Paul L. Caron
Dean



Thursday, October 29, 2020

Trump’s Tax Returns: Why The Supreme Court Should End Things Now

Richard O. Lempert (Michigan), Trump’s Tax Returns: Why the Supreme Court Should End Things Now:

With front pages devoted to the continuing spread of the coronavirus and with the election so close, it is easy to forget about the ongoing controversy over Trump’s taxes. It is even easier to think that the case no longer matters since an anonymous leaker provided the New York Times with the tax returns sought by New York District Attorney Cyrus Vance, and the Times is sharing that information with the public. Still, it is worth noticing that a three-judge panel of the Second Circuit’s Court of Appeals has just dealt Donald Trump another blow in his effort to prevent his tax accountants, Mazars, from giving his tax returns and related documents to a New York grand jury. The panel judges unanimously agreed with the District Court’s determination that Trump’s effort to prevent the release of his records fails because his second amended complaint (or SAC) failed to state a claim on which relief could be granted. Yet, as both Trump and Vance realize, the grand jury’s ability to get the documents it subpoenaed matters almost as much as it did before the Times’ stories appeared.

Trump has repeatedly asserted that the documents the Times has are false. But if the returns the Times has are genuine and their reporting on them is accurate, they describe situations where Trump’s efforts to secure tax advantages are so aggressive that they come close to and may cross the line that separates the legal from illegal. However, standing alone the information the Times disclosed does not prove illegality. The Mazars subpoena, however, demands documents that might. These include not just Trump’s tax returns, but supporting documents which in conjunction with the returns could show that Trump or members of his family knowingly committed crimes. Information Vance could acquire might reveal which lenders, including foreign interests, loaned Trump money on what terms, and whether Trump’s accountants cautioned Trump about the questionable legality of deductions he claimed. Also, having verified copies of the original documents might be essential should Vance want to introduce any of these documents in a criminal prosecution. ...

I see no good legal argument for why the Supreme Court should accept Trump’s appeal.

The decision to grant Vance’s 12b)(6) motion is, in my view, sound, although, as is often the case, different judges might have reached different conclusions. In this connection, it is, however, fair to point out that every judge charged with evaluating the motion to dismiss was appointed by a Democratic president. Still, the Supreme Court should refuse to hear Trump’s appeal. The Supreme Court does not exist to serve as a third assessor of what factual assertions imply for litigation, even if the question is one of law which the Court would be deciding de novo. Rather the Supreme Court exists to resolve questions of legal and constitutional interpretation. Nothing in the complaint seeks to change or elaborate on the Iqbal precedent, and the complaint ignores the Supreme Court’s invitation to argue on remand that the subpoena was designed to coerce the president or otherwise interfere with his Article II functions. Absent a constitutional claim, New York law controls the decision. The Supreme Court is, if anything, less able than the district and circuit courts to interpret New York law because it has fewer occasions to do so.

True, a case can be made that because the president is involved, the Supreme Court should resolve the issue regardless. As a general matter, the argument is a strong one because Supreme Court resolution ordinarily lends legitimacy to decisions involving the chief executive, particularly when, as in U.S. v. Nixon and Clinton v. Jones, the Court is unanimous in ordering a president to do something he resists doing. In this case, however, no matter what decision the Court might reach, there would almost certainly be dissenters, and if the Court differs from what the four judges who have weighed in so far have ruled, many would see this as a political rather than a legal decision. Also, a Supreme Court denial of Vance’s 12 (b)(6) motion would not end the litigation. Rather the case would be remanded for further proceedings, most likely resulting in Vance prevailing on a motion for summary judgment. But the additional delay might extend the case beyond the limits of the grand jury’s term, and/or some people might avoid prosecution for their alleged crimes because statutes of limitations have expired. Both justice and prudence counsel against further proceedings.

In Trump v. Vance, the Supreme Court held, with a few now inapplicable exceptions, that Donald Trump should be treated like any other citizen. If he is, this lawsuit will soon end, and Mazars will give the grand jury the documents it seeks.

https://taxprof.typepad.com/taxprof_blog/2020/10/trumps-tax-returns-why-the-supreme-court-should-end-things-now.html

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Comments

Richard O. Lempert stated “But if the returns the Times has are genuine and their reporting on them is accurate, they describe situations where Trump’s efforts to secure tax advantages are so aggressive that they come close to and may cross the line that separates the legal from illegal.”

The author’s background is “Richard O. Lempert is a graduate of Oberlin College and the University of Michigan Law School and holds a PhD in sociology from the University of Michigan. He is the Eric Stein Distinguished University Professor Emeritus of Law and Sociology. In the 1993-1994 academic year, he served as acting chair of the Department of Sociology at the University of Michigan, and from 1995-1998 he was chair of the department.”

I seems the author has specialized in sociology rather than law, yet alone tax, yet he can tell from a newspaper article when tax evasion becomes criminal avoidance.

I have specialized in tax, but I wonder if the Trump tax returns (if accurate) were illegally obtained, can they be used in a criminal prosecution? Since I am not a specialist in sociology, I cannot be as certain as the author.

Posted by: aircav65 | Oct 29, 2020 8:27:26 AM

"I have specialized in tax, but I wonder if the Trump tax returns (if accurate) were illegally obtained, can they be used in a criminal prosecution?"

Great question. And one wonders why the NY Times doesn't just post Trump tax returns...let me guess: Because the NY Times would have some legal exposure.

Posted by: Just Sayin' | Oct 29, 2020 9:54:45 PM

Now that the election is over (?), interest in Trump's tax returns may disappear.

Posted by: Woody | Nov 4, 2020 6:41:05 PM