BY PATRICK HOWLEY
The Internal Revenue Service (IRS) is paying a Washington law firm $1,000 an hour in taxpayer money to perform a corporate audit, despite its claim of being severely underfunded.
The IRS’ $2.2 million contract with big-money firm Quinn Emanuel has sparked a Senate Finance Committee investigation, with the committee’s chairman saying that the IRS “appears to violate federal law.”
Senate Finance Committee chairman Sen. Orrin Hatch wrote a letter this month to IRS commissioner John Koskinen stating his concerns relating to the contact, which pays Quinn Emanuel $1,000 an hour to perform an audit of Microsoft.
Hatch said that the contract appears to violate laws against the IRS sharing confidential taxpayer information with third parties.
“Despite these statutory prohibitions against the outsourcing of certain revenue functions or sharing of confidential taxpayer information, in May of last year the IRS hired a litigation law firm to assist in the income tax audit and investigation of a corporate taxpayer, including the conduct of sworn interviews,” Hatch’s letter stated.
“The IRS’s hiring of a private contractor to conduct an examination of a taxpayer raises concerns because the action: 1) appears to violate federal law and the express will of the Congress; 2) removes taxpayer protections by allowing the performance of inherently governmental functions by private contractors; and 3) calls into question the IRS’s use of its limited resources.”
But the Obama administration quickly re-wrote the rules shortly after hiring Quinn Emanuel.
“Only weeks after retaining the law firm, the Treasury Department and IRS issued a temporary regulation, without a notice and comment period, allowing third party contractors to take compulsory, sworn testimony in connection with an IRS investigation,” Hatch wrote. “The new, temporary regulation would allow private contractors — in this case, litigation attorneys billing taxpayers over $1,000 an hour, according to the contract — to question a witness under oath and ask the witness to clarify objections or assertions of privilege. It would also give these attorneys access to confidential taxpayer information while raising questions over how well that information is then protected from further disclosure. The temporary regulation was issued as a ‘clarification,’ despite the fact that it is an unprecedented expansion of the role of outside contractors in the examination process, and one that violates the IRC provisions…”
IRS commissioner John Koskinen, meanwhile, recently said that budget cuts would force the agency to cut its law enforcement capabilities.
Quinn Emanuel Washington partners William Burck and Jon Corey did not return requests for comment for this report.