Trump Files Federal Lawsuit in Bid to Strike Down NY Law Allowing Congress to Obtain State Tax Returns
The president's attorney, William Consovoy, is taking the new tax disclosure law to court before Democrats or committee chairpersons can invoke it.
July 23, 2019 at 02:49 PM
8 minute read
The original version of this story was published on New York Law Journal
President Donald Trump is attempting a preemptive strike to block the release of his tax returns under a recently passed law in New York state.
A lawsuit filed in U.S. District Court for the District of Columbia asks the court to strike down a New York state law that would allow members of Congress to obtain copies of his state tax returns from the state Department of Taxation and Finance.
The complaint claims members of the U.S. House of Representatives cannot use the state law in order to go around a Treasury Department decision to not release Trump's tax returns. Treasury Secretary Steven Mnuchin rejected a House subpoena seeking the president's federal return, claiming they had no legislative purpose.
Trump is represented by William Consovoy and Patrick Strawbridge of Consovoy McCarthy.
“Because the Committee's jurisdiction is limited to federal taxes, no legislation could possibly result from a request for the President's state tax returns,” the suit said. “The Committee thus lacks a legitimate legislative purpose for using the TRUST Act. This Court has 'the power, either by injunction or declaratory judgment, to stay the issuance' of any request under the Act.”
The law, dubbed the TRUST Act, was signed by Gov. Andrew Cuomo earlier this month. It would allow key members of Congress, including House Ways and Means Committee Chairman Rep. Richard Neal, D-Massachusetts, to request copies of the president's state tax filings.
When New York state lawmakers initially proposed the law earlier this year, a spokesman for Neal said Ways and Means wasn't planning to take advantage of it. But an NBC News report Monday, which was cited by the lawsuit, showed that pressure was being exerted on Neal from fellow Democrats to use the law.
Neal said earlier this month, according to the suit, that an attorney for the House had been asked to reconsider concerns about using the TRUST Act to request Trump's state tax filings and “is reviewing all of that right now.”
Those events instigated the complaint filed by Trump's attorneys Tuesday, according to the suit.
“Because Chairman Neal has expressed a renewed interest in utilizing the TRUST Act, President Trump had no choice but to file this lawsuit to protect his constitutional rights,” the lawsuit said.
The House Ways and Means Committee is named as a defendant in the lawsuit, as are New York Attorney General Letitia James and New York State Tax Commissioner Michael Schmidt.
James said in a statement released shortly after the lawsuit was filed that her office would defend the TRUST Act in court and criticized Trump's lawsuit against it Tuesday.
Trump is seeking to both enjoin members of Congress from taking advantage of the law and have the law declared unconstitutional.
“President Trump has spent his career hiding behind lawsuits, but, as New York's chief law enforcement officer, I can assure him that no one is above the law—not even the president of the United States,” James said.
“The TRUST Act will shine a light on the president's finances and finally offer transparency to millions of Americans yearning to know the truth. We have all the confidence that this law is legal and we will vigorously defend it against any court challenge.”
The lawsuit is challenging the TRUST Act on two counts. The first deals with the actual language of the legislation, and claims that members of Congress wouldn't be able to use it if they tried.
The law, according to its text, would only allow members of Congress to request copies of Trump's tax returns if they're “related to, and in furtherance of, a legitimate task of the Congress.”
The lawsuit argued that federal lawmakers have no such purpose for requesting Trump's state tax returns. Congress can't regulate New York's income taxes, the suit said, and state filings wouldn't give federal lawmakers any information about federal taxes because the TRUST Act requires federal information be redacted.
“No legitimate legislative purpose exists to request the President's state tax returns,” the lawsuit said. “The primary purpose of any request under the TRUST Act would be exposure for the sake of exposure, law enforcement, or some other wholly impermissible goal—not pursuing valid federal legislation.”
The suit also argued that the House Ways and Means Committee lacks the statutory jurisdiction to request Trump's state tax returns because the body is charged with overseeing federal laws, not state tax laws.
The second major argument in the lawsuit claims that the TRUST Act violates the First Amendment of the U.S. Constitution.
The suit points to several public statements by New York state officials, who have said the law was proposed to give Congress access to Trump's state tax documents. The law does not allow federal lawmakers to review or discuss the contents of those filings in public; that can only happen behind closed doors.
But the complaint argued that the New York Democrats who pushed for the law intended for it to be used purely for political purposes by exposing Trump's private tax information. That violates the First Amendment, the suit argued, because the law could be used to retaliate against Trump for his political affiliation.
“The TRUST Act singles out President Trump because he is a Republican and a political opponent,” the lawsuit said. “It was enacted to retaliate against the President because of his policy positions, his political beliefs, and his protected speech, including the positions he took during the 2016 campaign.”
Trump is seeking to both enjoin members of Congress from taking advantage of the TRUST Act and to have it declared unconstitutional.
The law was approved by the state Legislature earlier this year to give Congress an avenue for obtaining copies of Trump's tax returns from the state Tax Department. But there are limits on when those filings can be requested and for what purpose.
Congress may only request those documents after first asking for them from the U.S. Treasury Department. They also have to have a specific purpose for requesting them, as was defined in the legislation.
The bill is broader than Trump, though it was inspired by his decision to break decades of tradition by deciding not to release his federal tax returns while running for president in 2016. The TRUST Act allows members of Congress to obtain the state tax filings of most elected or appointed officials who file in New York.
It was sponsored by State Sen. Brad Hoylman, D-Manhattan, and Assemblyman David Buchwald, D-Westchester.
Hoylman said in a statement Tuesday he was confident the law would survive judicial review.
“Trump's lawsuit is without merit. It impugns the integrity of the legislative purpose behind the law,” Hoylman said. “New York State has an interest in supporting the lawful oversight responsibilities of the U.S. Congress.”
Hoylman also pointed out that a section of the lawsuit appeared to misstate the legislative history of the law. The complaint claimed that an initial version of the bill would have only allowed Congress to request Trump's tax returns, but that's not true, Hoylman said.
“The initial bill, which you can see online, applied to all taxpayers in New York state,” Hoylman said.
That was actually a point of contention among state lawmakers when the bill was initially introduced. There were concerns that the first version of the bill went too far because it would have allowed Congress to obtain the state tax returns of any individual who filed in New York.
The legislation was later amended to allow Congress to only request the state tax documents of certain elected and appointed officials who file taxes in New York. That's the version that was passed and signed into law earlier this month.
Requests for comment sent to representatives for Schmidt and the House Ways and Means Committee were not immediately returned Tuesday.
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