The United States Law Week

New York Could Give Congress Trump’s State Tax Returns (1)

May 7, 2019, 5:12 PM

The New York Senate is planning a vote on legislation that could give Congress access to President Donald Trump’s state tax returns, even as his administration refuses to turn his federal returns over to committees investigating him.

The Democratic-led Senate is expected to take up the bill (S. 5072) May 8, according to an announcement from the Senate majority. If passed by both chambers and signed by the governor, the legislation would create an exemption to the state’s current tax law, which prohibits the sharing of tax return information except under certain circumstances. The new exemption would authorize the state to share tax returns upon request from a congressional committee.

Assembly Speaker Carl Heastie (D) will discuss the measure further with the Democratic majority conference “in the near future,” majority spokesman Mike Whyland said. The Assembly version of the bill (A. 7194) is in committee.

The White House declined to comment on the bill. William Consovoy, Trump’s personal attorney, has said that it is Trump’s right as a citizen to keep his returns private.

The vote comes after Treasury Secretary Steven Mnuchin said May 6 that his department wouldn’t release Trump’s personal and business tax returns to Congress. House Ways and Means Committee Chairman Richard E. Neal (D-Mass.), who requested the release of six years of the president’s returns, could now decide to take more forceful actions like issuing a subpoena or filing a lawsuit.

Experts say the New York law would provide another avenue for Congress to get a hold of Trump’s returns.

‘Enormously Consequential’

The bill’s passage could be “enormously consequential,” Gerald Benjamin, distinguished professor of political science at the State University of New York at New Paltz told Bloomberg Tax May 7.

“A decision by New York to release Trump’s New York returns would effectively release portions of his federal returns, and probably very revealing portions, as much of the background that’s required for claiming tax benefits would be on federal forms,” Benjamin said.

With his businesses based in New York, experts have said the state return, depending on the level of detail, could provide insight into the structure of his empire, including how much revenue is coming in and from what sources.

Trump would likely challenge the matter in court, Benjamin said.

The law would protect against fishing expeditions by authorizing the state Commissioner of Taxation and Finance to provide the state tax return or return information. But that could only take place upon request of the chairman of the Ways and Means Committee, chairman of the Senate Finance Committee, or the chief of staff of the Joint Committee on Taxation. Tax code Section 6103 gives them that authority.

The request must show that the information is for a specified and legitimate legislative purpose, that the committee has made a related request to the Treasury Department pursuant to federal law, and that the disclosure and inspection of the information will be consistent with the federal law.

A spokesman for Neal said the New York bill “wouldn’t matter,” insisting that their only goal was to oversee the annual routine Internal Revenue Service audits of the president.

“As Mr. Neal noted in his first letter to Commissioner Rettig, the committee is investigating the mandatory presidential audit program at the IRS to determine whether or not the program needs to be codified into federal law,” said Daniel Rubin, a spokesman for the U.S. House Ways and Means Committee Democrats.

Once passed by the state Senate and Assembly, the measure would go before Gov. Andrew M. Cuomo (D). Cuomo hasn’t specifically addressed the bill, but has said all elected officials should be prepared to release their taxes if they enter public service.

—With assistance from Shannon Pettypiece and Laura Davison.

To contact the reporter on this story: Keshia Clukey in Albany, N.Y. at kclukey@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Megan Pannone at mpannone@bloombergtax.com

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