The director of Delaware’s tax-collection office said Friday that his agency accessed the federal tax records in 2010 of an unnamed taxpayer, believed to be former GOP Senate candidate Christine O'Donnell.
“A state Division of Revenue investigator accessed records on or after March 20, 2010 following information that came to the attention of the division,” Mr. Carter said in a statement. “The record access led the state revenue investigator to conclude there was no basis for further state investigation of a taxpayer and no action was taken by the state Division of Revenue against the taxpayer.”
Ms. O’Donnell told The Washington Times that she was contacted in January by a federal Treasury official who told her that her IRS tax records might have been accessed inappropriately by a government official. She said the federal investigator dropped the inquiry in April, and she has been unable to learn why her tax records were scrutinized.
She said the accessing of her tax records took place on the same day that she announced her candidacy for the U.S. Senate, and she has questioned whether the timing was politically motivated. News reports surfaced at the time that Ms. O'Donnell had been slapped with a tax lien, which turned out to be generated by a computer error.
Citing privacy laws, Mr. Carter would not discuss the specifics of Ms. O'Donnell’s case. But he said he did speak to a federal Treasury Department investigator in December 2012 “about state investigator access of federal tax records.”
The Washington Times reported this week that the Treasury inspector general for tax administration had found at least four cases in which a candidate’s or donor’s tax information was accessed improperly.
Investigators for Sen. Chuck Grassley of Iowa, the ranking Republican on the SenateJudiciary Committee, said the problem was likely a backdoor system that allows state officials to look at federal tax records as part of their own investigations.
In one case, the investigator said the violation was willful and referred it to the Justice Department, which declined to pursue the case.
House oversight committee Chairman Darrell E. Issa said Thursday he’s baffled that the Justice Department declined to prosecute a government employee who apparently knowingly pried into tax records of a political candidate or donor, and said there should be a way for victims to know their rights have been violated.
He also said letting state officials have access to federal tax records can be dangerous, and that’s one reason to try to rein in the health care law, which will expand access to states that plan on running their own insurance exchanges.
“We are not just disappointed, but dismayed,” Mr. Issa, California Republican, told The Times, speaking just after he finished a hearing with Inspector General J. Russell George looking at the intrusive IRS scrutiny of conservative groups applying for tax-exempt status.
Mr Carter identified the state investigator who accessed the tax records as David Smith, an auditor “who we believe properly conducted a review of federal tax records.”
“The 2010 access in question was approved by me as director and was for routine purposes,” he said. Mr. Carter would not answer questions from a reporter Friday.
But he said his agency did not engage in wrongdoing.