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.
Patrick Carter, director of the state's division of revenue, would not identify Ms. O'Donnell as the taxpayer but said he approved the inquiry "for routine purposes."
"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.
"Upon reviewing the access with the U.S. Treasury Department in December 2012, my Division again found state access of the records of the taxpayer was part of a typical review and was not improper," Mr. Carter said. "Further, the state Division of Revenue has received no notification from the U.S. Treasury that access of the taxpayer's records by a state employee was improper."
"No one in the Delaware Division of Revenue misused access to the taxpayer's records," he said. "There was no impetus for the review besides the routine sources of information the Department uses."
Mr. Carter said the division "routinely compares state and federal tax records for discrepancies and potential investigation based on information provided on tax forms, financial information from other state government agencies, from tips or complaints, or from media coverage or other public information highlighting tax issues."
At Thursday's hearing, Mr. George said federal law prohibits him from giving victims details about their cases.Mr. Issa said that should be fixed.
"It should not be complicated for a victim to find out that he is a victim and to be given information related to the misconduct so he can seek remedies," Mr. Issa said.
The Treasury official who contacted Ms. O'Donnell, Dennis Martel, has not responded to repeated requests for comment.
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