A federal judge decided Thursday that a different judge should handle President Donald Trump’s suit to prevent House Democrats from obtaining his New York state tax returns, delaying a decision on the president’s request for a restraining order against the Democrats. Trump’s suit to block Democrats from getting his New York tax returns will be handed off to another judge:
Judge Trevor McFadden, a Trump appointee, rejected a bid by Trump lawyer William Consovoy to have McFadden hear both that case and a separate lawsuit by Ways and Means Chairman Richard Neal seeking the president’s federal returns.
At a hearing Thursday, Consovoy argued the cases are so similar that McFadden ought to handle both.
But McFadden disagreed, noting one involved federal tax law and the other state law. What’s more, McFadden said, Democrats are plaintiffs in one case and defendants in the other, and that could have ramifications for their legal strategies in the cases.
“It feels like a very different situation,” he said.
While the New York case will be reassigned to another judge, McFadden will still handle Neal’s lawsuit for Trump’s federal filings.
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McFadden did not rule on Trump’s plea for a restraining order to prevent House Democrats from taking advantage of a newly passed New York law allowing state officials there to share Trump’s returns with Neal. That will be decided by the new judge.
Though Neal has been lukewarm about using the law, Trump filed suit Tuesday expressing concern that the Massachusetts Democrat might suddenly change his mind. On Wednesday, Trump asked the court for the restraining order to prevent Neal from acting while the case was being considered.
But House Democrats urged the court to reject Trump’s request, arguing the court does not have the authority to grant the restraining order.
“The Ways and Means Committee’s decision whether to avail itself of a newly enacted provision of the New York tax code is a legislative act absolutely immune from challenge through the court system,” lawyers for the House of Representatives said in a court filing. “This Court thus lacks jurisdiction to grant the relief requested by Mr. Trump.”
House Democrats released historical documents Thursday showing their attempt to obtain President Donald Trump’s tax returns has precedent.
According to a statement from committee chairman Richard Neal, D-Mass., the House Ways and Means Committee voted to publish documents from the early 1970s showing how when members of the Joint Committee on Taxation used their authority to request President Richard Nixon’s tax information, the Internal Revenue Service (IRS) immediately complied with the request.
As Section 6103 of the federal tax code requires.
The Ways and Means panel has cited the same tax disclosure law — Section 6103 of the federal tax code — in an effort to obtain Trump’s tax returns. The law says the IRS “shall furnish” [a non-discretionary command] the returns of any taxpayer to the chairmen of the tax-writing House Ways and Means Committee, the Senate Finance Committee and the Joint Committee on Taxation for legitimate legislative purpose.
Nixon had voluntarily disclosed his returns from 1969-1972. The Joint Committee on Taxation sought — and received — additional tax information from the IRS from 1963-1968.
The ensuing audit led to the Internal Revenue Service ruling that Nixon underpaid his taxes in his first four years in office by more than $400,000. In 1974, the House Judiciary Committee had already approved three articles of impeachment, alleging that Nixon had obstructed the Watergate investigation, abused the powers of his office and failed to comply with House subpoenas. The House Judiciary Committee rejected an article of impeachment that sought to remove President Richard Nixon from office for tax fraud and accepting improvements to his property at government expense.
Donald Trump’s financial entanglements with Russia goes to the heart of Russian “kompromat” over Trump and was one motivating factor for his campaign’s collusion with Russian interference in the 2016 election. It is also the reason why he is obstructing Congress over his tax returns, one of the specific charges against Richard Nixon in his articles of impeachment. Trump definitiely has something to hide.
Neal initially made the request for Trump’s personal and business tax returns, as well as documents related to any audits, on April 3. After a series of letters between the panel and the administration, Treasury Secretary Steve Mnuchin formally rejected the request at the beginning of May, arguing that it represented an unprecedented abuse of power. [It was an abuse of power to fail to comply with the request.] Neal issued subpoenas to the IRS and Treasury Department on May 10.
As tax expert David Cay Johnston explains, this is the point where everyone concealing Trump’s tax records has exposed themselves to being removed from office and subject to prosecution:
There is, however, a law requiring every federal “employee” who touches the tax system to do their duty or be removed from office.
The crystal-clear language of this law applies to Trump, acting White House Chief of Staff Mick Mulvaney, Mnuchin and Rettig, federal employees all.
The law says all of them “shall” be removed from office if they fail to comply with the request from Representative Richard Neal, the Massachusetts Democrat who chairs the House Ways and Means Committee.
[That] provision in our tax code, Section 7214(a), provides that “Any officer or employee of the United States acting in connection with any revenue law of the United States… who with intent to defeat the application of any provision of this title fails to perform any of the duties of his office or employment… shall be dismissed from office or discharged from employment and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years or both.”
Mnuchin, who oversees the IRS, has fought to protect the president’s financial information from public disclosure, arguing the request to turn over his returns would create a dangerous precedent.
Um, Dude, there already are longstanding precedents: the IRS has always turned over the tax records upon request from the chairman, including president Nixon’s tax returns. See tax code, Section 7214(a) above to learn your fate.
“History demonstrates that private tax return information is susceptible to abuse for partisan purposes ― regardless of which party is in power,” Mnuchin said in an April 23 letter. [Provide one example.] “Unless carefully restrained by law, this risk threatens the privacy of all taxpayers.”
Democrats, meanwhile, have argued the power for lawmakers to seek the returns is written explicitly in a 1924 law. They have also argued they need to see the president’s returns to ensure the IRS was conducting audits properly.
Mnuchin argued at a Senate Appropriations subcommittee hearing in May the tax scuffle was “a very important issue that has a precedent way beyond any one president and Congress.”
“There is a difference in interpretation between Congress and the Department of Justice around this law [only since the arrival of William “Coverup” Barr, Trump’s new fixer] that not only impacts this president and this Congress but has a very big impact on every single taxpayer in weaponizing the IRS,” Mnuchin said at the time. “And this is why there are three branches of government.”
He also said Congress did not need to see the president’s tax returns to ensure the IRS was fairly enforcing the law.
“Congress has a legitimate interest to make sure that the IRS is performing the function properly as it relates to any taxpayer,” Mnuchin said. “This is a very important issue that has a precedent way beyond any one president.”
Democrats have been on a hunt for Trump’s tax returns since he bucked decades of tradition when he refused to release them during the 2016 election cycle.
Although not required by law, every major party presidential nominee since the 1970s has chosen to publicly release his or her tax returns except for Gerald Ford, who only released a summary. Financial disclosures can help paint a fuller picture of a candidate’s business positions and interests by providing information about financial dealings, such as investments, donations, business relationships, assets and possible conflicts of interests.
Trump has made clear he does not want to turn over his tax returns, claiming he cannot disclose them as a result of being audited by the IRS. [As Trump would say, “that’s bullshit!”] However, an audit does not prevent a taxpayer from releasing his or her own tax documents. The administration has indicated it plans to fight congressional requests for information about the president’s finances.
Toward the end of former special counsel Robert S. Mueller III’s Capitol Hill testimony on Wednesday, Democratic representatives sitting on the House Intelligence Committee began to press Mueller on whether Donald Trump was compromised by his financial dealings with Russians, presenting a national security risk. As Mueller’s testimony concludes, Democrats revisit an old question: Is Trump a blackmail risk?
Rep. Raja Krishnamoorthi (D-Ill.) noted that counterintelligence investigations — that is, investigations into ways in which foreign intelligence agencies might seek to compromise government officials — were outside of the scope of the special counsel’s probe.
“Since it was outside your purview, your report did not reach counterintelligence conclusions regarding any Trump administration officials who might potentially be vulnerable to compromise or blackmail by Russia, correct?” Krishnamoorthi asked.
Mueller confirmed that this was correct, noting that those investigations would be housed at the FBI.
Krishnamoorthi quickly walked through often-murky links between Russian actors and Trump’s private business, links like the Moscow skyscraper deal or past purchases of Trump properties by Russians. (Mueller declined to indicate whether his team had obtained Trump’s tax returns.) Krishnamoorthi then turned to the broader point.
“Individuals can be subject to blackmail if they lie about their interactions with foreign countries, correct?” he asked.
“True,” Mueller replied.
While former national security adviser Michael Flynn did plead guilty to lying to Mueller’s team, Krishnamoorthi said, “your report did not address how Flynn’s false statements could pose a national security risk because the Russians knew the falsity of those statements, right?”
“I cannot get into that,” Mueller replied, “mainly because there are many elements of the FBI that are looking at different aspects of that issue.”
“Currently?” Krishnamoorthi asked.
“Currently,” Mueller replied.
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In May, House Intelligence Committee chairman Adam B. Schiff (D-Calif.) spoke with The Washington Post about how the counterintelligence investigation into Trump himself had gone dark since former FBI director James B. Comey was fired.
“This all began as an FBI counterintelligence investigation into whether people around then-candidate Trump were acting as witting or unwitting agents of a foreign power,” Schiff said then. “. . . We would get briefed, predominantly at a Gang of Eight level, up until Comey was fired. And, after that point, while we continued to get quarterly — although often they missed the quarterly nature of it — counterintelligence briefings, they excluded the most important counterintelligence investigation then going on, that involving Donald Trump.”
Schiff referred to the discrepancy between what Putin knew and what was public as “quintessential counterintelligence issues” and expressed concern that the investigation might have been shut down.
Schiff raised this same question to Mueller on Wednesday. He noted that January 2016 conversation between Trump’s former attorney Michael Cohen and a staffer in Putin’s spokesman’s office.
“If candidate Trump was saying, I have no dealings with the Russians, but the Russians had a tape recording [of the Cohen conversation], they could expose that, could they not?” Schiff asked.
“Yes,” Mueller replied.
“That’s the stuff of counterintelligence nightmares, is it not?” Schiff said.
“It has to do with counterintelligence and the need for a strong counterintelligence entity,” Mueller replied.
Schiff then stated that Trump’s response to the Trump Tower Moscow deal being made public was twofold. The first was to say that the discussions weren’t a crime. The second was that he was lining things up in case he lost.
“There was a good chance that I wouldn’t have won,” Trump said last November, “in which case I would have gone back into the business, and why should I lose lots of opportunities?”
Schiff asked Mueller, “Were you able to ascertain — because he wouldn’t answer your questions completely — whether or if he ever ended that desire to build that tower?”
“I’m not going to speculate on that,” Mueller replied.
Schiff continued: “If the president was concerned that if he lost his election, he didn’t want to miss out on that money, might he have the same concern about losing his reelection and missing out on that money?”
“Again, that’s speculation,” Mueller said.
Schiff said, “The difficulty with this, of course, is we are all left to wonder whether the president is representing us or his financial interests.”
And with that, Mueller’s time on the Hill was over.
And the Congressional oversight committees’ work has only just begun.
I don’t see how the court can rule in any way other than ordering the IRS to produce Trump’s federal tax returns to House Ways and Means Committee Chairman Neal, as Section 6103 of the federal tax code unambiguously requires. But this is a Trump appointed judge, so who can say for certain?
Trump’s financial ties to Russia, and the probability that he is compromised, makes him a national security threat.