Attorney General Ken Cuccinelli claims the IRS is blocking the release of $125 million it owes Virginia from a Medicaid fraud settlement.
Cuccinelli says the agency refused to finish a two-page form that would allow the Treasury Department to cut the check.
Just a few hours after Cuccinelli's press conference, federal officials spoke out, and said they are prepared to cut a $10 million check, but need more information before handing over the rest, though they have confirmed that the state will get $115 million.
The money owed to Virginia is part of a $1.5 billion Medicaid settlement with drug maker Abbott Labs.
Virginia led the investigation that led to the payout, to settle allegations that Abbott Labs promoted an anti-seizure drug for uses not FDA-approved.
Cuccinelli says his office had earmarked most of its share of the payout for local police departments to buy vehicles and equipment and to help pay for training.