House Democrats Sue Treasury, IRS Head for Trump Tax Returns

(Bloomberg) -- House Democrats asked a U.S. court to force the Treasury Department to turn over six years of President Donald Trump’s personal and business tax returns.

The long-expected lawsuit filed in a Washington federal court on Tuesday is Congress’s latest attempt to assert oversight over the executive branch, as the Trump administration has either rejected or ignored various subpoenas since Democrats took the majority in the House in January.

"In refusing to comply with the statute, defendants have mounted an extraordinary attack on the authority of Congress to obtain information needed to conduct oversight of Treasury, the IRS, and the tax laws on behalf of the American people who participate in the nation’s voluntary tax system," the complaint said.

The White House called the suit a “danger to democracy.”

“The only thing more political than the committee’s crusade for the president’s tax returns is its sham lawsuit,” said a statement by White House Deputy Press Secretary Steven Groves.

Neither the Treasury Department nor the Internal Revenue Service replied to requests for comment on the lawsuit. The lawmakers are seeking a court order compelling the defendants to hand over the records.

The lawsuit followed Treasury Secretary Steven Mnuchin’s rejections of a written request and then a subpoena for the information. House Ways and Means Chairman Richard Neal has sought the records since April, arguing that his committee needs them to see whether the IRS is following its practice of auditing the president annually.

Trump’s private lawyers have twice tried and failed to win court orders blocking subpoenas seeking records from his bankers and accountants. His attorneys are appealing those rulings. A federal judge in May said U.S. lawmakers have the power to demand Trump’s financial records from his accounting firm, Mazars USA LLP. A U.S. appeals court panel in Washington will take up that case on July 12.

Trump broke more than 40 years of campaign precedent by refusing to release his tax returns as a candidate. Trump has said he cannot return them while under audit, although no law prevents such a release. He has also said that publicizing his tax returns was an invasion of his privacy.

Neal has faced displeasure from progressives within Congress and outside groups frustrated that he did not move more quickly to sue for the tax returns. Neal has said he and his legal counsel have been cautious and deliberate to develop the strongest legal case.

“This delay is a win for Trump, regardless of the eventual outcome in court,” Jeff Hauser, the director of the Revolving Door Project, said in a statement. “Trump has been gifted several months of delay in litigation that can never be recovered by the public that voted Democrats into control of the House of Representatives as a check on Trump’s corruption.”

The Democrats’ lawsuit attempts to enforce requests for tax returns and other records for both Trump and his businesses. Democrats have long hoped to see the returns to help explore his foreign business ties, see how he might have profited from recent tax legislation and see whether he’s under audit by the IRS, as he has said, among other issues.

Neal invoked a section of the tax code in his requests that gives him and Congress’s other tax-writing committees the right to receive such records for any taxpayer.

Mnuchin put off the request for a month and in May rejected it, asserting that Neal’s stated legislative purpose was just a pretext for a political attack. He said that the rejection was based on advice from the Department of Justice, which gave him a formal written opinion on the issue.

That upped the pressure for Neal to sue. Some legal experts believe the battle could last well past the 2020 presidential election and reach the U.S. Supreme Court.

Representative Kevin Brady, the top Republican on Ways and Means, said Tuesday he plans to introduce a resolution expressing official disapproval of the lawsuit, which he said circumvents “America’s democratic process” because the panel didn’t vote to file a lawsuit. A resolution doesn’t hold any legal weight and is unlikely to pass the Democratic-controlled House.

Included with the committee’s complaint were a series of letters between the House and the Trump administration. In a May 6 letter to Neal, Mnuchin called the chairman’s request "unprecedented" and warned its resolution "may have lasting consequences for all taxpayers." In a separate letter from April, Trump’s lawyer William Consovoy asserted requests for tax returns and return information "must be related to, and in furtherance of a legitimate task of Congress," echoing arguments the attorney made in opposing lawmakers’ requests for records from Trump’s bankers and accountants.

Democrats cited the president’s own questions about the integrity of the IRS, which he has said is auditing his returns and called it "extremely unfair."

"These complaints by President Trump underscore the appropriateness of the
committee’s review of IRS audits of presidential returns, including those of President Trump," the committee’s lawyer said in the complaint. "Thus far, however, the committee has been unable to evaluate President Trump’s claims about the audit program or investigate its other concerns because the president has declined to follow the practice of every elected president since Richard Nixon of voluntarily disclosing their tax returns."

The case is Committee on Ways and Means v. U.S. Department of the Treasury, 19-cv-1974, U.S. District Court, District of Columbia (Washington).

To contact the reporters on this story: Joe Light in Washington at jlight8@bloomberg.net;Andrew Harris in Washington at aharris16@bloomberg.net;Laura Davison in Washington at ldavison4@bloomberg.net

To contact the editors responsible for this story: Wendy Benjaminson at wbenjaminson@bloomberg.net, John Harney

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