Some wonder if IRS scandal began with Goolsbee remark on Koch taxes

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Treasury Department investigators completed but never released a 2011 law enforcement probe of White House economic advisor Austan Goolsbee, The Washington Examiner has learned.

The investigation by the Treasury Department Inspector-General for Tax Administration was sparked by Goolsbee's remarks during an Aug. 27, 2010, White House news briefing in which he appeared to possess confidential tax information on Koch Industries, the private conglomerate controlled by the Koch brothers, Charles and David.

"So in this country we have partnerships, we have S corps, we have LLCs, we have a series of entities that do not pay corporate income tax. Some of which are really giant firms, you know Koch Industries is a multi-billion dollar business," Goolsbee said.

It is illegal for government officials to make public confidential tax information. Goolsbee was chief White House economist at the time.

The Kochs have funneled hundreds of millions of dollars into conservative and libertarian campaigns and causes, and are often invoked by President Obama and other liberal Democrats as poster boys for political abuses bred by "too much money in politics."

Six Republican senators requested the IG probe to determine if confidential tax records of individuals viewed by Obama as enemies were being passed around among senior staffers in the White House.

In the Aug. 10, 2011, email obtained by The Washington Examiner, Treasury Special Agent Daniel K. Carney said "the final report relative to the investigation of Austan Goolsbee's press conference remark is completed, has gone through all the approval processes."

But neither the report itself nor a summary of its findings have ever been made public. The report wasn't given to any of the six senators. The Kochs have never seen the report, either, according to a spokesman.

The investigation was conducted under Section 6103 of the Internal Revenue Commission's criminal code, which Congress enacted following revelations of President Nixon's abuse of private tax information during the Watergate scandal. The second article of impeachment against Nixon in the House Judiciary Committee was based on those abuses.

Goolsbee did not return a reporter's telephone calls seeking comment.

Recent revelations that the IRS harassed an estimated 500 conservative, evangelical and pro-Israel groups seeking non-profit status during the 2010 and 2012 election campaigns have stirred new interest in Congress on the Goolsbee investigation.

Among the groups harassed by the IRS was Americans for Prosperity, a non-profit grassroots conservative activist group funded in part by David Koch. Obama's 2010 campaign described AFP as a "special interest front group run by the oil billionaire Koch brothers." Obama and many officials in his administration also criticized AFP in campaign speeches.

"It appears that this Koch situation was just the beginning," Rep. Devin Nunes, R-CA, told The Washington Examiner Wednesday. "It should have immediately stopped there."

Nunes is a member of the powerful House Ways and Means Committee, which handles tax legislation.

The six GOP senators who demanded the IG probe were led by Sen. Chuck Grassley, R-IA, who is the ranking minority member of the Senate Finance Committee.

In a letter to Treasury IG J. Russell George, the senators said Goolsbee's comment raised "a very serious allegation that [Obama] administration employees may have improperly accessed and disclosed confidential taxpayer information."

Unknown to the six senators, their inquiry concerning Goolsbee's remark came during the period when IRS Exempt Organization officials were demanding that conservative groups seeking tax-exempt status "explain your relationship to Americans for Prosperity."

The tax agency demanded that the conservative groups disclose "copies of any contracts with AFP ... describe the training program by AFP ... and provide copies of the training materials" as a prerequisite of gaining tax exempt status.

Koch Industries officials have been repeatedly denied when they've requested copies of the IG report.

"The investigation was done and we've been denied access to it and my understanding is that we won't be able to get access to it," Koch attorney Mark Holden told The Washington Examiner.

IG spokesman David Barnes refused to discuss the report, saying "unfortunately, we can't provide any information on investigations."

But in his Aug. 20, 2011, email, Carney told Koch Industries in the August 2011 email that the report "would now be available through a Freedom of Information (FOIA) request."

Koch filed a FOIA request, but the IG office refused to acknowledge the report's existence, saying in a Sept. 12, 2011, letter that it "can neither admit nor deny the existence of responsive records."

On three other occasions when Koch representatives asked for copies of the report, Treasury Department and IG officials separately refused, with each saying only the other could release all or part of it.

Despite the veil of secrecy surrounding the report, Goolsbee claimed in a May 14 tweet that his information came from an article in a Florida newspaper that included no confidential tax information.

Richard Pollock is a member of The Washington Examiner Watchdog investigative reporting team. He can be reached at rpollock@washingtonexaminer.com.

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