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Mnuchin Gives Richie the Bird, Not Trump’s Taxes…

UPDATED: On  Friday, Neal subpoenaed the documents from Sec. Mnuchin and Comm. Rettig.

Middle finger not pictured. (via wikipedia)

As expected, United States Secretary of the Treasury Steven Mnuchin today formally rejected Representative Richard Neal’s request for Donald Trump’s tax returns. Flying in the face of the plain language of a 95 year-old statute, the secretary claimed that the request served no legitimate legislative purposes and that compliance would set a bad precedent.

On April 3, Neal, by virtue of his authority as the House Ways & Means Committee chair, requested six years of Trump’s personal returns plus those of the corporations that constitute much of his businesses. Last month, Mnuchin indicated reluctance to comply despite the statute’s mandatory language. Now that the secretary’s “No” is official, Neal has begun huddling with lawyers, perhaps in advance of legal action.

“Today, Secretary Mnuchin notified me that the IRS will not provide the documents I requested under Section 6103 of the Internal Revenue Code,” Neal said in a brief statement. “I will consult with counsel and determine the appropriate response.”

Neal’s authority to request returns appears in Section 6103.

Trump has long argued his tax returns are unavailable due to an impossibly interminable audit. But audits are no bar to releasing one’s own returns. Nonetheless, he used that shtick with endless encores to avoid disclosure during and since the 2016 campaign.

Despite some agitation among prominent Democrats, Neal has long promised to request Trump’s taxes. After taking the Ways & means chair, he assembled a case over three month, assuming the matter would ultimately land before a judge. In his request, technically made to the Internal Revenue Service, Neal said he wanted the returns as part of a review of the agency’s practice of auditing presidents and vice-presidents annually.

Not buying that excuse. Rep. Neal the day after the 2018 election. (WMassP&I)

Section 6103, dates to the Coolidge administration and passed after Teapot Dome engulfed President Warren Harding’s administration. Sources of income for the principal figures in the scandal became a central issue.

While the president could obtain the returns of any taxpayer, congressional investigators could not. Consequently, Congress passed a law in 1924 that allows the Ways & Means chair—or his Senate counterpart, the Finance Committee chair—to request the returns of any taxpayer.

Many commentators have noted that the law gives Mnuchin no mechanism to refuse, which is true. Yet, the source of Neal’s authority appears to undermine a key Mnuchin talking point about violating taxpayer confidentiality. In the current tax code, the authority appears as an exception to the confidentiality tax returns otherwise have.

While Neal’s request was unusual—because presidents in the last 40 years have disclosed returns—use of this statute is not. Indeed, a 1977 Office of Legal Counsel (OLC) memo mulled the delegation of authority in the statute without ever questioning the Ways & Means and Finance chairs’ general authority to request returns. If anything, it presumed that power valid.

US Rep Richard Neal, seated center, at a hearing in March. (WMassP&I)

Neal will likely go to court soon. While he may issue a subpoena, some believe he could just sue Mnuchin and/or IRS Commissioner Charles Rettig for not following the law. The OLC’s memo also hints a subpoena is unnecessary.

Many expect a long legal battle, perhaps putting off a reckoning until after the 2020 election. That assumes Mnuchin is before a sympathetic judge. Given the clearness of the language, the Bond villain-esque cabinet secretary may find courts quickly declaring his arguments cow excrement. While conservative hold a majority on the Supreme Court, there is no guarantee they would take up the case or rule favorably for Trump.

This comes amid broader intransigence from the administration. The White House has flat-out denied some requests for documents and witnesses on a host of issues. Trump has also sued to block subpoenas House Democrats have served upon financial companies Trump did business with.

The tax return battle fits into a broader standoff with the new Democratic House. However it may be the one that concerns Trump the most.

During the campaign, former Secretary of State Hillary Clinton speculated Trump fears his returns would prove embarrassing.

“First, maybe he is not as rich as he says he has. Second, maybe he’s not as charitable as he claims to be,” she said at their first debate. Clinton suggested he either does business with less upstanding people or he paid nothing in taxes.

How long can he hide (and hide them)? (created with Getty image via Axios)

The last could include the potential for fraud. Last year, The New York Times documented how Trump’s father engaged in massive tax fraud saving himself millions.

“That makes me smart,” Trump said in reply to Clinton’s suggestion he paid little or nothing taxes.

Perhaps, but only for so long. Whatever happens in Washington, Trump may have problems elsewhere.

As a New York resident, much of Trump’s tax information is on file with Empire State authorities. A bill before the state legislature would allow Neal to request tax information directly from Albany.

The Washington Post reported that the bill’s author, Manhattan State Senator Brad Hoylman, has discussed the legislation with Neal’s colleague Jerry Nadler.

“Today’s news increases the sense of urgency that Albany must act now to provide the House Ways and Means Committee with the president’s state returns,” Hoylman said per The Post. “It could move very soon.”