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Supreme Court Keeps Door Open for Congress to Subpoena President's Tax Returns

(Parker Tax Publishing July 2020)

The Supreme Court held that in upholding the validity of congressional subpoenas seeking President Trump's personal financial records and tax returns, lower courts failed to adequately consider the separation of powers principles involved, including both the significant legislative interests of Congress and the unique position of the President as an individual who alone composes a branch of government. The Court therefore remanded the case and identified several special considerations that should inform the lower courts' analysis, including: (1) whether the asserted legislative purpose warrants involving the President and his papers; (2) whether the subpoena is broader than reasonably necessary; (3) the nature of the evidence offered by Congress to establish that a subpoena advances a valid legislative purpose; and (4) the burdens imposed on the President. Trump v. Mazars USA, LLP, 2020 PTC 196 (S. Ct. 2020).


In 2019, three committees of the U.S. House of Representatives issued four subpoenas seeking information about the finances of President Donald Trump, his children, and affiliated businesses. The House Committee on Financial Services issued subpoenas to Deutsche Bank and Capital One seeking documents related to account activity, due diligence, foreign transactions, business statements, debt schedules, statements of net worth, tax returns, and suspicious activity. The Permanent Select Committee on Intelligence issued a subpoena to Deutsche Bank that mirrored the subpoena issued by the Financial Services Committee. And the House Committee on Oversight and Reform subpoenaed to the President's personal accounting firm, Mazars USA, LLP, demanding information related to the President and several affiliated businesses. Each committee supplied different justifications for the requests, explaining that the information would help guide legislative reform in areas ranging from money laundering and terrorism to foreign involvement in U.S. elections.

President Trump, along with his children and affiliated businesses, filed lawsuits in two district courts contesting the subpoenas on the grounds that they lacked a legitimate legislative purpose and violated the separation of powers. The President did not, however, argue that any of the requested records were protected by executive privilege. Both district courts found that the subpoenas served valid legislative purposes, and those decisions were affirmed by the D.C. Circuit and the Second Circuit, respectively. President Trump then appealed to the Supreme Court, arguing that the usual rules for determining the validity of congressional subpoenas did not apply. The President argued for a more demanding standard based on cases involving the recordings of conversations between President Richard Nixon and his advisers discussing the Watergate scandal over which President Nixon invoked executive privilege. President Trump contended that the Nixon cases established the standard applicable in this case - specifically, that the House must establish a demonstrated, specific need for the financial information and that the information is demonstrably critical to its legislative purpose.

Supreme Court's Analysis

The Supreme Court held that the lower courts did not adequately take into account the significant separation of powers concerns implicated by congressional subpoenas for the President's information. First, the Court disagreed that the demanding standards applicable in the Nixon cases applied here because, unlike the Nixon case, this case involved non-privileged, private information which did not implicate sensitive Executive Branch deliberations. The Court further found that the standards proposed by President Trump would risk seriously impeding Congress in carrying out its responsibilities. In the view of the Court, President Trump's approach would apply the same exacting standards to all subpoenas of the President's information without recognizing distinctions between privileged and non-privileged information, between official and personal information, or between various legislative objectives.

The Court explained that historically, disputes over congressional demands for presidential documents have been resolved by the political branches through negotiation and compromise. The Court recognized that this dispute was the first of its kind to reach the Court; that such disputes can raise important issues concerning relations between the branches; that similar disputes recur on a regular basis, including in the context of deeply partisan controversy; and that Congress and the Executive have nonetheless managed for over two centuries to resolve these disputes among themselves without Supreme Court guidance. According to the Court, such longstanding practice is a consideration of great weight in cases concerning the allocation of power between the two elected branches of government, and the Court said it had a duty of care to ensure that it did not needlessly disturb the compromises and working arrangements reached by those branches.

The Court found that the approach proposed by the House, which relied on precedents that did not involve the President's papers, failed to adequately take into account the significant separation of powers issues raised by congressional subpoenas for the President's information. In the Court's view, the House's approach would leave essentially no limits on the congressional power to subpoena the President's personal records, and a limitless subpoena power could transform the established practice of the political branches and allow Congress to aggrandize itself at the President's expense. According to the Court, these separation of powers concerns were unmistakably implicated by the subpoenas at issue, which represented not a run-of-the-mill legislative effort but rather a clash between rival branches of government over records of intense political interest. The Court said that the inter-branch conflict did not vanish simply because the subpoenas sought personal papers or because the President sued in his personal capacity.

In the view of the Court, neither side had identified an approach that adequately accounted for these separation of powers concerns. The Court determined that a balanced approach is necessary and that courts must take adequate account of the separation of powers principles at stake, including both the significant legislative interests of Congress and the unique position of the President.

The Court held that several special considerations informed its analysis. First, courts should carefully assess whether the asserted legislative purpose warrants the significant step of involving the President and his papers. The Court said that Congress may not rely on the President's information if other sources could reasonably provide Congress the information it needs in light of its particular legislative objective. Second, to narrow the scope of possible conflicts between the branches, the Court held that a subpoena should be no broader than reasonably necessary to support Congress's legislative objective. Third, the Court held that courts should be attentive to the nature of the evidence offered by Congress to establish that a subpoena advances a valid legislative purpose. The more detailed and substantial, the better, the Court noted, particularly when Congress contemplates legislation that raises sensitive constitutional issues, such as legislation concerning the Presidency. Fourth, the Court held that courts should assess the burdens imposed on the President by a subpoena, particularly because they stem from a rival political branch that has an ongoing relationship with the President and incentives to use subpoenas for institutional advantage. However, the Court noted, it has previously held that burdens on the President's time and attention stemming from judicial process and litigation, without more, generally do not cross constitutional lines. The Court concluded that other considerations may be pertinent as well, and one case every two centuries did not afford enough experience for an exhaustive list.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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