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Supreme Court: President's Tax Returns Are Fair Game for Criminal Subpoenas

(Parker Tax Publishing July 2020)

In a 7-2 decision, the Supreme Court held that Article II and the Supremacy Clause of the U.S. Constitution do not categorically preclude, or require a heightened standard for, the issuance of a state criminal subpoena to a sitting President. Citing its decision in Clinton v. Jones, 520 U.S. 681 (S. Ct. 1997), the Court confirmed that federal criminal subpoenas do not rise to the level of constitutionally forbidden impairment of the Executive's ability to perform its constitutionally mandated functions and that a properly tailored criminal subpoena, such as the one at issue involving the President's tax returns and other financial information, will not normally hamper the performance of a President's constitutional duties. Trump v. Vance, 2020 PTC 197 (S. Ct. 2020).


In 2019, the New York County District Attorney's Office, acting on behalf of a grand jury, served a subpoena on Mazars USA, LLP, the personal accounting firm of President Donald J. Trump, for financial records relating to the President and his businesses. The President, acting in his personal capacity, sued the district attorney and Mazars in district court to enjoin enforcement of the subpoena, arguing that a sitting President enjoys absolute immunity from state criminal process under Article II and the Supremacy Clause. The district court dismissed the case (Trump v. Vance, 2019 PTC 391 (S.D. N.Y. 2019)) under the abstention doctrine of Younger v. Harris, 401 U.S. 37 (1971), and, in the alternative, held that the President was not entitled to injunctive relief. The Second Circuit, in Trump v. Vance, 2019 PTC 429 (2d Cir. 2019), rejected the district court's dismissal under Younger but agreed with the court's denial of injunctive relief, concluding that presidential immunity did not bar enforcement of the subpoena and rejecting the argument of the United States as amicus curiae that a state grand jury subpoena seeking the President's documents must satisfy a heightened showing of need.

Before the Supreme Court, the President claimed that the Supremacy Clause gives a sitting President absolute immunity from state criminal subpoenas because compliance with those subpoenas would categorically impair a President's performance of his Article II functions. Article II guarantees the independence of the Executive Branch. The Solicitor General, arguing on behalf of the United States, agreed with much of the President's reasoning and urged the Court to resolve the case by holding that a state grand jury subpoena for a sitting President's personal records must, at the very least, "satisfy a heightened standard of need," which the Solicitor General contended was not met in this case. The President's primary contention, which the Solicitor General supported, was that complying with state criminal subpoenas would necessarily divert the Chief Executive from his duties. The Solicitor General grounded that concern in Nixon v. Fitzgerald, 457 U.S. 731 (S. Ct. 1982) which recognized a President's "absolute immunity from damages liability predicated on his official acts." In explaining the basis for that immunity, the Supreme Court observed that the prospect of such liability could "distract a President from his public duties, to the detriment of not only the President and his office but also the Nation that the Presidency was designed to serve." The President contended that the diversion occasioned by a state criminal subpoena imposes an equally intolerable burden on a President's ability to perform his Article II functions.

Supreme Court's Analysis

The Supreme Court affirmed the decision of the Second Circuit and held that the President is not entitled to absolute immunity from the issuance of a subpoena, but remanded the case to the district court for further proceedings where the President may raise constitutional and legal objections to the state grand jury subpoena as appropriate. The Court concluded that Article II and the Supremacy Clause do not categorically preclude, or require a heightened standard for, the issuance of a state criminal subpoena to a sitting President.

The Court noted that, in U.S. v. Nixon, 418 U.S. 683 (S. Ct. 1974), it had rejected President Nixon's claim of an absolute privilege of confidentiality for all presidential communications. Recognizing that "compulsory process" was imperative for both the prosecution and the defense, the Court held that the President's "generalized assertion of privilege must yield to the demonstrated, specific need for evidence in a pending criminal trial." As a result of that decision, President Nixon then released the tapes which had been the subject of the case.

The Court noted that it had expressly rejected immunity based on distraction alone in its decision in Clinton v. Jones, 520 U.S. 681 (S. Ct. 1997) when President Clinton sought absolute immunity from civil liability for private acts. The prospect that a President may become "preoccupied by pending litigation," the Court noted, does not ordinarily implicate constitutional concerns. Two centuries of experience, the Court said, likewise confirm that a properly tailored criminal subpoena will not normally hamper the performance of a President's constitutional duties.

With respect to the President's objection that the additional distraction is caused by the subpoena itself, the Court responded that such an argument runs up against the 200 years of precedent establishing that Presidents, and their official communications, are subject to judicial process.

Finally, with respect to the President's argument that subjecting Presidents to state criminal subpoenas will make them easily identifiable targets for harassment, the Court noted that it had rejected a nearly identical argument in Clinton, concluding that the risk posed by harassing civil litigation was not serious because federal courts have the tools to deter and dismiss vexatious lawsuits.

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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