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House Ways and Means Chairman Issues Subpoenas for Trump's Tax Returns

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Washington, DC, May 11, 2019 | Richard Rubin, Wall Street Journal

Rep. Richard Neal issued subpoenas Friday to the Treasury secretary and IRS chief seeking six years of President Trump’s tax returns and audit records, taking the next formal step in the dispute between House Democrats and the Treasury Department.

Democrats don’t expect Treasury Secretary Steven Mnuchin or Charles Rettig, commissioner of the Internal Revenue Service, to comply with the subpoenas, following Mr. Mnuchin’s rejection of a previous written request from Mr. Neal and following the administration’s general refusal to provide documents for House Democrats’ investigations. The subpoenas, issued on the advice of House lawyers, link the tax-return fight to the existing body of law governing congressional information requests.

“While I do not take this step lightly, I believe this action gives us the best opportunity to succeed and obtain the requested material,” Mr. Neal said.

Treasury and IRS officials said Friday they had received the subpoenas.

Mr. Neal, a Massachusetts Democrat, requested the tax records last month, using a power the tax code gives him as chairman of the Ways and Means Committee. Under that provision, which dates to the aftermath of the Teapot Dome scandal in 1924, the chairman can seek any taxpayer’s returns and the Treasury secretary “shall furnish” them.

The law is clear, but Mr. Mnuchin argued in a letter on Monday that Mr. Neal’s request exceeded Congress’s constitutional authority because it lacked a legitimate legislative purpose. Mr. Mnuchin wrote that the Justice Department would publish a more detailed legal opinion, though that hasn’t happened yet.

Although the tax-code provision requires Mr. Mnuchin to produce any requested documents, it doesn’t outline deadlines or penalties for noncompliance. The subpoenas, which set a May 17 deadline, could help address those issues because courts may treat that deadline like they would treat that of any other congressional subpoena.

Mr. Neal also responded to an argument Mr. Mnuchin has made. The secretary has argued that limiting the request to Mr. Trump showed that Democrats weren’t really interested in how the IRS was auditing presidential tax returns.

Mr. Trump’s extensive business holdings and claims about audits make him different, Mr. Neal wrote in letters accompanying the subpoenas.

“The tax issues raised by the current president are unique,” he wrote.

Mr. Neal, who became Ways and Means chairman in January, has been saying for months that he expected the tax-returns fight to end up in court. It is now likely headed there and could take months, at least, to resolve.

Democrats have been pressing Mr. Trump to release his tax returns since the 2016 presidential campaign, when he broke a four-decade tradition of voluntary disclosure. Mr. Trump has cited IRS audits as a reason to keep his returns private, though no law stops him from releasing them.

Mr. Neal used those audits as the purpose of his request, arguing that the committee needs to examine how well the IRS is auditing the president who oversees it. The request covers some years before Mr. Trump became president, which may have been under audit. It also covers the two years he has been president, because all presidential tax returns are audited. The request also includes business tax returns that may be outside the scope of the automatic audit.

Mr. Mnuchin and Republican lawmakers have argued this audit-oversight rationale is just a pretext for a political fishing expedition. They have noted that Mr. Neal isn’t seeking previous presidents’ audit records and pointed to other Democrats’ statements about their desire to see Mr. Trump’s tax returns.

Democrats have cited multiple reasons why they want to see Mr. Trump’s tax returns, including the possibility that the returns would reveal conflicts of interest and financial ties. If it ever receives the returns, the committee could review them only in closed session but could release the documents or information with a vote.

Mr. Trump’s comments this week added fuel to Democrats’ interest in his tax records. After a New York Times report detailed more than $1 billion in tax losses that he compiled from 1985 through 1994, the president declared that he was engaged in a form of competition or entertainment.

“You always wanted to show losses for tax purposes....almost all real estate developers did - and often re-negotiate with banks, it was sport,” he wrote on Twitter on Wednesday.

Tax records from that time period aren’t directly relevant to Mr. Neal’s request for more recent documents. Still, Democrats said they worried the president’s approach to tax avoidance could undermine the voluntary compliance that underpins the tax system.

“What words for the president of the United States, when we want public confidence in the tax system, to declare it sport, to underreport, to dodge your taxes,” Rep. Lloyd Doggett (D., Texas) said at a committee hearing on Thursday.

Republicans defended Mr. Trump and warned that Mr. Neal’s request would set a precedent.

“This is a gross abuse of authority, and I’m embarrassed this committee would do that,” said Rep. Tom Rice (R., S.C.).

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