The Treasury Inspector General for Tax Administration has agreed to the request from Sen. Chuck Grassley, R-Iowa, ranking member of the Senate Finance Committee, and six other committee members to conduct an investigation of whether Obama Administration officials illegally accessed and disclosed confidential taxpayer information involving a particular taxpayer.

The inquiry comes after media reports quoted a senior Obama administration official describing the tax structure of Koch Industries, Inc., a prominent financial supporter of the Tea Party Movement. Taxpayer confidentiality laws are strict, in part to prevent the use of tax information for political gain. The official appeared to indicate knowledge of Koch Industries’ tax structure beyond what is publicly available. 

Grassley, along with Sens. Jon Kyl, Jim Bunning, Pat Roberts, Michael B. Enzi, John Cornyn and John Ensign, asked TIGTA to investigate whether Obama administration officials inappropriately examined and disclosed confidential taxpayer information and if so, whether they violated the taxpayer confidentiality law, known as Section 6103. 

They referred to a Wall Street Journal article that described a tax reform report recently delivered by the President’s Economic Recovery Advisory Board, or PERAB, which recommended ways to encourage corporations to pay corporate income taxes rather than setting themselves up as partnerships and other flow-through entities. In the article, "a senior Obama administration official singled out privately held oil refiner Koch Industries as a "really giant firm" that is structured as a pass-through."

The senators seized on the possibility of a possible breach of taxpayer confidentiality. They wrote to TIGTA Inspector General J. Russell George late last month asking him to investigate whether the Obama administration has violated taxpayer confidentiality, and TIGTA agreed Tuesday to conduct an investigation.

“The statement that Koch is a pass-through entity implies direct knowledge of Koch’s legal and tax status, which would appear to be a violation of section 6103,” the senators wrote. “Alternatively, if the statement was based on speculation, it raises the question of whether the Administration speculating about any specific taxpayer’s liability is appropriate.”

They asked TIGTA to determine whether “administration employees, including PERAB employees, have access to tax returns and return information in compiling the PERAB report. If yes, how many companies’ tax returns did the PERAB employees review and did they follow the procedures prescribed under the regulations governing Section 6103 for accessing and protecting taxpayer information? Did Administration employees, including PERAB employees, violate Section 6103 when they discussed the tax status of Koch Industries, Inc. and its related companies? If violations of 6103 did not occur, what was the basis for the statement regarding Koch’s legal and tax status and was the statement appropriate?”

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