Federal Judge Tosses Trump Attempt to Block Subpoena for His Tax Returns

Judge rules President Trump isn’t immune from criminal investigations while in office; Appeals court blocks immediate enforcement of subpoena

A federal judge in New York on Monday ruled President Trump’s accounting firm must turn over eight years of his personal and business tax returns, an order immediately put on hold by an appeals court.

The decision came in a lawsuit filed by Mr. Trump against Manhattan District Attorney Cyrus Vance Jr. and Mazars USA LLP, his longtime accounting firm. Mr. Trump sought to block a subpoena for his tax returns that state prosecutors sent to the accounting firm, saying it was unconstitutional to subject a sitting president to what he called the “criminal process.”

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Mr. Trump’s lawyers filed an emergency appeal minutes after the ruling, leading a judge from the Second U.S. Circuit Court of Appeals to put the ruling temporarily on hold “because of the unique issues raised by this appeal.” Mr. Vance’s office asked the court to hear arguments on the matter this week, but it isn’t clear when the panel will rule.

Mr. Vance’s office sent the subpoena to Mazars in August as part of its probe into whether payments made to adult-film actress Stormy Daniels, and how these payments were recorded, violate a state law against falsifying business records.

In his ruling, U.S. District Judge Victor Marrero rejected the idea that a president couldn’t be investigated while in office. “This Court cannot endorse such a categorical and limitless assertion of presidential immunity from judicial process,” wrote Judge Marrero, an appointee of President Bill Clinton.

The judge said he recognized that subjecting a president to certain criminal proceedings, such as imprisonment, would interfere with his official duties. But the idea that the president, his business entities, relatives and private activities are immune from any criminal process is too broad, he said.

This Court finds aspects of such a doctrine repugnant to the nation’s governmental structure and constitutional values,” Judge Marrero wrote.

Responding to the ruling on Twitter, Mr. Trump wrote, “The Radical Left Democrats have failed on all fronts, so now they are pushing local New York City and State Democrat prosecutors to go get President Trump. A thing like this has never happened to any President before. Not even close! “

Donald J. Trump

@realDonaldTrump

The Radical Left Democrats have failed on all fronts, so now they are pushing local New York City and State Democrat prosecutors to go get President Trump. A thing like this has never happened to any President before. Not even close!

28K people are talking about this

A spokesman for Mr. Vance, a Democrat, declined to comment. Within minutes of the ruling, lawyers for Mr. Trump appealed the decision to the Second U.S. Circuit Court of Appeals.

Last week, the Justice Department weighed in on the case, asking the judge to temporarily block enforcement of the subpoena to allow for further consideration of the legal issues. The Justice Department lawyers also said the dispute should remain in federal court, not state court as requested by Mr. Vance’s office.

In a letter to the judge, prosecutors from Mr. Vance’s office said delaying enforcement of the subpoena would likely result in the statute of limitations expiring for state crimes under consideration. They asked Judge Marrero to dismiss the case. “The Plaintiff’s only goal in this litigation, now supported by the DOJ itself, is to obtain as much delay as possible, through litigation, stays, and appeals,” the state prosecutors wrote.

The state probe comes on the heels of a federal investigation into hush-money payments that concluded this summer. Trump lawyer Michael Cohen, who pleaded guilty to charges including violating campaign-finance laws as a result of that investigation, is now in federal prison.

Mr. Vance’s prosecutors have said the tax returns would remain confidential because they are part of a grand-jury proceeding. During a hearing, a lawyer for Mr. Trump said he didn’t think Mr. Vance’s office could make this promise.

“We do not know how the district attorney will respond to a subpoena from Congress,” said the lawyer, William Consovoy. “Would those secrecy laws trump that subpoena?”

Several disputes over Mr. Trump’s tax returns are making their way through federal courts.

In New York, a federal appeals court is weighing a case in which Mr. Trump sued Deutsche Bank AG and Capital One Financial Corp. to block the banks from complying with congressional subpoenas.

In California, a federal judge temporarily suspended a new state law requiring presidential candidates to make their tax returns public in order to appear on the state’s primary-election ballot.

Confidential draft IRS memo says tax returns must be given to Congress unless president invokes executive privilege

A confidential Internal Revenue Service legal memo says tax returns must be given to Congress unless the president takes the rare step of asserting executive privilege, according to a copy of the memo obtained by The Washington Post.

The memo contradicts the Trump administration’s justification for denying lawmakers’ request for President Trump’s tax returns, exposing fissures in the executive branch.

Trump has refused to turn over his tax returns but has not invoked executive privilege. Treasury Secretary Steven Mnuchin has instead denied the returns by arguing there is no legislative purpose for demanding them.

But according to the IRS memo, which has not been previously reported, the disclosure of tax returns to the committee “is mandatory, requiring the Secretary to disclose returns, and return information, requested by the tax-writing Chairs.”

The 10-page document says the law “does not allow the Secretary to exercise discretion in disclosing the information provided the statutory conditions are met” and directly rejects the reason Mnuchin has cited for withholding the information.

“[T]he Secretary’s obligation to disclose return and return information would not be affected by the failure of a tax writing committee . . . to state a reason for the request,” it says. It adds that the “only basis the agency’s refusal to comply with a committee’s subpoena would be the invocation of the doctrine of executive privilege.”

The memo is the first sign of potential dissent within the administration over its approach to the tax returns issue. The IRS said the memo, titled “Congressional Access to Returns and Return Information,” was a draft document written by a lawyer in the Office of Chief Counsel and did not represent the agency’s “official position.” The memo is stamped “DRAFT,” it is not signed, and it does not reference Trump.

The agency says the memo was prepared in the fall. At the time, Democrats were making clear they probably would seek copies of Trump’s tax returns under a 1924 law that states that the treasury secretary “shall furnish” tax returns to Congress.

Precisely who wrote the memo and reviewed it could not be learned. The agency says IRS Commissioner Charles Rettig and current chief counsel Michael Desmond, who was confirmed by the Senate in February, were not familiar with it until a Post inquiry this week. The IRS says it was never forwarded to Treasury.

Executive privilege is generally defined as the president’s ability to deny requests for information about internal administration talks and deliberations.

On Friday, Mnuchin rejected a subpoena from the House Ways and Means Committee to turn over the tax returns, a move that probably will now lead to a court battle. Mnuchin has criticized the demands as harassment that could be directed against any political enemy, arguing Congress lacks a “legitimate legislative purpose” in seeking the documents.

Breaking with precedent, Trump has refused to provide tax returns, saying without evidence they are under audit.

Mnuchin and other senior staff members never reviewed the IRS memo, according to a Treasury spokesman. But the spokesman said it did not undermine the department’s argument that handing over the president’s tax returns would run afoul of the Constitution’s mandate that information given to Congress must pertain to legislative issues.

The spokesman said the secretary is following a legal analysis from the Justice Department that he “may not produce the requested private tax return information.” Both agencies have denied requests for copies of the Justice Department’s advice to Treasury.

Some legal experts said the memo provides further evidence that the Trump administration is using shaky legal foundations to withhold the tax returns.

“The memo is clear in its interpretation of the law that the IRS shall furnish this information,” said William Lowrance, who served for about two decades as an attorney in the IRS chief counsel’s office and reviewed the memo at the request of The Post.

Daniel Hemel, a professor at the University of Chicago Law School who also reviewed the memo for The Post, said the document suggests a split over Trump’s returns between career staffers at the IRS and political appointees at that agency and the Treasury Department.

“The memo writer’s interpretation is that the IRS has no wiggle room on this,” Hemel said. “Mnuchin is saying the House Ways and Means Committee has not asserted a legitimate legislative purpose. The memo says they don’t have to assert a legitimate legislative purpose — or any purpose at all.”

The administration has resisted a range of House inquiries, although a federal judge on Monday ruled the president’s accounting firm must turn over his financial records to Congress.

Treasury Department officials said there had been extensive discussions about the tax return issue, with one official saying the issue put the agency in a difficult spot because Trump has predetermined the outcome — and because Mnuchin is a Trump ally who was the finance chair of his 2016 campaign.

The decision has been made,” this official said, who spoke on the condition of anonymity to discuss private conversations. “Now it’s up to us to try to justify it.”

Trump has told advisers he will battle the issue to the Supreme Court, according to people familiar with the matter. Trump recently has argued that the tax returns were an issue in the 2016 election but that because he won they should no longer be of concern.

Last week, Mnuchin told a Senate panel that Treasury Department lawyers held an early discussion about disclosing the tax returns long before Democrats officially demanded the documents in April. He did not reveal details of that deliberation or say what, if any, legal memos he had reviewed.

Some legal experts have held that the law is clear in giving Congress the power to compel the provision of the returns. But other former government lawyers, including two who served in the Reagan and George H.W. Bush administrations, have argued that the law is unconstitutional and could lead to widespread abuses of taxpayer privacy for political aims.

The IRS memo describes how and why Congress has the authority to access tax returns, explaining the origin of the provision and how it has been interpreted over the decades.

It highlights the special powers given to three committees for compelling the release of tax returns: the House Ways and Means Committee, the Senate Finance Committee, and the Joint Committee on Taxation. Other congressional committees, the memo emphasizes, do not have the same authority.

When it comes to the Ways and Means Committee, the obligation to divulge the returns “would not be affected by the failure” to give a reason for the request. By contrast, other committees “must include a purpose for their request for returns and return information when seeking access,” the memo states.

“One potential basis” for refusing the returns, the memo states, would be if the administration invoked the doctrine of executive privilege.

But the IRS memo notes that executive privilege is most often invoked to protect information, such as opinions and recommendations, submitted as part of formulating policies and decisions. It even says the law “might be read to preclude a claim of executive privilege,” meaning the law could be interpreted as saying executive privilege cannot be invoked to deny a subpoena.

Earlier this month, the nonpartisan Congressional Research Service published a review of Section 6103 of the Internal Revenue Code that found the code “evinces no substantive limitations” on the Ways and Means Committee’s authority to receive the tax returns.

But, the CRS report added, the committee’s authority “arguably is subject to the same legal limitations that generally attach to Congress’ use of other compulsory investigative tools,” including the need to serve some “legislative purpose” and not breach constitutional rights.

Tensions quickly spiral as Democrats ramp up investigations of Trump administration

Among Schiff’s new committee hires is Abigail C. Grace, who served as an Asia policy staffer on the National Security Council during the Trump administration until departing last spring for a Washington think tank.

At the Center for a New American Security, Grace worked as a research associate in the Asia-Pacific Security Program, a relatively junior-level position. She published essays on Asia policy and was quoted in news articles, including in The Washington Post, offering analysis about Trump’s Asia strategy. She announced her departure from the think tank last week and began work Monday on Schiff’s team, specializing in East Asia affairs, said people who know her.

.. “Although none of our staff has come directly from the White House, we have hired people with prior experience on the National Security Council staff for oversight of the agencies, and will continue to do so at our discretion,” the aide said.

A fluent Chinese speaker who accompanied Trump on his visit to five Asian countries in November 2017, Grace is expected to help the committee conduct oversight as the administration pursues high-stakes negotiations over North Korea’s nuclear weapons program and a trade war with China.

Grace was not a political appointee but rather a civil servant who started at the NSC working on Middle East affairs during the Obama administration in 2016, before switching to a focus on East Asia, said those familiar with her work. Her duties included assisting Matt Pottinger, the NSC’s senior Asia director who helps national security adviser John Bolton coordinate policy among the federal agencies and advise Trump.

.. Some senior Trump aides have privately expressed concern that Schiff’s hiring of former White House staff members is a bid for inside information that could be particularly damaging — a sign of the growing alarm over the president’s vulnerability in a new era of divided government.

But former staffers from the George W. Bush and Obama administrations, as well as longtime civil servants, said it was not unusual for government policy experts to leave and wind up advising or working for lawmakers.

“It happens every day,” said a Capitol Hill staffer who is not on Schiff’s committee. The staffer, who spoke on the condition of anonymity because of the sensitivity of the matter, rattled off a number of former Hill aides who had worked as policy experts in past administrations. “My understanding is that Schiff was going from the minority to the majority and had to staff up more fully. It’s the normal way things operate.”

.. Also on Thursday, the House held a hearing on obtaining Trump’s tax returns, listening to tax experts who discussed the impact of legislative language that would force presidential candidates to release 10 years of tax returns after they win their party’s nomination.

Three congressional officials are empowered legally to seek taxpayer information from the Treasury Department: the chairman of the Ways and Means Committee, the chairman of the Senate Finance Committee and the chairman of the Joint Committee on Taxation. But Rep. Mike Kelly (Pa.), the ranking Republican on the subcommittee that held the hearing, said Congress is barred from releasing tax returns for political purposes.

House Speaker Nancy Pelosi (D-Calif.), responding to criticism from liberals that the House leadership has not moved quickly enough to obtain Trump’s tax returns, said, “You have to be very, very careful if you go forward.”

“In terms of the tax issue, it’s not a question of just sending a letter,” Pelosi said. “I know there’s this impatience because people want to know, that answers the question, but we have to do it in a very careful way.”

House Democrats unveil bill to obtain Trump’s tax returns, put checks on White House

A day after assuming the majority, House Democrats on Friday unveiled a sweeping ethics reform package that would put new checks on the White House and require President Donald Trump to release his tax returns.

House Democrats mostly presented the package — which contains numerous changes to campaign finance and ethics law — as a set of popular good-government reforms during a Friday press conference on Capitol Hill. But the bill’s proposed checks on Trump also will make it a useful cudgel for the new majority, even though the legislation is unlikely to be approved by the GOP-held Senate.

Rep. Elijah Cummings (D-Md.), incoming chairman of the House Committee on Oversight and Government Reform, indicated he will be stepping up oversight of Trump in the coming weeks.

.. The new bill would mandate that the president and vice president release 10 years of their tax returns. It would also enhance ethics rules for White House employees and give the Office of Government Ethics more enforcement power.

.. Another change to campaign-finance law in the bill: A requirement that super PACs and other groups that spend more than $10,000 in an election disclose their donors within 24 hours. Nearly 70 super PACs found ways to delay disclosing their donors during the 2018 elections, according to a POLITICO analysis. The issue has gotten little attention from lawmakers, and activists in contact with House Democrats initially said it wouldn’t be addressed in the bill.