Political victory for Democrats in Trump tax return lawsuit hinges on timing

Many legal experts say that Democrats made a solid case in their lawsuit over President Trump’s tax returns, but they’re less certain about whether the case will be resolved before the 2020 presidential election.

The House Ways and Means Committee, chaired by Rep. Richard NealRichard Edmund NealDemocrats push judge for quick action on Trump tax returns lawsuit Trump argues NY tax return case should take place in DC NY files motion to keep Trump tax returns lawsuit out of DC court MORE (D-Mass.), on Tuesday filed a complaint against the Treasury Department and IRS asking a federal district court in D.C. to order the administration to comply with requests and subpoenas for the president’s tax returns.

Lawyers and tax-policy specialists who have been following the tax-return dispute closely say Democrats laid out their arguments well in their complaint. But they also expect the administration to fight to delay a final ruling for as long as possible.

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“I think the case on the merits is compelling. The case on the timing is questionable,” said Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center who supports Democrats’ effort to obtain Trump’s returns.

Trump and his administration are expected to vigorously challenge the lawsuit.

“We will respond to this latest effort at Presidential harassment in Court,” Jay SekulowJay Alan SekulowTrump, RNC sue to block California law requiring release of tax returns Voters sue California over tax return law targeting Trump Team Trump blasts California bill requiring candidates release tax returns to appear on ballot MORE, a lawyer for the president, said in a statement Tuesday.

A prolonged battle, even if it results in the IRS turning over Trump’s taxes, could lead to a political victory for the president.

“Neal took a while to get this out, and it may take a while to get through the courts,” Rosenthal said. “Trump may win on delay.”

Neal filed the lawsuit after Treasury and the IRS rejected requests for Trump’s returns made under a section of the federal tax code. The agencies also rejected subsequent subpoenas for the documents. 

The Trump administration has argued that Democrats lack a legitimate legislative purpose for obtaining the president’s returns, and that their real motivation for wanting the documents is to expose the returns of a political rival.

Democrats in their lawsuit said they aren’t required under the tax code to provide a reason for requesting the tax returns, but that nonetheless their need for the documents is “evident” because the Ways and Means Committee is investigating the IRS's administration of laws and policies relating to presidential tax returns.

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Many experts said Democrats have a good chance of a legal victory if courts look at the merits and not just procedural issues. They noted that Democrats bolstered their argument about the usefulness of the tax returns by mentioning which bills the documents would be relevant to as they consider legislative proposals.

“The House has a particularly strong position on the merits,” said William Pittard, an attorney at KaiserDillon who served in the House general counsel’s office from 2011 to 2016. “They went out of their way to show in the complaint that the documents they’re seeking are relevant not only to possible legislation but to legislation actually under consideration in the House.”

Charles Tiefer, a law professor at the University of Baltimore who served in the House counsel’s office from 1984 to 1995, said it was smart for Democrats to focus narrowly on the Ways and Means Committee’s interest in examining the audit of Trump’s tax returns.

Democrats “put heavy emphasis on their unique interest in supervising the audit of Trump, since it is special to the presidency that each president gets audited,” he said.

But others have suggested that Democrats could run into a roadblock if a judge focuses on their motives for seeking Trump’s tax returns.

University of Iowa law professor Andy Grewal said “there’s a pretty big gap” between Democrats’ stated purpose in the complaint for wanting the returns and Democrats’ other public comments about why they want the documents.

Even among experts who say they think Democrats can win on the merits of their case, there are questions about whether, and how quickly, courts will examine the merits.

Legal observers expect the Trump administration to challenge the lawsuit on technical grounds, such as whether the Ways and Means Committee has standing to sue. The question of exactly when Congress has standing to sue has not been definitively resolved in the courts.

The judge assigned to the tax-returns case is Trevor McFadden, a Trump appointee who ruled in June that House Democrats didn’t have standing to sue to temporarily stop the president from using military funds for a wall along the U.S.-Mexico border.

Lawyers said it may be a concern for Democrats, and a plus for the administration, that the tax-returns case was assigned to McFadden. But they also said there are differences between whether the House has standing to sue to get information it is seeking in an investigation and whether the chamber can sue over its appropriations power.

McFadden acknowledged those differences in his June ruling. 

“Indeed, using the Judiciary to vindicate the House’s investigatory power is constitutionally distinct from seeking Article III standing for supposed harm to Congress’s Appropriations power,” he wrote.

Mike Stern, who served in the House Counsel’s office from 1996 to 2004, said “the border wall is a much harder case for standing” than the tax-return case, since the House doesn’t have a specific injury in the border wall case.

It’s unclear how fast McFadden will move the case. Stern noted that McFadden acted quickly in the border wall case, but “there’s no deadline that he has to meet” with Trump’s tax returns, though Democrats would likely prefer he rule before Election Day next year.

In cases where Trump is challenging congressional subpoenas of his financial records, federal district court judges have recently acted quickly. But a court case in the dispute between Congress and the Obama administration over documents related to the Fast and Furious operation lasted years.

Democrats’ ability to obtain Trump’s tax returns before the 2020 election may depend on whether the Supreme Court decides to take up the case. Experts said the district court and U.S. Court of Appeals for the D.C. Circuit could easily rule on the case before November 2020, but a final judgement is less likely before then if the Supreme Court decides to hear it.

A number of factors will determine whether the Supreme Court gets involved, including how the lower courts rule on the case and whether justices want to address the issues at stake.

“It’s pretty early to guess how the Supreme Court might come out,” said University of Richmond law professor Carl Tobias.

Neal’s lawsuit was filed about six months after Democrats took control of the House. Some have argued that it should have been filed earlier to increase the odds of Democrats obtaining Trump’s returns before the election.

“It’s unfortunate that it took so long to get to this point,” said Ryan Thomas, spokesman for the liberal group Stand Up America. “We know that the Trump administration is going to stop at nothing to try to block this lawful request for tax returns.”

Neal has said he’s taken a methodical approach to the tax-return issue because he expected the matter to end up in court, and the lawsuit couldn’t be filed until after Treasury and the IRS rejected Neal’s request for the documents. It wasn’t until after the two agencies rejected Neal’s subpoenas that the House passed a resolution to give committee chairmen more legal authority to enforce subpoenas.

“It’s not like the chairman could have snapped his fingers and brought a lawsuit on the day the Treasury Department and IRS refused his request,” Stern said.

Even though the lawsuit was filed later than he wanted it to be, Thomas said he’s hopeful that Democrats will see Trump’s tax returns before the election.

“I think that House investigators have a pretty strong case here to take to the courts,” he said.