Congressional Republicans on Monday issued a letter to Eric T. Schneiderman, the New York attorney general, raising questions about his investigations into private equity firms and politically active tax-exempt groups.
Senator Orrin Hatch of Utah, the ranking member of the Senate Finance Committee, and Representative Dave Camp of Michigan, the chairman of the House Ways and Means Committee, questioned whether Mr. Schneiderman, a Democrat, had properly followed federal procedures in requesting tax information in connection with the two unrelated inquiries. One of the inquiries focuses on tax-exempt groups' election spending; the other is looking at whether strategies used by private equity managers to reduce their taxes violate federal or state law.
“We are particularly concerned by reports that indicate your office has not followed the federally prescribed process for legally obtaining tax returns and other financial information from these organizations and businesses,†wrote Mr. Hatch and Mr. Camp.
The two lawmakers said that legal demands by state law enforcement officials for federal tax information must be made through the Internal Revenue Service. They also hint at fears that Mr. Schneiderman's investigation of tax-exempt groups might reveal which donors have been financing multimillion-dollar advertising barrages by the groups, which overwhelmingly back Republicans and whose right to spend on campaigns without disclosing donors has been fiercely defended by Republicans on Capitol Hill.
“We emphasize strongly that willful unauthorized disclosure of returns or return information is a federal crime subject to fines and/or imprisonment,†the letter says.
So far, Mr. Schneiderman does not appear to have issued subpoenas to any of the groups, known as 501(c)(4)s after the section of the tax code under which they are organized. During the summer, his office requested that groups operating or raising money in New York register with the attorney general's charities bureau and comply with relevant state rules - which require registering organizations to provide the office with copies of their tax returns and audited financial statements each year - or explain why they are not subject to the state regulation.
“State law empowers the Office of the New York State Attorney General to conduct inquiries to protect New Yorkers from, among other things, fraudulent solicitations and state tax evasion,†James Freeland, a spokesman for Mr. Schneiderman, said in a statement. “Senator Hatch and Representative Camp correctly note in their letter that federal law recognizes this as a legitimate basis for states to seek tax returns from the I.R.S. 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.â€
Mr. Schneiderman's investigation of the private equity industry has involved subpoenas to more than a dozen firms in recent months, but it is not clear whether individual tax returns are among the documents that have been requested.
