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Supreme Court: N.Y. Grand Jury Can Get Trump’s Tax Returns

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us capitol The U.S. Capitol Building. Credit: Mike Scarcella/ALM

The U.S. Supreme Court, in one the most important legislative power challenges in decades, ruled Thursday that President Donald Trump’s accounting firm and banks are not required to turn over the president’s tax returns and other financial documents to congressional investigating committees.

In a separate opinion, the court said Trump must comply with a New York state grand jury subpoena investigating potential irregularities in his tax and business records. The court gave Trump a chance to make constitutional and other legal arguments against the subpoenas on remand to the trial court.

The U.S. Supreme Court said lower courts that had upheld the U.S. congressional subpoenas failed to adequately account for the Constitution’s separation of powers in their subpoenas of President Donald Trump’s tax returns and other financial documents.

Both decisions were written by Chief Justice John Roberts Jr. In the case Trump v. Mazars, involving the congressional subpoenas, Roberts said for the 7-2 majority “When Congress seeks information ‘needed for intelligent legislative action,’ it ‘unquestionably’ remains ‘the duty of all citizens to cooperate.’ Congressional subpoenas for information from the President, however, implicate special concerns regarding the separation of powers. The courts below did not take adequate account of those concerns.”

Justices Clarence Thomas and Samuel Alito Jr. dissented.

In the second subpoena case, Trump v. Vance, Roberts again led a 7-2 majority that ruled that neither Article II nor the Supremacy Clause “categorically preclude, or require a heightened standard for, the issuance of a state criminal subpoena to a sitting president.” Justices Samuel Alito Jr. and Clarence Thomas dissented in separate opinions.

“Two hundred years ago, a great jurist of our court established that no citizen, not even the president, is categorically above the common duty to produce evidence when called upon in a criminal proceeding,” Roberts wrote. “We reaffirm that principle today and hold that the President is neither absolutely immune from state criminal subpoenas seeking his private papers nor entitled to a heightened standard of need.”

The rulings were handed down on the final day of the term, and just months before the presidential election. Trump was the first president in modern history to refuse to release his tax returns. He has given various reasons over the years about why he will not release his returns, including a claim he was under audit and would release those records after the review was complete.

Investigative reports published during the Trump presidency have raised questions about the Trump family’s tax maneuvering and Donald Trump specifically. A comprehensive New York Times report in 2018 showing Trump’s reliance on his father’s wealth undermined the president’s oft-repeated assertion that “I built what I built myself.”

The rulings Thursday do not end scrutiny over Trump’s financial records. Other cases, still pending, put a focus on those records. In one case, still playing out in Washington’s federal court, a judge is weighing a demand from the House Ways and Means Committee for Trump financial records. Federal law says U.S. Treasury “shall furnish” tax records on request of the committee. The Trump administration, unable to defeat the language of the statute, has argued Democrats have no legitimate reason to review Trump’s records.

The Trump financial records cases arrived at the U.S. Supreme Court this year after federal appeals courts broadly shut down the president’s assertions that his records remain off limits from Democrats and the New York grand jury.

In May, the justices held back-to-back, telephonic hearings for more than three hours on the president’s effort to keep his tax returns and other financial matters secret.

The case Trump v. Mazars arose from the president’s opposition to subpoenas issued by three House investigating committees—Oversight, Financial Services and Intelligence. The committees issued the subpoenas to Trump’s longtime accounting firm, Mazars, and two of his banks: Deutsche Bank and Capital One.

The banks, and not Trump, are the actual defendants as third parties. Lawyers for the banks have not taken a public position on the subpoenas.

The oversight committee’s investigation was spurred by testimony by Trump’s former lawyer, Michael Cohen, who told Congress that Trump inflated and deflated certain assets between 2011 and 2013 to reduce his real estate taxes. The financial services committee is looking into possible Russian money laundering in the president’s real estate deals, and the intelligence committee is exploring any foreign influence in elections.

During the May arguments, the justices’ questions focused primarily on the various competing tests—their scope and limits—that lawyers for Trump, the House of Representatives and the Manhattan district attorney’s office argued should apply for the issuance of subpoenas involving the president.

Consovoy McCarthy partner Patrick Strawbridge, representing Trump in the Mazars case, argued the subpoenas should have a “legitimate legislative purpose that is defined with specificity,” he said. The House subpoenas, he said, fail all the hallmarks of a legitimate legislative purpose and their demand for decades of papers from the president and his family, he added, “opens the door to all sorts of requests.”

Principal Deputy Solicitor General Jeffrey Wall, supporting Trump, said, “The House must explain in a meaningful way why it needs the subpoenaed records in particular. There is a mismatch between breadth and duration of these subpoenas and the asserted purposes.”

But Justices Ruth Bader Ginsburg and Elena Kagan appeared skeptical of those arguments. The clash of interests in the Nixon Watergate tapes case, the Whitewater special counsel investigation and the Paula Jones civil suit against then-President Bill Clinton were “much more” serious, Ginsburg said.

During one exchange, Kagan told Strawbridge, “These subpoenas are for personal records, not for official records where the president might have an executive privilege claim or burden the way the executive branch operates. Why doesn’t that suggest a lower standard, not a higher one?”

House general counsel Douglas Letter’s test fared little better with Chief Justice John Roberts Jr. and Justice Brett Kavanaugh. Letter argued that subpoenas must be pertinent to a legislative purpose, can’t violate constitutionally protected liberty interests and can’t undermine presidential responsibilities.

John Roberts Chief Justice John Roberts. Photo: Tim Roske

But Roberts countered, “Your test isn’t really much of a test; it’s not a limitation, and it doesn’t seem in any way to take account of the fact they were talking about a coordinate branch of government, the executive branch.” Kavanaugh told Letter: “Just about everything can be characterized as pertinent to a legislative purpose and you couldn’t answer something that wasn’t.”

During the grand jury subpoena arguments, Trump’s personal lawyer, Jay Sekulow, argued that the Constitution’s Article II and the supremacy clause make the president temporarily immune from all criminal process.

But Justice Sonia Sotomayor challenged that argument, saying, “You seem to be asking for broadness of immunity nowhere in the Constitution.”

U.S. Solicitor General Noel Francisco, arguing in support of Trump, offered a lesser test or standard. A prosecutor must demonstrate a special need for the subpoenaed information—the same standard that the federal prosecutor in the Nixon tapes case had to meet, he said.

Carey Dunne, general counsel to the Manhattan District Attorney’s office, argued “If there has been an affirmative showing of burden (on the person subpoenaed), a prosecutor should show an objective basis for the investigation and a reasonable probability the request will produce relevant information.”

The lower courts, he added, already found that his office met that standard in Trump’s case. “To get permission first for any request relating to a president’s business activities would undermine the confidential grand jury process,” Dunne argued. “The other problem is their [test's] language only applies in trial proceedings. No charging decisions are made in the grand jury process.”

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