State tax returns

Judge seeks compromise in fight over Trump's state tax returns

By BRIAN FALER

A federal judge on Monday ordered lawyers for President Donald Trump, House Democrats and New York state to try to come up with a compromise in a fight over the president’s state tax returns.

Judge Carl Nichols said he wants the three sides to outline possible ways forward in the dispute by 6 p.m. Tuesday.

The surprise decision came in a case in which Trump is demanding a temporary restraining order to prevent Ways and Means Chairman Richard Neal from taking advantage of a newly passed New York law that would give him access to the president’s confidential tax filings there. Trump is challenging the underlying law, and is concerned Neal could obtain the records while the case is still pending.

While Trump lawyer William Consovoy argued in a hearing Monday that Democrats do not have a legitimate legislative reason for seeking the returns, Neal’s lawyers said the court does not have the authority to get involved because such a request would be part of Neal's legislative responsibilities.

The problem, Nichols said, is that he was being asked to decide the lawfulness of a request that hasn’t actually been made.

He said he didn’t know if or when Neal might ask for the documents. Nor does he know what exactly Neal might request or what reasons he might give for seeking it.

“I need to know more,” said Nichols, a Trump appointee confirmed to his post in May. “We don’t have the facts yet.”

At the same time, Nichols expressed concern that Neal could obtain the returns immediately, making the case moot, which led to him demanding the three sides try to work it out on their own. He wants them to set “forth any agreement they have reached — or in the event they are unable to reach agreement, their respective positions — regarding how this case should proceed.”

At issue is legislation New York Gov. Andrew Cuomo signed into law earlier this month authorizing state officials there to share Trump’s state filings if requested by Neal, who is separately suing for the president’s federal tax returns.

The Massachusetts Democrat has been lukewarm on the law, fearing it could undermine his own suit, though some liberals are demanding he act. Trump filed suit last week against Neal and New York officials arguing Neal could change his mind at any time and obtain them without any notice. Neal’s lawyers said Monday that he has not requested the documents.

Consovoy had been seeking to block Neal from seeking the state returns. On Monday, he suggested Nichols could also prevent New York from providing the documents to Congress.

That last-minute proposal, coming hours before the hearing, antagonized a lawyer for the state who said he had not been expecting the proposal and did not have enough time to prepare a rebuttal. Nichols agreed Monday the state deserved more time to consider the issue.