Federal judge to NY: Don't turn over Trump's state tax returns to Congress -- for now

New York’s attempt to get around the IRS and target Donald Trump has come to a temporary — and surprisingly early — halt. A federal judge issued a temporary injunction that forbids the state to use its new TRUST Act to supply Trump’s state tax records to congressional committees that request them. Judge Carl Nichols took no position on the merits of either side, but wants to make sure that the status quo gets maintained while Trump’s lawsuit against the TRUST Act plays out in court:

A federal judge ordered New York state authorities Thursday to take no action, for the time being, on turning over President Donald Trump’s state tax returns if they’re requested by Congress.

U.S. District Court Judge Carl Nichols of the District of Columbia agreed with the president’s lawyers, who said if they waited to take legal action until after the tax returns were turned over, it would be too late to challenge the state law because the tax documents would have already been made public.

That is the most surprising part of Nichols’ order. Normally, federal courts will not intervene to freeze the status quo unless damage is imminent or already under way and the plaintiff has a significant chance of succeeding with their claim. Nichols didn’t make a determination on either point. In his order, though, he agrees with Trump’s argument that to wait for damage to be imminent would make it too late to take action:

Nichols had asked the two sides to come up with an agreement to keep the situation from arising, but that didn’t bear fruit. Instead, Nichols imposed the order that now requires the state of New York to notify him if Congress attempts to utilize the TRUST Act.

To be fair, Richard Neal hadn’t even yet asked for them, a point which has grated on the nerves of other Democrats. They have pressured the House Ways and Means Committee chair to take quick advantage of the TRUST Act and get Trump’s New York state tax returns, which would allow them a back door to Trump’s finances. Neal has balked at that, claiming it would undermine his argument to use 26 USC 6103 to get Trump’s federal tax returns by making the effort more nakedly political. That clause exists for Congress to have the ability to review the IRS’ operations, not to investigate individual citizens, and a New York state tax return has nothing to do with the IRS. Neal wants to keep pursuing the head-on legal challenge on the basis of the federal law, not undermine the case by revealing the true intent of the demand.

Nichols will hear arguments on the case at the end of the month, starting with New York’s motion to dismiss Trump’s lawsuit blocking the execution of the TRUST Act. Nichols was careful not to overtly tip his hand, but his recognition that damage would be done instantaneously absent this order at least hints that he thinks Trump’s argument against the law has merit. This injunction might be in place for a while.

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Jazz Shaw 8:31 AM on December 04, 2022