Senators Seek Investigation of Obama Administration for Discussing Koch Tax Status (Updated)
Did an administration official violate the law?
5:38 PM, Sep 24, 2010 • By JOHN MCCORMACK
Senator Chuck Grassley, ranking Republican of the Finance Committee, has requested a formal investigation of the Obama administration over a senior administration official's comments on the tax status of Koch Industries--a private company targeted by Democrats, including President Obama himself, for funding libertarian and conservative causes.
Grassley and six other Republican senators on the Finance Committee sent a letter today to the Treasury Inspector General for Tax Administration, in which they asked the inspector general to investigate "a very serious allegation that Administration employees may have improperly accessed and disclosed confidential taxpayer information. As you know, section 6103 of the Internal Revenue Code protects the privacy of federal tax returns and return information. This law was enacted as a result of the use of tax information for political gain during the Watergate scandal."
"[T]he 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 in their letter today. "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."
Grassley and his colleagues don't necessarily buy the Obama administration's claim that the information about Koch came from publicly available sources.
The senators write that the senior administration official "comments on the legal structure of Koch Industries, Inc. (Koch) and its impact on the group’s tax liability. While Koch’s website indicates some of the Koch companies are limited liability companies (LLC) or limited partnerships, there is no indication that Koch itself is a Subchapter S Corporation, which is one type of flow through entity, or a Subchapter C corporation. In addition, an LLC can choose to be taxed as Subchapter C corporation."
The senators conclude their letter with these requests to the Treasury Inspector General for Tax Administration:
Update: A White House official writes in an email to THE WEEKLY STANDARD that the senior administration official's statement on Koch's tax status "was not based on any review of tax filings and we will not use this example in the future."