Tax writers fire off warning to NY AG

The top Republican tax-writers in Congress have urged New York’s attorney general to abandon any efforts to directly obtain tax information from outside spending groups that are active in the 2012 campaign.

Rep. Dave Camp (R-Mich.) and Sen. Orrin Hatch (R-Utah) are questioning whether Attorney General Eric Schneiderman could run afoul of federal guidelines that limit how and when state officials can access tax returns.

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The two lawmakers say that the Democratic attorney general should instead direct his attention to the IRS as he seeks information on so-called 501(c)(4) groups, which have risen to prominence this year with multimillion-dollar political ad campaigns.

“Clearly, federal tax law carefully and extensively safeguards the confidentiality of taxpayer information,” Camp, the chairman of the House Ways and Means Committee, and Hatch, the ranking Republican at Senate Finance, wrote to Schneiderman on Monday.

“Failing to follow the guidelines set forth in the code suggests an attempt to improperly compel disclosure of federally protected taxpayer information.”

Camp and Hatch’s letter is just the latest salvo in a back-and-forth between Democrats and Republicans over the increasing prominence of 501(c)(4) groups, and the IRS’s handling of those organizations. 

James Freedland, a spokesman for Schneiderman, told The Hill in a statement that Monday's letter did note that state officials could request tax returns as part of their official duties. 

"If the Office of the Attorney General should require such records for purposes of carrying out its law enforcement functions on behalf of New Yorkers, it is well aware of the proper procedures for requesting such information," Freedland said.

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Schneiderman, according to news media reports over the summer, requested tax returns and other documents from 501(c)(4) groups on both sides of the aisle –— such as Crossroads Grassroots Policy Strategies, which has deep ties to Karl Rove, and Priorities USA Action, which was started by former staffers to President Obama. 

But a source familiar with the attorney general's work said that, while the office was examining the amount of political activity being conducted by 501(c)(4)s, Schneiderman had yet to directly request tax records from those groups.

501(c)(4)s currently are not required to release their donors, but are also supposed to concentrate on social welfare activities and limit their political work. Political candidates and the super-PACs that support them, in contrast, are required to disclose their contributors. 

Democrats have called on the IRS to place stricter controls on 501(c)(4) groups, including a “bright line test” for how much political work the groups do. 

Lawmakers in the party, who also want to force 501(c)(4)s to tell donors how much they concentrate on politics, have said they will introduce legislation on the subject if the IRS doesn’t make those changes. 

But Republicans have suggested that Democrats are trying to use the IRS for political gain, while also questioning whether the IRS is playing politics with the tax-exempt applications from Tea Party groups. 

In a letter last month, Hatch and other GOP senators prodded the IRS commissioner, Doug Shulman, to keep politics out of any decision to update guidelines for nonprofit groups. 

— This story was updated at 4:27 p.m. to clarify the content of the letter from Sen. Hatch and Rep. Camp.