DC legal battle over Trump's state taxes could be moving to New York court

A Washington, D.C., legal battle over President Donald Trump's state tax returns could be moving to the New York courts, under a new ruling by the judge in the case issued on Thursday.

The case, brought by Trump, aims to prevent the House Ways and Means committee from requesting his state tax records under a New York state law.

Trump is seeking to prohibit the committee from utilizing a just-passed New York state law which allows the state commissioner to turn over tax returns upon request of certain congressional committees. The case was brought by Trump against the House Ways and Means committee, as well as New York Attorney General Letitia James and the commissioner of the New York Department of Taxation and Finance, Michael Schmidt.

But considerations over how the case should proceed have faced additional speed bumps due to arguments about whether the cause ought to be heard in Washington or in New York. An attorney on behalf of the New York Attorney General and New York Commissioner, Andrew Amer, has argued the D.C. courts do not have the authority to issue orders to his client and that the case ought to be before a New York judge.

Judge Carl Nichols, a Trump appointee who is new to the federal bench, has been grappling with how best to proceed in the case since attorneys for Trump and the House Ways and Means committee appeared before him on Monday. In court, Trump's attorneys argued that Trump's taxes could be requested and produced before there was an opportunity to litigate the matter. But an attorney for the committee argued that the courts have little power to regulate what is an appropriate request from Congress.

Nichols on Monday said he was considering a solution which would require New York to hold off producing Trump's tax documents until the D.C. court and Trump's legal team were notified should New York receive a request from Congress. But New York attorneys pushed back on that proposal, arguing that a decision needed to be made on whether the D.C. courts could tell the state of New York how to enforce its new law and that was necessary before further decisions could be made.

"It is not a close call," wrote Amer in a status report on Tuesday, while arguing that the D.C. courts could not regulate his clients.

Nichols ruled on Thursday in favor of this argument. New York attorneys were ordered by the judge to seek a dismissal in the case under their argument that the D.C. courts are not the correct venue for the legal battle. Trump's legal team will then have an opportunity to submit written arguments for why the case should remain in D.C. before the parties again appear in court to try to hash out their differences.

While the matter is being decided, the judge told the New York commissioner not to produce Trump's state tax returns, a concession agreed to in a previous filing.

The House Ways and Means committee has not yet made a request for Trump's tax returns under the New York law. In fact, chairman of the House Ways and Means Committee, Rep. Richard Neal, D-Mass., has hesitated to actually use the new law to request the president’s state returns. Under the current language of the New York law, neither the committee nor New York state would have to provide notice to any party if the request for documents is made or if the documents are distributed. There's also no specified wait period between request for and distribution of documents

But in their complaint, the president’s lawyers claim that Neal has “expressed a renewed interest in utilizing” the statute, citing media reports. And Trump's attorney, William Consovoy, argued Monday that if the court did not take some sort of action, the president may not have the opportunity to defend himself in court should a request be made.

After almost 90-minutes of argument, Nichols instructed the parties to meet, along with Amer, to see whether they could find an agreeable solution. On Tuesday, the legal teams reported to the judge that they could not reach a determination on how best to proceed and instead, each party proposed suggestions for a path forward. The conclusion reached by Nichols on Thursday closely mirrors the proposal submitted by Amer.