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Delays Likely in Trump Tax Returns Case After ‘McGahn’ Ruling

Aug. 7, 2020, 8:45 PM

House Democrats’ pursuit of President Donald Trump’s tax returns from the Treasury Department likely faces long delays ahead, despite an appeals court ruling that removes a roadblock.

U.S. District Judge Trevor McFadden in March paused the lawsuit between the House Ways and Means Committee and Treasury Department as he waited for a ruling from the U.S. Court of Appeals for the District of Columbia Circuit in a separate case concerning a congressional subpoena.

The appeals court issued that ruling on Friday, holding that Congress does have standing to sue to enforce subpoenas of White House officials, including former White House counsel Donald McGahn.

While the ruling removes a stated reason from McFadden for pausing the Ways and Means lawsuit, law professors said to nonetheless expect a long road to resolution. That means even if House Democrats ultimately prevail, their win almost surely won’t come until after the presidential and congressional elections, and their case could even be abandoned if Republicans win control of the House.

“There are about a dozen reasons why we likely won’t see Donald Trump’s tax returns before at least early 2021 via the Ways and Means mechanism,” said Daniel Hemel, a law professor at the University of Chicago.

Democrats sued for several years of Trump’s personal and business tax returns after Treasury rejected a request and a subpoena. They say the documents are needed to assess whether the IRS is properly auditing presidents.

House Ways and Means Chairman Richard Neal (D-Mass.) complained Friday of delays that have already occurred in the committee’s lawsuit.

“Now that the D.C. Circuit has soundly rejected the Department of Justice’s arguments, I hope our case will move ahead promptly,” he said.

Unresolved Issues

In Comm. on the Judiciary v. McGahn, the Justice Department could decide to appeal to the U.S. Supreme Court, which could bring further delays for House Democrats as McFadden would likely wait on the high court’s ruling before proceeding.

But other procedural issues that remain unresolved after the D.C. Circuit ruling could also lead to delays, Hemel said.

While Friday’s D.C. Circuit ruling resolved the question of whether Congress has suffered a “concrete and particularized injury” that gives it standing to sue, it didn’t decide whether Congress has a cause of action for bringing the suit, and furthermore whether federal courts have jurisdiction over the subject matter in the case.

Those questions also extend across both lawsuits. The U.S. Supreme Court is unlikely to want to hear an appeal in the McGahn case until all three procedural issues are addressed by the lower appeals court because they’re related to each other, said Andy Grewal, a law professor at the University of Iowa.

And McFadden may choose to wait to discuss the merits of the Ways and Means subpoena for the president’s tax returns until he has made a ruling on the procedural issues.

“I don’t think it’s the case that Judge McFadden is going to tell the parties to delve into the merits anytime soon,” Grewal said.

—With assistance from Kaustuv Basu.

To contact the reporter on this story: Aysha Bagchi in Washington at abagchi@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Colleen Murphy at cmurphy@bloombergtax.com

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