Yesterday, Fox News finally jumped on The Weekly Standard's bogus two-week-old story that an Obama administration official had illegally accessed the tax information of Koch Industries in order to tell reporters that the company didn't pay corporate income taxes. Unfortunately for Fox, that story dissolved days after it was first reported, when Koch Industries disclosed that the administration official was wrong because they do, in fact, pay such taxes.

The story hangs on what a senior Obama administration official -- identified as Council of Economic Advisers chairman Austan Goolsbee -- told reporters in an off-the-record briefing on corporate taxes:

So in this country we have partnerships, we have S corps, we have LLCs, we have a series of entities that do not pay corporate income tax. Some of which are really giant firms, you know Koch Industries is a multibillion dollar businesses. So that creates a narrower base because we've literally got something like 50 percent of the business income in the U.S. is going to businesses that don't pay any corporate income tax. They point out [in the report] you could review the boundary between corporate and non-corporate taxation as a way to broaden the base.

The Weekly Standard's John McCormack suggested in a September 20 report that Goolsbee “may have crossed the line” by giving out information on Koch's filing status that he supposedly illegally obtained by accessing the firm's tax information. Even McCormack's Koch Industries source, senior vice president and general counsel Mark Holdren, wouldn't go that far, though he said that “if he got this information--confidential tax information--under the internal revenue code ... if he obtained it in a way that was inappropriate, that would be unlawful. But I don't know that that's the case.”

The story started to fall apart the next day, when the Obama administration explained that the source Goolsbee used wasn't Koch's tax returns, but rather from public congressional testimony, media reports, and Koch's website, which lists several large Koch companies “as LLCs, LPs or other frequent pass-through entities.”

But as Mother Jones reports today, the story completely dissolved over the next three days, as Koch Industries told The Weekly Standard and The Wall Street Journal that if Goolsbee was saying that Koch Industries as an entity doesn't pay corporate income tax, he was wrong, because the company does pay such taxes. (Holdren's comment on this -- “It doesn't necessarily mean that they didn't look at our income tax returns and doesn't necessarily mean that they didn't access our confidential information improperly” -- is really one for the ages.)

Thus, the Fox allegation now hangs on an official illegally accessing the information (for which there is no evidence, mind you), then inexplicably saying the opposite of what those illegally accessed documents state.