Mnuchin Won’t Comply With Subpoena For Trump Tax Returns

Treasury Secretary Steve Mnuchin has informed Congress that he will not comply with a subpoena seeking the President's tax returns, meaning that we're headed for a court battle.

Secretary of the Treasury Steven Mnuchin has advised Congress that he will not comply with a subpoena issued by the House Ways And Means Committee directing him to produce copies of President Trump’s tax returns, documents which the committee is entitled to under Federal law:

WASHINGTON — Treasury Secretary Steven Mnuchin on Friday refused to comply with a congressional subpoena to hand over President Trump’s tax returns, a move that is likely to be the final step before the matter heads to the courts.

For more than a month, the Treasury Department and House Democrats have exchanged letters about the request, which was initiated in April by Representative Richard E. Neal, Democrat of Massachusetts and the chairman of the House Ways and Means Committee.

Mr. Mnuchin said that lawyers in the department concluded that the original request, made using an obscure provision of the tax code, was not legitimate. Mr. Neal changed course last week and issued a subpoena to try to gain access to six years of Mr. Trump’s personal and business tax returns.

On Friday, Mr. Mnuchin wrote a one-page letter to Mr. Neal, in which he reiterated his previous position that the request lacked “legitimate legislative purpose” and said he could not comply with the subpoena.

“For the same reasons, we are unable to provide the requested information in response to the committee’s subpoena,” Mr. Mnuchin said.

Mr. Mnuchin was widely expected to ignore the subpoena, as Mr. Trump has vowed to fight all subpoenas from House Democrats. The Treasury secretary has warned that allowing House Democrats to retrieve the president’s tax returns would open the door to lawmakers from both parties politicizing the Internal Revenue Service in the future.

At a Senate hearing this week, Mr. Mnuchin said that House Democrats were trying to “weaponize” the I.R.S. He said that he had not yet decided how he would respond to the subpoena, but that “you can guess which way we are leaning.” He said that the judiciary, as the third branch of government, would most likely need to settle the dispute between Congress and the executive branch, signaling the potential for a protracted court fight.

House Democrats have been weighing how to respond to the Trump administration’s defiance of congressional subpoenas. On Friday, Mr. Neal made clear his preference for avoiding retaliatory threats, to the disappointment of several of his more liberal colleagues.

Mr. Neal told reporters that he saw little value in trying to hold Mr. Mnuchin or Charles P. Rettig, the I.R.S. commissioner, in contempt of Congress. Instead, he said, he would go straight to the courts to try to enforce his subpoena, potentially as soon as next week. The case could take months or years to resolve.

“I don’t see what good it would do at this particular time,” Mr. Neal told CNN, when asked about the possibility of contempt proceedings. “I think if both sides have made up their minds, better to move it over to the next branch of government, the judiciary.”

That did not sit well among Democrats on the Ways and Means Committee, who have consistently pushed a more aggressive approach toward getting Mr. Trump’s returns. Representative Bill Pascrell Jr., Democrat of New Jersey, argued on Friday that the committee should still consider fines and other possible forms of punishment for defying the subpoena.

“What this does, going to court, is absent the Congress from their own responsibilities,” Mr. Pascrell said. He added, “I think that’s a very dangerous position for us to be in.”

While I understand the frustration of Congressman Pascrell and others who would like to see Congress hold Secretary Mnuchin and Commissioner Rettig in contempt for their refusal to comply with the subpoena, I tend to think that Chairman Neal is taking the right position here. The Ways and Means Committee could easily vote to hold Mnuchin and Rettig in contempt, and the House of Representatives would most likely vote to approve the contempt citation, there’s very little that could be done after that which would not require going to court anyway. The Trump Justice Department is unlikely to enforce the contempt citation, just as the Obama Justice Department declined to enforce the contempt citation against Attorney General Eric Holder over documents related to the Fast & Furious investigation. At that point, the House went to court but the suit was rendered moot when Holder resigned as Attorney General. The same thing is likely to happen in this case, so rather than wasting the time of going through with a pointless contempt citation, it seems to me that the better root is for the Committee and the House to go forward with a lawsuit against Mnuchin and the Administration based on its failure to comply with the law that entitles the committee to request copies of any individuals tax return.

That legal basis exists under 26 U.S.C. Sec 6103(f), which states that the Ways and Means Committee is entitled to request a copy of anyone’s tax return:

Upon written request from the chairman of the Committee on Ways and Means of the House of Representatives, the chairman of the Committee on Finance of the Senate, or the chairman of the Joint Committee on Taxation, the Secretary shall furnish such committee with any return or return information specified in such request, except that any return or return information which can be associated with, or otherwise identify, directly or indirectly, a particular taxpayer shall be furnished to such committee only when sitting in closed executive session unless such taxpayer otherwise consents in writing to such disclosure.

On it’s face, the statute seems clear on the authority of the committee to request a copy of a taxpayer’s return appears from the statute and this authority appears to be virtually unlimited. The terms of the statute make it clear that this is not true in that, at the very least, it provides that the committee will only be allowed to receive requested tax returns in executive session and that the could not be disclosed to the public without the consent of the taxpayer.

Additionally, thanks to two Supreme Court cases, though, there are some restrictions on the committee’s authority that appear to be the basis on which Mnuchin is relying in his refusal to comply with both the committee’s initial request and the subpoena. Those two cases are McGrain v. Daugherty, a 1927 case arising out of one of Congress’ investigations into the Teapot Dome scandal, and Watkins v. United States, a 1957 case dealing with a union officials conviction for contempt of Congress. The facts of these cases are not important to the current issue, but both stand for the proposition that any Congressional investigation into the private affairs of an individual must serve a “legitimate legislative purpose.” In his letter to Chairman Neal, Secretary Mnuchin essentially argues that the Committee has failed to provide a legitimate legislative purpose for requesting the Presidents tax returns. Mnuchin states that this determination was made pursuant to guidance from the Justice Department, although the legal argument that the Justice Department raises isn’t entirely clear since its recommendation to Mnuchin has not been made public as of yet. In any case, it is this issue, whether there is a “legitimate legislative purpose” behind the committee’s request, that will be subject of litigation when the matter does get before a court, and that would still have been the case had the committee decided to take the step of holding Mnuchin and Rettig in contempt.

Other than the two Supreme Court cases I cited above, there’s very little legal precedent out there that speaks to the issue of when a Congressional investigation is legitimate and when it does not serve a “legitimate legislative purpose.” Surely, we cannot simply take the word of Congress as gospel in a situation like this, particularly because we are talking about the highly personal information that, could be subject to being abused for political purposes. That’s why Congress simply can’t say “we demand to see the returns of Taxpayer John Doe” without providing at least some legitimate reason for why they need them. At the same time, though, I would argue that the deference on this issue should be on the side of Congress and that if it comes down to being a close issue the courts should uphold the right of Congress to use its oversight and investigatory powers as permitted by law. Additionally, in the case of Donald Trump, there appears to be any number of legitimate lines of Congressional inquiry under which a request for his tax returns would be justified. Because this appears to be a case of first impression, though, it’s unclear which way the lower courts and, if necessary at some point, the Supreme Court will come down.

Here’s Secretary Mnuchin’s letter to Chairman Neal:

Secretary Mnuchin Letter to… by on Scribd

FILED UNDER: Campaign 2020, Congress, Donald Trump, Law and the Courts, Politicians, Taxes, US Politics, , , , ,
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. Facebones says:

    Cool. So I assume everyone can now ignore subpoenas by declaring the investigations illegitimate? Cool cool cool.

    Trump’s appeal to his cult is that he’s this big, tough guy. There’s no better way to appear tough than to flout the law without consequence. Democrats better figure out a way to hold him accountable, starting with impeachment hearings

  2. @Facebones:

    This is why we have courts. Anyone served with a subpoena has a legal right to object to them, what happens next is that there will be a legal process designed to determine if that objection has a legitimate legal basis.

  3. drj says:

    @Doug Mataconis:

    This is why we have courts.

    Which is obviously not much of a recourse if the accused and his political allies have appointed a majority of the judges on the Supreme Court.

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  4. Bob@Youngstown says:

    @drj:

    accused and his political allies have appointed a majority of the judges

    Yep, second cousin to “stacking the jury”. Just confirms the perception that Lady Justice is not blind, favoring to those who yield wealth and power.

  5. Kit says:

    The courts have created the notion of legitimate legislative purpose out of whole cloth. Not only that, they declined to enumerate those purposes. But don’t worry: the courts will take that up on a case-by-case basis. In the meantime, anyone inconvenienced by Congress can simply let the courts decided. Next up will be a ruling to hem in the Executive. No doubt that can wait for a President the courts find disagreeable.

    Surely, we cannot simply take the word of Congress as gospel in a situation like this, particularly because we are talking about the highly personal information that, could be subject to being abused for political purposes.

    Why the hell not? Congress is hemmed in by laws, just like the other branches. Following your reasoning, Congress should not be allowed access to any information that might be abused, at least not until the courts have weighed in on the particulars. Please don’t attempt to say that there are laws and rules regarding, for example, top-secret information: the law regarding these tax returns is quite explicit.

    The notion of legislative oversight is being usurped. Funny how the Constitution is never mentioned, especially when each one of its sacred words is so carefully weighed and sifted when lesser issues are at stake.

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  6. MikeSJ says:

    @Doug Mataconis:

    What happens if Mnuchin, even after a court orders him to comply, simply continues to refuse to provide the requested documents?

  7. @MikeSJ:

    If they exhaust their appeals and still refuse to comply, then we have a Constitutional crisis and impeachment becomes the only option.

  8. dazedandconfused says:

    @MikeSJ:

    That really would be a Constitutional crisis. If the Executive branch holds itself above the law, the Executive branch is the law.

  9. MikeSJ says:

    @Doug Mataconis:

    I fully expect no matter what the court orders Mnuchin will refuse to cooperate. If the House impeaches the President then the Senate under Mitch will either refuse to have a trial or simply vote to exonerate Trump.

    I do wonder what is in his tax returns that warrants all of this.

  10. CSK says:

    @MikeSJ: The possibilities range from “he’s not nearly as rich as he claims to be” to “decades of financial crimes, including fraud and money laundering.” Trump has already been fined for laundering Russian mob money through his casinos.

    My guess is that he hopes to fend off the subpoenas till well past Novembert 2020.

  11. Bob@Youngstown says:

    @CSK:
    The other possibility is that there is really nothing (in his tax returns) that is very damning, but by creating a focus on that red herring, we are distracted as he is systemically destroying the US Constitution

  12. CSK says:

    @Bob@Youngstown: I see your point, but Trump appears to be a little too frantic to keep those returns hidden for it to be entirely valid. Recall that Trump promised, at various points, to release his returns during the campaign, then said he’d release them after the election, then said he wouldn’t release them. He’s been playing this game for quite a while.

  13. JohnMcC says:

    Thanks to Garret Epps over at theatlantic – dot – com I now know the latin phrase for the governing philosophy of the modern Republican Party. It’s ‘Quod principi placuit, legis habet vigorem.’ Means ‘Whatever pleases the prince has the force of law.’

    He has a remarkable laundry list of cases where this has proven true.

  14. DrDaveT says:

    The facts of these cases are not important to the current issue, but both stand for the proposition that any Congressional investigation into the private affairs of an individual must serve a “legitimate legislative purpose.”

    You keep saying this, but it is still not true. Those cases both found that an individual may not be compelled to testify before Congress unless such testimony would serve a legitimate legislative purpose. No one is asking Trump or Mnuchin or anyone else to testify at a Congressional hearing, and Mnuchin is not being treated as a private individual at all. Neither precedent is relevant in any way to a question of whether an Executive agency can decline a statutory request from Congress that is clearly authorized and nondiscretionary under existing law.

    If you still disagree with that, could you please either expand on your argument or point to an outside analysis of why those cases ought to apply here?

  15. Tyrell says:

    This tax thing – again? A few weeks ago the politicians and news media were aghast about those Trump tax forms that showed those billion dollar losses! “Trump loses billions” they were hollering!
    Then to their astonishment, they found out that years ago Trump had already talked about this on one of his “Apprentice” shows and it was in one of his books!
    And get this: the New York Times in 1995 ran this story:” Crowning the Comeback King!”. This was the account of how Trump lost the money and then made it back! I am going to get some of his books and read them. Maybe they will give me some tax tips. The more they bring stuff up, the more I research and learn new things about Trump, a person I used to think was a big showoff and “fake”.
    “can’t simply say we demand to see the tax returns of John Doe”: once they open the door for one, it will then be John Doe, Bob the plumber, Joan the school teacher, Paul the pastor, Sandra the doctor, and Ashley the movie theater popcorn technician.
    “Business and government leaders in New York honored Donald J. Trump yesterday for pulling off what they called the “comeback of the decade”(NYT, October 1995).

  16. Bob@Youngstown says:

    @Tyrell:

    “can’t simply say we demand to see the tax returns of John Doe”

    Who are you quoting?

    Are you arguing that occupation of the presidency is on par with the occupation a theater popcorn vendor?