IRS fires back after AG says agency owes Va. millions

Posted at 2:32 PM, Jun 05, 2013

RICHMOND, Va. (WTVR) - The IRS is firing back at Virginia Attorney General Ken Cuccinelli after he said the federal agency was holding up the release of about $125 million owed to the Commonwealth as part of a medicaid fraud settlement.

Cuccinelli said his office earned the money by being lead investigator in the case.

"They refuse, to date, refuse to fill out very basic paperwork so the money can be properly distributed," Cuccinelli said at a Wednesday morning press conference.

However, in a letter to the attorney general's office obtained by CBS 6 News, the IRS said that Cuccinelli's office failed to detail specifically how the money would be spent, which was a requirement for the release of funds.

Additionally, the letter said that the agency was only authorized to give his office $10 million right away, but has now agreed to to release the additional $115 million.

The attorney general said he wants the money to go to police and sheriff's departments that need equipment and to a fund for training prosecutors.

"During the eight months the Treasury Department has been withholding the money, they have been depriving Virginia law enforcement of tools to make their jobs safer," Cuccinelli said.  "The interest alone on Virginia's share of the money in those eight months would have totaled more than a half million dollars.  That interest could have purchased more than 1000 bulletproof vests for police officers and sheriffs' deputies."