Treasury likely to defy demand to hand over Trump tax returns

By Damian Paletta and Erica Werner / The Washington Post

WASHINGTON — The Treasury Department on Tuesday is likely to defy a second demand from House Democrats to turn over six years of President Donald Trump’s tax returns, according to two administration officials, part of a widening White House effort to stymie congressional oversight.

House Democrats must now decide how forcefully to respond. They could seek to send a final written warning, subpoena the records under a 1924 law that appears to give them access to virtually any tax return, or summon top administration officials to testify.

The White House has not offered any legal rationale for so far refusing to turn over the records. Instead, Treasury Secretary Steven Mnuchin — Trump’s former campaign finance chairman — has attacked the motives of Democrats and said he is consulting with the Justice Department over how to proceed.

“There is nothing nefarious there at all,” White House spokesman Hogan Gidley said Tuesday on Fox News. “This was litigated in 2016, and they are going to keep pushing.”

He said Trump was not inclined to allow the release of his tax returns until an audit of the records is complete. He has not provided any details of the audit, however, and his former lawyer — Michael Cohen — has said he doesn’t believe the records are actually under audit.

Last week, House Ways and Means Committee Chairman Richard Neal, D-Mass., sent Internal Revenue Service Commissioner Charles Rettig a pointed request for six years of Trump’s personal and business tax returns, giving him a 5 p.m. deadline on Tuesday. The IRS is a division of the Treasury Department, and Mnuchin has said he has taken charge of the administration’s response.

The resistance is part of a broader Trump administration effort block a myriad congressional investigations into the White House and Trump’s business background. The White House instructed a former personnel security director not to show up for questioning before the House Oversight Committee on Tuesday, and on Monday the Trump Organization filed a lawsuit to prevent an accounting firm from complying with a committee subpoena for eight years’ worth of Trump’s financial records.

As the White House tries to mobilize opposition to the congressional investigations, some Democrats believe they will ultimately prevail.

“We can squeeze these birds,” said Rep. Bill Pascrell Jr., D-N.J., a senior member of the House Ways and Means Committee. “We can go to court… . Anyone who denies us is at risk.”

Tuesday’s deadline was set by Neal after the IRS missed an initial April 10 time limit to produce six years’ worth of Trump’s personal and business returns.

Neal’s request relies on a 1924 federal law that says the IRS “shall furnish” any individual’s tax returns if they are sought by a chairman of Congress’ tax-writing committees. Neal contends that his request for Trump’s returns is part of his committee’s oversight responsibilities. IRS guidance directs the agency to audit the tax returns of presidents and vice presidents, and Neal said that he wants to determine if such an audit is taking place as appropriate, among other things.

Mnuchin has questioned the legitimacy of the request, while Trump’s personal attorney has dismissed it as a politically motivated fishing expedition and rejected Neal’s stated reasons. Trump himself has continued to suggest that he can’t release his tax returns while being audited, which is the explanation he’s given since his presidential campaign for becoming the first president since Richard Nixon to refuse to voluntarily release his tax returns.

The wording of the statute does not appear to offer discretion to the commissioner of the IRS, which is part of the Treasury Department, to refuse Neal’s request. However, the whole situation amounts to “uncharted territory” since there has not previously been an occasion where a request for tax returns under the little-used statute has been refused, according to George Yin, a University of Virginia law professor who’s testified on the topic before the Ways and Means Committee.

The statute itself does not specify a timeline for compliance, or a penalty for an IRS commissioner or treasury secretary who fails to comply.

“Presumably if there was a refusal, and if the Congress doesn’t simply back off the request, there would be some type of conflict that would be resolved in court in some way, and then it would be up to the court to make a determination of at what point the treasury secretary has violated the law,” Yin said.

Although Neal has proceeded carefully with his request and rejected suggestions that politics are at play, other Democrats have been more open about their desire to get the returns in time to examine their contents ahead of the next presidential election. As Democrats proceed to investigate Trump and his administration on various fronts, some of them say that the contents of Trump’s tax returns could be key to their efforts.

The returns could provide insight into Trump’s entanglement with foreign governments, whether he improperly inflated or deflated the value of his assets in dealing with financial institutions, and potentially whether he benefited personally from the 2017 tax law.

“The center of this discussion better be the finances of the president of the United States. If it isn’t it’s going to wind up as a draw, a jump ball, and that’s where we are,” said Pascrell, adding that the returns could show whether Trump is “fit for office.”

The issue has become a rallying cry for liberal activists, who staged a rally outside the IRS on Tax Day, April 15, to demand Trump release his returns. But Republicans have closed ranks around the president and objected to Democrats’ pursuit of the topic, particularly after special counsel Robert Mueller’s investigation concluded without accusing Trump of collusion or obstruction of justice.

“The Democratic request for the President’s tax returns is unprecedented and sets a dangerous precedent,” Rep. Kevin Brady, R-Texas, the top Ways and Means Republican, said earlier this month. “The intent of Section 6103 is clear: the tax code must not to be used for political fishing expeditions.”

Both sides anticipate the issue will turn into a heated court battle, and some Democrats fear the Trump administration’s strategy will be to drag the issue out past the election.

“At some point you do have to have the House attorneys go to court for you,” said Janice Mays, a managing director at PwC who formerly served as the longtime staff director for Democrats on the Ways and Means Committee. “My personal view, I don’t know why this wouldn’t be summary judgment on the side of Richie Neal because the statute is so clear but my instinct is the lawyers for the administration would be doing their damnedest to push against that.”

Presuming Democrats ultimately are successful in obtaining the returns, they would not become public but instead would have to be closely held by Neal as confidential taxpayer information. At some point, the Ways and Means Committee could vote to begin a process that would make the returns public.