By Alan Rappeport
The Treasury Department said Wednesday evening that it would not immediately comply with a congressional request to hand over President Donald Trump’s tax returns, setting up a protracted legal battle between two branches of government.
Steven Mnuchin, the Treasury secretary, said in a letter to Rep. Richard E. Neal, D-Mass., the chairman of the House Ways and Means Committee, that the Treasury Department’s lawyers needed more time to assess the lawfulness of the request and expressed concern that it would be a violation of taxpayer privacy.
Mnuchin did not say how much time the review would take but conveyed concerns about whether Congress has authority to review the records.
“The committee’s request raises serious issues concerning the constitutional investigative authority, the legitimacy of the asserted legislative purpose and the constitutional rights of American citizens,” Mnuchin wrote. “The legal implications of this request could affect protections for all Americans against politically motivated disclosures of tax information, regardless of which party is in power.”
Neal responded to Mnuchin’s decision with a terse statement that indicated he believed the request was a matter for the IRS, not the Treasury secretary: “I will consult with counsel and determine the appropriate response to the commissioner in the coming days.”
Neal is expected to send a follow-up letter demanding the tax returns and outlining potential next steps, which could include a subpoena or a lawsuit. The issue could ultimately be decided by the Supreme Court.
Trump said Wednesday that he would not turn over his tax returns because they remained under audit by the IRS, signalling a long fight ahead.
The president, who has used the excuse of an IRS audit since the 2016 presidential campaign, made clear he would continue to cite that as a reason not to release his tax records, even though no law prevents a taxpayer from releasing returns while under audit.
“I would love to give them, but I’m not going to do it while I’m under audit,” Trump told reporters before departing for a trip to Texas. “I have no obligation to do that while under audit and no lawyer would tell you to release your tax returns while you’re under audit.”
Trump’s Treasury Department was facing a midnight deadline to respond to a letter sent last week by Neal, who issued a formal request for six years of Trump’s personal and business tax records.
White House officials have called the request a political fishing expedition, and Mnuchin has said that furnishing the returns could open the floodgates to weaponizing the IRS.
Mnuchin signalled his intention Tuesday, when he told members of Congress that the president had no legal obligation to make his tax returns public. While Mnuchin insisted he would follow the law, he also defended Trump’s right to keep his tax returns private.
Mnuchin reiterated his position that the privacy of taxpayers, including that of the president, was paramount during a moderated discussion Wednesday at the International Monetary Fund.
“We are going to respond carefully. We need to make sure that the IRS and individual taxpayer information does not just become subject to political winds,” Mnuchin said, adding that he had been consulting with the Justice Department on the matter. “Whether it is this party or a different party over time, I take the obligation very seriously to make sure that we follow the law correctly.”
But the provision in tax law that Democrats are using appears to give the Trump administration little leeway to resist their request; it says merely that the Treasury secretary “shall” furnish the requested information. It was used several times by House Republicans when they were investigating whether the IRS had improperly delayed applications by conservative groups for nonprofit status.
Some Democrats quickly denounced the Treasury Department’s decision Wednesday.
“How many lawyers and how much time does it take for Secretary Mnuchin to understand that ‘shall’ means ‘shall’?” said Rep. Lloyd Doggett, D-Texas, a member of the Ways and Means Committee. “Again, believing that he is above the law, Trump is engaged in obstruction.”
Republicans praised Mnuchin’s caution and lashed out at Democrats for what they said was an abuse of power.
“Americans didn’t elect their members of Congress to go to Washington to try to dig up harmful information on their political opponents,” said Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee. “It should be alarming to every American that there are attempts by elected officials to weaponize the IRS for partisan political purposes.”
Mnuchin acknowledged that White House lawyers had been in touch with the Treasury Department about the matter before Neal made his formal request last week. Mnuchin said he had not personally spoken to Trump about the request.
As a candidate, Trump promised on many occasions that he would release his returns when the IRS finished an audit of his taxes. Declining to release the returns broke with decades of precedent.
Charles P. Rettig, the IRS commissioner, said Tuesday at a congressional hearing that no rules prohibited taxpayers who are under audit from releasing their tax returns.
The tax returns of presidents are automatically audited. After Democrats took control of the House this year, Neal decided to use a provision in the tax code that allows the chairman of the tax writing committee to gain access to the returns of any taxpayer. Neal said Trump’s returns were needed so the committee could assess how the IRS was auditing presidential returns.
Republicans have argued that this rationale is suspect, pointing out that Democrats only asked for Trump’s returns and that there are other methods that could be used to study the auditing practices at the IRS.
Although he has said he would rely on the advice of his department’s lawyers when deciding, Mnuchin, one of Trump’s most loyal aides, has been widely expected to fight to keep the tax returns secret.
In his letter, the Treasury secretary said he would be personally overseeing the matter.