Attorney General Ken Cuccinelli alleges politics motivated IRS to block $125 million owed to Virginia

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Virginia Attorney General Ken Cuccinelli alleged Wednesday that he is the latest victim of the ongoing scandal at the Internal Revenue Service and that the agency is withholding millions of dollars owed to the state as a political punishment.

The accusations stem from a $1.5 billion settlement that Virginia and the Justice Department reached last year with Abbott Laboratories, which pleaded guilty to unlawfully promoting the prescription drug Depakote for uses not approved by the Food and Drug Administration. Virginia should have received $125 million for the role it played in investigating the pharmaceutical giant, according to the Attorney General's Office.

A year later, the IRS still has not released that money, Cuccinelli said. And the outspoken conservative and Republican candidate for governor said his past battles with President Obama's administration could be a reason.

The IRS is already under fire for targeting conservative groups like the Tea Party and delaying their requests for tax-exempt status.

"There's incompetence or there's malevolence," Cuccinelli said. "The level of incompetence here is so astoundingly high that it does become hard to believe that even a federal agency like the IRS is capable of that."

But the Treasury Department, in a letter dated Wednesday obtained by The Washington Examiner, noted that the federal government had ongoing discussions about the money with Cuccinelli's office and corresponded as recently as May 24.

In the letter, the department agreed to turn over $10 million to Virginia immediately and more than $100 million more once Cuccinelli provides a list of projects the money would fund, prompting Cuccinelli to claim victory Wednesday evening.

Treasury officials wrote that because Virginia's piece of the pot was so large -- three times the budget for Cuccinelli's office -- policy required them to "ensure that funds are used for appropriate purposes and in a fiscally responsible manner." Department rules say the money must go toward public safety.

Virginia Democrats called Cuccinelli's press conference Wednesday "a de facto campaign event" and charged that Cuccinelli should have shown such determination in pursuing Star Scientific, a supplement-maker with political ties to Cuccinelli. The Republican owned stock in the company, which sued the state over unpaid taxes, and accepted gifts from its CEO, Jonnie Williams, many of which went unreported for several years.

scontorno@washingtonexaminer.com

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