David E. Hanlon Ralph Orcutt Edmund X. Klipa (Possible Contact by the Senate Select Committee Staff)

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PROPOSED STATEMENT CONCERNING CIA ACCESS
TO INTERNAL REVENUE SERVICE TAX RECORDS
As recently disclosed by one of the committees investigating
the Central Intelligence Agency, there have been limited instances
where the Agency has obtained certain Federal income tax data on
an individual or firm. These instances have been few in number
and over three years has elapsed since such data was last obtained.
The nature of the Agency's mission requires that it have
liaison with the Internal Revenue Service to insure that the
correct taxes of its employees of proprietaries are paid with due
respect to the dictates of the security and confidentiality of
operations. Over the years the Agency has had a close and effec-
tive liaison with the Service at the highest level.
Since 1957 we know of only twelve Agency~internal investiga-
tions where Federal income tax information was requested or
received from the Internal Revenue Service, and all but one of
these centered on very sensitive Agency concerns of a counter-
intelligence nature. The one exception occurred in 1957 when
the Agency sought and obtained Federal tax data on an employee
who was suspected of using his position of trust and responsibility
for his own financial advantage. In no known instance did the
Agency request or receive copies of Federal income tax returns.
The Internal Revenue Service generally provided limited information
to the Agency verbally or permitted an Agency officer to view tax
records and take notes.
The tax data obtained was used solely as an adjunct to the
sensitive investigation being conducted. It was not provided to
any other Federal agencies and its dissemination within the Agency
was tightly controlled and restricted to those individuals directly
involved in the investigation.
In all of these instances the Federal tax data obtained would
have been available to the Agency under existing statutes and regu-
lations if a request to the Internal Revenue Service had been in
writing. _However, the sensitivity of each of the investigations
coupled with the close liaison relationship between the two
agencies caused the information to be sought and provided on an
informal basis primarily to protect the identity of the individuals
involved.