Nicole Duartel, Finance Committee Denies Allegation of Invasive Vetting of Brainard's Tax Returns, 2010 TNT 7 (Apr. 22, 2010):

Senate Finance Committee spokespersons have denied a long-circulating allegation that Lael Brainard, recently confirmed as Treasury undersecretary for international affairs, was subject to unusually invasive practices by the committee staffers who vetted her nomination.

More than a year after being nominated in March 2009, Brainard was confirmed April 20 by the Senate on a 78-19 vote. The delayed vote followed a vetting that included more than 11 rounds of correspondence and, sources say, examination of an unusually high number of past tax returns and a staff visit to her home to verify a 2008 home office deduction.

Despite complaints that Brainard's tax returns were subjected to more intense scrutiny than were other nominees', Finance Committee ranking minority member Chuck Grassley, R-Iowa, and others involved with the panel have said repeatedly that the vetting process for nominees has not changed in recent years and that the committee routinely requests and examines returns for the three years before the nomination. …

Chris Nelson, author of The Nelson Report, an e-newsletter on international issues, told Tax Analysts that the trade community is "outraged" that two rounds of U.S. talks with China took place without a confirmed Treasury undersecretary for international affairs.

A source familiar with the committee's review told Nelson that a Finance staff member visited Brainard's home to independently measure the home office to verify a deduction. Nelson reported on April 20 that the visit led committee staff to "ignore IRS acceptance of" tax returns that Brainard filed jointly with her husband, Kurt Campbell, assistant secretary of state for East Asian and Pacific affairs, "and to impose its own interpretation of allowable home office deductions on a minuscule difference of percentage." …

The Finance Committee "doesn't engage in root canals"; it examines returns on their face, said Dean Zerbe, a former committee staffer who is now the national director of Alliantgroup in Washington. "We don't go interview the nanny and ask her about her hours or things of that nature." … Zerbe noted another slight change in Finance Committee procedure. The committee was not interested in acting as an accountant for nominees, he said, so starting around 2002 or 2003, the committee began suggesting that nominees do a preliminary scrub of their own tax returns and to amend problematic returns before sending their information to the committee. "The committee doesn't want to be embarrassed that someone is engaged in plainly evident tax fraud," he said.

Prior TaxProf Blog coverage:

• Home Office Deduction Trips Up Treasury Department Nominee (Sept. 11, 2009)
• Senate Holds Hearing Today on Michael Mundaca's Nomination to be Assistant Secretary for Tax Policy (Nov. 4, 2009)
• Senate to Move Forward on Lael Brainard's Nomination Despite Tax Problems (Nov. 18, 2009)
• Senate Finance Committee Meets Today on Brainard and Mundaca Nominations (Nov. 20, 2009)
• More on Brainard Nomination (Nov. 22, 2009)
• Senate Finance Committee Approves Brainard, Mundaca Nominations for Treasury Posts (Dec. 24, 2009)
• WSJ: Four Treasury Dept Nominees Left Hanging As Senate Leaves Town (Dec. 24, 2009)

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