Ms. O’Donnell told The Washington Times that she discovered the levy when she couldn’t access her checking account as she was preparing to visit relatives over Thanksgiving.
“The day before I was heading out of town for the Thanksgiving weekend, my bank told me the IRS had frozen my accounts. They didn’t give me a reason why, just a phone number to call,” Ms. O’Donnell said in an interview this week.
She said she called the Internal Revenue Service and was told the agency had concluded she owed $30,000 in taxes from a 2008 house transaction, which was long ago accounted for on her federal returns. She said she implored the agency to check her tax records and eventually was told the levy was generated in error and her accounts would be freed up.
Although IRS officials removed the levy, they first withdrew all the funds from her account. They said that, too, was in error and the funds would be returned to her. The funds have not been replaced, Ms. O’Donnell said.
Ms. O’Donnell, who writes a column for the online Washington Times Communities, says her only current matter pending with the IRS is that she filed for an extension to pay her 2013 taxes but that the levy had nothing to do with that filing.
“They said it was a mistake, and they removed the levy. I’m grateful, but I also wonder what someone with less government experience might do when they find themselves frozen from their money because the IRS got its paperwork mixed up. It can be scary. You feel helpless if you can’t even buy gas for your car,” she said. Asked where she thought her latest IRS run-in fit into the bigger controversy over the agency’s dealings with conservatives, she answered cautiously.
“While I don’t believe in coincidences, it’s possible that this was just bureaucratic bungling. But either way, the IRS has to be held accountable. It needs to do its job right and not target or inconvenience taxpayers unfairly,” she said. IRS officials said federal tax privacy laws prohibit them from commenting on individual taxpayer matters.
Ms. O’Donnell, a tea party favorite who burst onto the national stage in 2010 when she upset a longtime incumbent and won the Republican nomination for U.S. Senate in Delaware, has been one of several high-profile conservatives to claim mistreatment from the IRS and other federal authorities.
Senate investigators continue to probe why Delaware state authorities accessed Ms. O’Donnell’s IRS tax file on a Saturday morning in spring 2010, right around the time she announced her candidacy and a story was leaked alleging that she owed back taxes to the IRS, which was later proved to be false.
Delaware authorities claim the records check was routine but that the computer records detailing what was searched have since been destroyed. Lawmakers in both parties have cited the episode in raising concerns about possible lax access for state agencies to sensitive federal tax records.
The first tax lien was placed on a house she had sold more than two years earlier, and it created headaches for her finances and her campaign. The lien was highly publicized and used to discredit Ms. O’Donnell’s candidacy just as it was getting off the ground, even though she no longer owned the home in question.
The IRS eventually removed the lien, blaming it on a computer error. Ms. O’Donnell sold the home in 2008, and financial documents from her lender show that her back payments were satisfied in July 2008, long before the IRS initiated the bogus lien.
Ms. O’Donnell also battled a three-year audit of her personal finances that ultimately ended with her repaying $1,100 to the federal government. She said friends and family also were subjected to intrusive audits, though they were cleared. She believes the first round of IRS intrusions were political and malicious, and she has called on Congress to rein in the tax agency.
The second erroneous tax lien was revealed the same week that House Oversight and Government Reform Committee Chairman Darrell E. Issa, California Republican, released a report highlighting emails he said showed a clear anti-conservative bias inside the IRS. It was also the same week that the House Ways and Means and Senate Judiciary committees confirmed they were still investigating the 2010 breach of Ms. O’Donnell’s tax records.
Mr. Issa’s report revealed that IRS employees who specifically targeted tea party groups with audits for review stretched to find ways to deny the groups’ tax-exempt status and one even referred to conservatives as “icky.”
The report also found that IRS officials “repeatedly changed their stories” about what went on and who was responsible for targeting the conservative and tea party groups.