Lawsuits, Contempt, Fines: How Democrats Could Get Trump's Taxes




 

(Bloomberg) -- Steven Mnuchin may face a deadline of 5 p.m. Friday to comply with a subpoena to hand over President Donald Trump's tax returns, but the pressure is really on a top House Democrat who has to decide how ferociously to respond to the Treasury secretary's all-but-certain refusal.

House Ways and Means Chairman Richard Neal, along with other House leaders, is determining how best to investigate a White House that is blocking them at every turn. The power struggle has also forced Neal to try to forge a path between his legal argument and the overheated politics that go with inquiries involving Trump.

Neal has asked Mnuchin and Internal Revenue Service Commissioner Charles Rettig several times to hand over six years of tax returns for Trump and his business entities. Neal cited a 1924 law that allows the chairmen of the congressional tax committees to review the returns of any taxpayer.

Mnuchin has repeatedly argued that Neal didn't have a legitimate legislative purpose for seeing Trump's private documents and accused Democrats of "weaponizing the tax code." But for the first two requests, he didn't flat out refuse, saying only he needed to consult with the Department of Justice.

Neal says he needs the returns to oversee the IRS's routine annual audits of every president and vice president. Mnuchin says the Democrats want them for political sport. When Mnuchin finally refused last week, Neal ratcheted up the pressure by subpoenaing Mnuchin and Rettig for the tax returns.

Mnuchin told senators on Wednesday, "We haven't made a decision, but I bet you can guess which way we're leaning."

If Mnuchin refuses to comply with the subpoena, Neal is largely out of arguments to make in polite letters and will have to turn to more forcible measures. Here's a look at what those might be:

See You in Court

Neal's most obvious recourse is to sue Mnuchin and Rettig for failing to comply with the subpoena. Mnuchin, however, could sue for an injunction blocking the subpoena.

This is the long-game strategy, and would likely take months, if not years, straight through the 2020 presidential election.

A lawsuit would be filed in addition to the pending case between the House Oversight and Government Reform Committee and Trump and his businesses over access to the president's financial records from accounting firm Mazars USA LLP.

Contempt of Congress

The House could also hold Mnuchin and Rettig in contempt of Congress, having them join Attorney General William Barr, who the House Judiciary Committee voted to hold in contempt for refusing to turn over the unredacted report by Special Counsel Robert Mueller and its underlying documents. This option has more political than legal weight. It's a misdemeanor offense that can come with a fine of as much as $1,000 "and imprisonment in a common jail" for as long as one year.

Read More: What's Contempt of Congress and Executive Privilege?: QuickTake

The contempt resolution against Barr is awaiting a full House vote. House Speaker Nancy Pelosi has suggested she might hold many officials in contempt at once.

Fines

Congress can hit Mnuchin with bigger fines than the $1,000 that comes with a contempt citation. Representative Bill Pascrell of New Jersey pointed out that Section 7214 of the tax code says any government official who "fails to perform any of the duties of his office" can be punished with jail time of up to five years and a fine of as much as $10,000, though that still wouldn't sting the multimillionaire Treasury secretary or Rettig, a former partner in a Beverly Hills law firm, too badly.

But Democrats have contemplated much steeper fines. The advocacy group Good Government Now has suggested that penalties go as high as $25,000 a day.

Jail Not Likely

It's highly unlikely that anyone is going to end up behind bars, at least for now, but it's a remote option.

Pelosi has quipped about a jail in the Capitol basement, although architecture plans for the building don't show it ever having a holding facility. Barr jokingly asked Pelosi on Wednesday at a law enforcement event if she had brought her handcuffs, according to reports. She demurred.

To contact the reporter on this story: Laura Davison in Washington at ldavison4@bloomberg.net

To contact the editors responsible for this story: Wendy Benjaminson at wbenjaminson@bloomberg.net, John Harney

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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