Inspector General Confirms Improper Access of Political Donors’ Tax Records

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Sen. Chuck Grassley, R-Iowa, the former chairman of the Senate Finance Committee, is looking into findings from the Treasury Inspector General for Tax Administration that the confidential tax records of political donors or candidates have been inappropriately accessed or disclosed in several instances since 2006 and asking why the Justice Department has declined to prosecute the perpetrators.

The inappropriate access most likely occurred at the IRS, Grassley’s office noted, but since TIGTA did not name the specific agency, another entity or entities, such as a state tax office with access to federal tax records, could be involved. TIGTA is withholding details of the agencies involved and the names of the candidates and donors because of taxpayer confidentiality laws.

The inspector general found one case of access “willful” and sought Justice Department prosecution, Grassley’s office noted, but the Justice Department declined to prosecute. Grassley is asking the Justice Department for an explanation of the decision not to prosecute.

“Any agency with access to tax records is required to act with neutrality and professionalism, not political bias,” he said in a statement. “The Justice Department should answer completely and not hide behind taxpayer confidentiality laws to avoid accountability for its decision not to prosecute a violation of taxpayer confidentiality laws. With the IRS on the hot seat over targeting certain political groups, it’s particularly troubling to learn about ‘willful unauthorized access’ of tax records involving individuals who were candidates for office or political donors. The public needs to know whether the decision not to prosecute these violations was politically motivated and whether the individuals responsible were held accountable in any other way.”

In his initial letter about the matter last month to TIGTA Inspector General J. Russell George, Grassley referred to an ABC News report that quoted several political donors who claimed they had been targeted, including Charlie Moncrief, a Texas oil executive who raised more than $1 million for Mitt Romney’s 2012 presidential campaign; Frank VanderSloot, an Idaho businessman who also donated over $1 million to groups supporting Romney; Hal Scherz, a physician who started the group Docs4PatientCare to lobby against health care reform; and possibly even the Reverend Bill Graham, several of whose charitable organizations had been audited, according to his son Franklin.

In response to Grassley’s query about the number of instances in which TIGTA found evidence that the IRS targeted for audit any candidates for public office, George responded in a letter earlier this month, “We did not identify any closed cases from 2006 to the present involving allegations that the IRS targeted for audit candidates for public office. We are currently reviewing two allegations on this topic.”

Grassley also asked George the number of instances where TIGTA found evidence that the confidential tax records of any political donor or candidate for public office were inappropriately accessed by any IRS employee or other federal or state government officials.

In response, George said TIGTA had identified eight items involving allegations of unauthorized access or disclosure of tax records of political donors or candidates. “Our reviews determined that in four of these eight cases, the allegations were not substantiated by evidence,” George explained. “In one case, we determined that no access occurred, and, in three cases, access occurred, but there were legitimate business reasons for the access. In the other four of the eight cases, we found evidence that unauthorized access or disclosure occurred. In three of these cases, we determined that the unauthorized access or disclosure occurred, but was inadvertent and there was no evidence of willfulness. We referred one of these three cases to the Department of Justice for additional review, and the Department of Justice concurred with our assessment that there was no willfulness and declined prosecution. In the fourth case, we presented evidence of a willful unauthorized access to the Department of Justice, but the case was declined for prosecution."

The IRS said its employees were not responsible for the willful violation disclosed by TIGTA. “The IRS understands that the willful violation referenced in the letter was not by an IRS employee,” said a statement emailed to Accounting Today by IRS spokesman Dean Patterson. “The IRS takes its role to protect confidential taxpayer information very seriously. The IRS conducts annual training and certification to ensure all employees are fully aware of their responsibility to protect the confidentiality of tax return information. Allegations of unauthorized access or inspection of taxpayer records are immediately reported to TIGTA. The IRS stresses that audits and collection actions are based on the information related to the tax return and the underlying tax law—nothing else. Audits and collections are handled by career, non-partisan civil servants, and the IRS has safeguards in place to protect the exam and collection process. Under federal law, we cannot discuss specifics of any taxpayer cases.”

TIGTA chief George is scheduled to testify Thursday before the House Oversight and Government Reform Committee in the latest of a series of hearings on scandals at the IRS. Democratic lawmakers had demanded that he return to testify about why his original report on the extra scrutiny that the IRS had given to Tea Party groups that had applied for tax-exempt status left out any findings about how "progessive" and "Occupy Wall Street" groups had also been on the IRS's so-called BOLO, or "Be on the Lookout," lists (see New Documents in IRS Tax-Exempt Screening Probe Raise More Questions).

Grassley wrote a letter to Attorney General Eric Holder last week demanding to know why the Department of Justice declined to prosecute any of the cases. He asked Holder how high up in the department the TIGTA referrals were reviewed, who made the decision at the DOJ to decline the investigations for criminal prosecution, and what was the rationale behind the refusals.

Grassley also asked Holder whether anyone from the Justice Department’s main headquarters in Washington had reviewed the referrals, whether Holder was personally aware of the referrals from TIGTA, and to which political party the “victims” of the declined investigations belonged.


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