Politics

Trump loses challenge to New York law that allows release of his state tax returns to Congress — but could get another bite at apple

Key Points
  • A federal judge in Washington, D.C., on Monday dismissed President Donald Trump's legal effort to bar a House committee from using a New York state law to obtain his state tax returns.
  • The ruling by Judge Carl Nichols does not mean that Trump's state tax returns will be released to the House Ways and Means Committee anytime soon. The committee has not tried to use the new law to get his state returns.
  • The committee sued the U.S. Treasury Department and the IRS in early July to obtain Trump's federal income tax returns.
President Donald Trump attends the opening ceremony of the Veterans Day Parade in Madison Square Park on November 11, 2019 in New York City.
Eduardo Munoz | VIEW press | Corbis News | Getty Images

A federal judge in Washington, D.C., on Monday dismissed President Donald Trump's lawsuit seeking to bar a House committee from using a New York state law to obtain his state tax returns, suggesting the president's legal action belonged in another courthouse.

The ruling by Judge Carl Nichols does not mean that Trump's state tax returns will be released to the House Ways and Means Committee anytime soon.

Neither that committee, nor the two other congressional committees that under certain circumstances can obtain a president's tax returns under the new state law, has actually invoked it to get Trump's state returns.

Nichols' ruling in Trump's own suit had failed to establish that a judge in Washington federal court had jurisdiction over a challenge to New York's law, known as the TRUST Act.

That act allows the chairs of the Ways and Means Committee, the Senate Finance Committee and the Joint Committee on Taxation, to get New York state returns of certain federal, state and local public officials, "for a specifed and legitimate legislative purpose."

Nichols' ruling said that Trump did not establish a conspiracy between the Ways and Means Committee and New York officials, which could have established that a Washington court had jurisdiction over the suit.

"Nowhere in his Amended Complaint does Mr. Trump allege the existence of a conspiracy; in fact, the word 'conspiracy' does not even appear in his pleadings," Nichols wrote.

But Nichols did note that Trump "may renew his claim" that New York state tax officials are barred from releasing his state tax returns in the event that they are sought by one of the congressional committees under the New York law.

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The saga of Trump's taxes

The judge also noted that Trump could file his suit in "another forum" — meaning another court — "presumably in New York."

The information on those state returns would largely mirror details of Trump's federal income tax returns, which are being sought by the House Ways and Means Committee.

That committee is suing the Treasury Department and the IRS to obtain those federal returns.

Before that suit was filed, both the Treasury Department and the IRS had rejected a demand from the committee to turn over those returns despite a section of the federal tax code saying that the Treasury "shall furnish" an individual's returns if a formal written request is made by the committee.

Trump has refused to publicly disclose his tax returns either before or after winning the 2016 election, despite a longstanding tradition of presidential candidates and presidents doing so.

Last week, a federal appeals court in New York rejected Trump's bid to bar a grand jury in Manhattan state court from obtaining eight years of personal and corporate tax returns from his accountants as part of an ongoing criminal probe. Trump's lawyers plan to ask the U.S. Supreme Court this week to hear an appeal of that decision.

Trump had sued the Ways and Means Committee, the New York attorney general and the state's tax chief in federal court in Washington in July, citing concerns that the committee's chairman, Rep. Richard Neal, D-Mass., soon would try to obtain his state tax returns under New York's TRUST Act, which was signed into law earlier that same month.

When Trump sued the Ways and Means Committee over its potential use of New York's law to obtain his state tax returns, his lawyer Jay Sekulow said, "We have filed a lawsuit today in our ongoing efforts to end Presidential harassment."

"The actions taken by the House and New York officials are nothing more than political retribution," Sekulow said.

On the heels of Nichols' ruling in the case on Monday, Sekulow said, "We are reviewing the opinion."

The White House had no immediate comment.

New York Attorney General Letitia James said, "We have said all along that this lawsuit should be dismissed and we are pleased with the court's conclusion."

"The TRUST Act is an important tool that will ensure accountability to millions of Americans who deserve to know the truth," James said. "We have never doubted that this law was legal, which is why we vigorously defended it from the start and will continue to do so."

Rep. Bill Pascrell Jr., D-N.J., a Ways and Means Committee member who has argued for the release of Trump's tax returns, said Nichols had "made the right decision, and when Trump and his lawyers make more attempts to block oversight, I am confident the ruling will be upheld."

"Trump and his myriad enablers in the administration have moved heaven and earth to violate the law and keep Trump's taxes hidden from sunlight," Pascrell said. "It's time for full transparency of Trump's corruption."

— Additional reporting by CNBC's Kevin Breuninger.