Feds vs State in Battle for Trump Taxes

NEW YORK (AP) -- Manhattan's top prosecutor pushed back against the U.S. Justice Department on Thursday in a legal battle over President Donald Trump's tax returns, saying local efforts to investigate the president's finances should be "free from federal interference."

A day after federal prosecutors asked for a delay, District Attorney Cyrus R. Vance Jr. filed court papers saying the Justice Department is supporting Trump's efforts to run out the clock on certain statutes of limitation that could affect a state grand jury investigation.

The move comes amid a deepening standoff in Washington after a government whistleblower alleged "inappropriate efforts to influence" the mandatory IRS audit program that's looking into Trump's tax returns and those of the vice president.

The chairman of the House Ways & Means Committee, Rep. Richard Neal, D-Mass., said the panel on July 29 received "an unsolicited communication from a Federal employee setting forth credible allegations of 'evidence of possible misconduct' — specifically, potential 'inappropriate efforts to influence' the mandatory audit program."

The whistleblower claim comes amid the House's impeachment inquiry into Trump after another government whistleblower complained about the president's actions toward Ukraine.

In an Aug. 8 letter to Treasury Secretary Steven Mnuchin, Neal sought documents and communications regarding specific employees at the department and the Internal Revenue Service. In a court filing, it was disclosed that Mnuchin missed the deadline to begin producing the documents.

Trump's tax returns have been a well-kept secret. He broke with U.S. political tradition as the first president in decades not to give voters a look at his financial situation. Democrats sued for their release.

Vance and Trump have been fighting over a subpoena issued this summer for Trump's tax returns as part of a criminal inquiry into the hush-money payments made to two women who claimed to have had affairs with the president.

The grand jury also subpoenaed the Trump Organization for records related to payments that former Trump lawyer Michael Cohen helped arrange to the porn actress Stormy Daniels and model Karen McDougal during the 2016 presidential campaign.

Trump has denied any sexual relationship with either woman and said any payments were personal matters, not campaign expenses.

The Justice Department on Wednesday asked a judge to temporarily delay enforcement of the subpoena for Trump's tax returns so the court can consider the president's argument that he can't be investigated while in office.

The Republican president has said Vance's investigation is unconstitutional and part of an effort by elected Democrats to harass him.

Attorneys for Vance counter that Trump's immunity should not interrupt a probe that includes the actions of individuals and businesses other than Trump.

"Also of concern is the State's sovereign right to enforce its criminal laws free from federal interference," they wrote in a court filing Thursday.

They added that it was "audacious" for the Justice Department to seek a delay, considering they conducted a similar investigation last year "into some of the very same transactions and actors."

That investigation resulted in Cohen pleading guilty to federal charges that the hush-money payments amounted to illegal campaign contributions. Federal prosecutors did not charge Trump or anyone else involved in either arranging the payoffs or reimbursing Cohen through Trump's company.

The Justice Department and U.S. attorney's office in Manhattan declined to comment on Vance's filing.