House Democrats are expected to file a lawsuit or a subpoena with the federal tax authorities for Donald Trump’s returns now that the treasury secretary, Steven Mnuchin, has refused to hand them over – in the latest twist of an escalating war between Congress and the executive branch of the US government.

The Treasury department on Monday afternoon denied a request by Congress for copies of Trump’s tax returns, saying that Congress had overstepped its bounds in requesting them.

The moves came as the president’s bitter confrontation with his political opponents continues to intensify. Democrats will meet with officials from the Department of Justice on Tuesday, having set up a vote in the House on Wednesday to hold Trump’s attorney general, William Barr, in contempt of Congress.

Jerry Nadler, the Democratic chair of the House judiciary committee, proposes to hold Barr in contempt after the justice department refused to provide the panel with an unredacted version of special counsel Robert Mueller’s report of the Trump-Russia investigation. The committee had given Barr until 9am on Monday to comply, after a redacted version of the report was issued last month.

On Monday evening, Nadler announced that the DoJ had agreed to meet his staff on Tuesday, adding that he hopes to make “concrete progress” toward resolving the dispute and that the court proceedings over contempt could be postponed if the attorney general makes a “good faith” effort to comply with his committee.

A DoJ spokeswoman, Kerri Kupec, said the department has “taken extraordinary steps to accommodate the House judiciary committee’s requests for information” but that Nadler had not reciprocated.

She noted that Democrats have refused to read a version of Mueller’s report with fewer redactions that has already been provided to Congress.

Kupec said Nadler’s staff had been invited to the department on Tuesday “to discuss a mutually acceptable accommodation”.

But amid sour relations, the flat refusal by the Treasury over Trump’s taxes, and the prospect of another legal battle, which analysts viewed as a direct challenge to the supposed power of Congress to oversee the other two branches of government, has further inflamed the contretemps between the administration and the Democratic leadership of the House of Representatives.

Mnuchin said in a letter to the House ways and means chair, Richard Neal, on Monday that the request from Congress was “unprecedented” and that he had consulted with the justice department on its legality.

“In reliance on the advice of the Department of Justice, I have determined that the committee’s request lacks a legitimate legislative purpose,” Mnuchin writes, “and … the department is therefore not authorized to disclose the requested returns and return information.”

Democrats in Congress have said that Trump’s tax returns must be reviewed for what the returns could reveal about foreign investments, debts or other financial arrangements. Trump has resisted the push, accusing Democrats of harassment.

The move by Mnuchin, which was expected, is sure to set in motion a legal battle over Trump’s tax returns. The chief options available to Democrats are to subpoena the IRS for the returns or to file a lawsuit. Last week, Richard Neal, Democrat of Massachusetts and the chairman of the House ways and means committee, promised “we’ll be ready” to act soon after Monday’s deadline.

Neal, the committee chairman, replied in a statement on Monday that he would seek legal advice on what to do next.

“Today, Secretary Mnuchin notified me that the IRS will not provide the documents I requested under section 6103 of the Internal Revenue Code,” Neal said. “I will consult with counsel and determine the appropriate response.”

Mnuchin said the justice department would “memorialize its advice in a published legal opinion as soon as practicable”. But after the refusal of attorney general to testify before a House committee and a Democratic move to hold him in contempt of Congress, a legal fight over the tax returns appeared inevitable.

Analysts rejected Mnuchin’s assertion that Congress did not have a “legitimate legislative purpose” for requesting Trump’s taxes.

Daniel Hemel, assistant professor at University of Chicago law school, pointed out that the ways and means committee, where tax law is written, has oversight authority over the IRS and the tax system more generally.

“Whether the president is paying his taxes is important to overall tax morale,” Hemel wrote. The request for tax returns, Hemel continued, did not mean that the committee was encroaching on IRS turf, but rather that Congress was verifying that the IRS is doing its own job.

“If anyone doubted that president is influencing tax administration in his favor, the fact that Mnuchin won’t let the IRS comply with Neal’s request should erase that doubt,” Hemel concluded.

Asha Rangappa, a former FBI special agent on the Yale faculty, added some historical background.

“The legislative purpose of the law under which the Ways & Means Committee is requesting Trump’s tax returns was passed in the wake of the Teapot Dome scandal,” Rangappa tweeted.

“The entire purpose of the law is to have oversight over potential financial conflicts of public officials.”

Trump is the first president since Richard Nixon to conceal his tax returns, which Congress has the explicit power to obtain under a 1924 law, the Washington Post reported.

The Associated Press contributed to this report