WASHINGTON -- Treasury Secretary Steven Mnuchin said Tuesday he will make a determination by May 6 on whether to comply with House Ways and Means Chairman Richard E. Neal's request for six years of President Donald Trump's tax returns.
Neal had set a deadline of 5 p.m. Eastern time Tuesday for the administration to comply with his request. The Treasury Department announced shortly after the deadline that Mnuchin had sent a 10-page response to the Massachusetts Democrat's request.
The letter repeats previous arguments made by Mnuchin and Trump's private lawyer that "exposure for the sake of exposure" is not a valid reason for seeking the returns, and that Democrats appear to have a political rather than a legislative motive for requesting the documents.
Neal issued a terse two-sentence statement after receiving Mnuchin's letter.
"This afternoon, Secretary Mnuchin notified me that once again, the IRS will miss the deadline for my 6103 request," Neal said, using shorthand for the Internal Revenue Code section that gives him authority to obtain tax returns. "I plan to consult with counsel about my next steps."
Neal had said 10 days ago that he would consider missing Tuesday's deadline to be a denial of his request, and therefore a possible violation of the statute.
What comes next in the standoff over the president's tax returns will likely lead to a court fight, though Neal has said he will move "methodically and judiciously" to obtain the documents.
Legal experts say it's Mnuchin who needs to be careful.
If noncompliance continues to be the administration's tack, the chairman of the tax-writing panel has three options, attorneys said. Neal could issue a subpoena for the information, file a lawsuit in federal court asserting his authority to get the returns or take the matter to the full House and seek to hold Mnuchin, IRS Commissioner Charles P. Rettig or both in contempt of Congress.
At an event held by the left-leaning advocacy group Tax March last week, California Democratic Rep. Judy Chu, who sits on Ways and Means, said Neal "would likely issue a subpoena for the returns" and if the administration doesn't comply "a legal battle would begin to defend Congress' investigative authority," according to a transcript supplied by Tax March.
"If Secretary Mnuchin fails to comply with this deadline, Chairman Neal has no choice but to subpoena the Treasury Department and force the IRS to comply with this request," Tax March spokesman Ryan Thomas said Tuesday. "If Secretary Mnuchin or other Trump administration officials continue to stymie the process, House Democrats should look into holding them in contempt of Congress."
Failure to comply with a subpoena also could lead to Mnuchin being held in contempt of Congress, along with a court order of daily fines or even jail until he does comply, experts say.
"To me the person who's most vulnerable to this is Mnuchin because, of course, the statute directs Mnuchin to do something, so if he doesn't comply then he's the one in violation," said George K. Yin, a professor at the University of Virginia School of Law and former chief of staff of the Joint Committee on Taxation.
"Mnuchin could well be on the line here if (Democrats) seek to enforce" the request for Trump's tax returns, said William Alden McDaniel Jr., an attorney with Ballard Spahr LLP who has represented officials in both Republican and Democratic administrations targeted in congressional investigations.
Trump would be the first president since Richard M. Nixon not to release his tax returns, if Mnuchin ultimately doesn't comply with Neal's demand.
Trump has repeatedly said he would disclose them publicly once he was no longer under audit by the IRS. But presidents and vice presidents are automatically audited each year by law, and Rettig recently told a congressional committee there is no law barring the president from voluntarily making his returns public.
Neal first requested the tax returns in an April 3 letter to Rettig, giving him a week to comply. Though the statute Neal cited directs the Treasury secretary to furnish any requested returns to certain congressional committees, including Ways and Means, the law also enables the Treasury secretary to delegate such authority, which occurred in 1982.
If Treasury wants such authority back, Democrats argue the statute says the secretary must provide 30 days' notice to lawmakers. Nonetheless, Rettig has deferred to Mnuchin in this instance.
When April 10 arrived, Mnuchin responded he wouldn't be able to meet the deadline and that he'd consult with the Justice Department on whether to comply. He wrote Neal's request "raises serious issues concerning the constitutional scope of Congressional investigative authority."
Neal's authority to seek the president's tax returns stems from Section 6103 of the tax code, which states that upon "written request" from the chairman of either of the two tax-writing committees "the Secretary shall furnish such committee with any return or return information specified" in the request.
"The statute is very clear and seems like very strong support for what Mr. Neal is trying to do," said Yin, who said he'd advise Mnuchin to proceed cautiously. "I think he obviously needs to think very seriously about that; now he might not care if he gets fired, but I think he would care if he gets sent to jail."
The best route, to McDaniel's thinking, is for the House to find Mnuchin in contempt of Congress.
The House "could then apply to a court to enforce that contempt order, by requiring him to turn it over or suffer some coercive penalty," McDaniel said. "They fine somebody, or put them in jail until they comply."
Issuing a subpoena for the returns, McDaniel said, would be a waste of time, since the statute clearly states Mnuchin "shall furnish" any tax return requested by the Ways and Means chairman. "This statute is good and it's better than a subpoena," said McDaniel, who said he'd advise Neal to pursue a standalone court case if the contempt of Congress route isn't taken.
New Jersey Democratic Rep. Bill Pascrell Jr. a senior Ways and Means member, recently floated the prospect of a House-issued contempt citation.
Yin said a subpoena would be the safer option at first, since there is wide legal precedent for holding someone in contempt for not complying with what a court finds to be a valid subpoena. Holding the Treasury secretary in contempt for not complying with Section 6103 has never been tried before.
"We're on uncharted territory because to my knowledge, the authority has rarely been exercised and when it has been, there hasn't been a refusal," he said.
Trump's lawyer William Consovoy argued in an April 5 letter to Treasury general counsel Brent McIntosh that the tax code "zealously guards taxpayer privacy," that Congress can use its investigative powers only as part of its legislative authorities and that "there is no congressional power to expose for the sake of exposure."
But the privacy protections were added to Section 6103 in 1976 in reaction to abuses by Nixon, Yin noted.
Not only is there "no wiggle room" in the law, the legislative history of Section 6103 appears to be on Neal's side as well, Yin said.
The original intent of the section when it was written in 1924 was in response to three concurrent events, he said. First, Congress wanted to investigate abuses at the IRS' predecessor, the Bureau of Internal Revenue. The second was the Teapot Dome scandal involving private oil leases granted by the government in Wyoming. And third was a desire to investigate the business ties of Treasury Secretary Andrew Mellon, one of the country's most prominent industrialists.
At that time, only the president could get tax return information and President Warren G. Harding had not complied with congressional requests for tax return information for these three investigative areas, Yin said.
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