district court level. Judge Trevor McFadden, a Trump-appointed judge in federal court in Washington, D.C., rejected a motion the committee filed in August to speed up the case.

The Trump administration and Trump's personal lawyers filed a motion to dismiss the case in September, arguing that the committee can't force the federal courts to take a side in the dispute. A hearing was held on the motion in November.

But McFadden has yet to rule on this motion. Instead, he has stayed the case while another case - over House Democrats' subpoena of former White House counsel Don McGahn - makes its way through the courts. The full U.S. Court of Appeals for the D.C. Circuit agreed to rehear that case, after a three-judge panel for the court ruled that the House lacked standing to sue to enforce its subpoena.

Those eager for Congress to obtain Trump's tax returns are frustrated with the current status of the lawsuit.

"It's a travesty that after a year in court, using a law clear as day and uncontested for a century, Congress still hasn't received the requested Trump tax returns," said Rep. Bill Pascrell (D-N.J.), a Ways and Means Committee member. "Our suit should've never needed to be filed. But the constant delay speaks to the judge's clear partisanship and that this government is more allergic to sunlight than Dracula." 

But Andy Grewal - a University of Iowa law professor who has long thought that standing issues would prolong the case - said it's not surprising the case is unresolved.

"This sort of litigation takes a long time. It doesn't matter who the judge is," he said. He noted that a legal battle between the House and the Department of Justice over documents relating to Operation Fast and Furious went on for years.

Some progressives have argued that Neal should have moved faster to request Trump's tax returns and sue. Neal has said that he's proceeded methodically on Trump's tax returns because the issue was bound to result in a legal battle. 

But some who think Neal should have moved faster say that even if he did, judges appointed by the president would have delayed the case.

"Once [Neal] drew a Trump appointee, it was over," said Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center.

The Ways and Means Committee's lawsuit isn't the only case about Trump's tax returns and financial records.

Trump, in his personal capacity, has sued the committee to prevent Neal from using a New York law to request his state tax returns. Judge Carl Nichols, a Trump-appointed judge in federal district court in D.C., has ordered the committee to notify the court and Trump if it requests the president's state tax returns, and to not receive any requested documents for 14 days. The committee has appealed the ruling. 

Neal has not requested Trump's New York returns and may never do so, but progressive groups are pressing him to use the state law.

The Supreme Court had been scheduled to hear oral arguments in three cases on the issue on Tuesday, before postponing arguments because of the pandemic. 

Two of the cases, which have been consolidated for oral arguments, center around Trump's efforts to block a subpoena that the House Oversight and Reform Committee issued to Trump's accounting firm, Mazars USA, and subpoenas that the House Financial Services and Intelligence committees issued to Trump's banks, Deutsche Bank and Capital One. The third case involves Trump's effort to block a grand-jury subpoena that the Manhattan District Attorney's Office issued to Mazars.

The Supreme Court has not yet announced a new date for the oral arguments. Progressive groups are urging the court to find a way to move forward and either decide the cases by June or let lower-court rulings that uphold the subpoenas stand.

"It is very frustrating that they're not finding other ways to hear these arguments and broadcast them," said Tax March Executive Director Maura Quint.

Even if Democrats win the cases pending before the Supreme Court, Trump's tax returns still may not be public before the 2020 election. The House Oversight and Reform Committee's subpoena doesn't explicitly seek Trump's tax returns, and Deutsche Bank and Capital One have said in court filings that they don't have any tax returns of the president that are responsive to the subpoenas. The materials sought in the Manhattan District Attorney's office's subpoena would be subject to grand-jury secrecy rules.

It's highly unlikely that Trump voluntarily releases his tax returns before the election. Mick Mulvaney, the president's former acting chief of staff, said last year that Democrats will "never" see them.

Grewal said that he thinks voters are now more interested in the coronavirus and the economy than Trump's tax returns.

"I don't even know if they were released, who would really care," he said.

But progressives and lawmakers say they will keep pushing.

"On a macro level, if Donald Trump has nothing to hide, he should release his tax returns," said Brett Edkins, political director for Stand Up America. 

Pascrell said Democrats are focused on protecting Americans from the coronavirus and providing relief to people who have lost their jobs, but will keep pressing for Trump's returns.

"I will continue to push until we finally get the returns because Americans deserve to know the truth," he said.

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