Commissioner of Taxation Chris Jordan's was answering questions on Tuesday about allegations that one of his deputy commissioners improperly used his influence to allow a taxpayer facing prosecution off the hook.

A Tax Office whistleblower says they were ordered to drop the prosecution in late 2015 after Michael Cranston was approached by an accountant acting for the "high wealth individual".

The accountant's firm, KPMG, said on Tuesday that they were not approached by internal ATO investigators who looked into an internal complaint about the case before finding Mr Cranston had no case to answer.

Mr Cranston is suspended without pay from his job while he faces charges of abusing his position as a public official in relation to the alleged $165 million "Plutus' payroll scam, with both his son and daughter also facing court over the allegations.

Another senior Tax Office official told a Senate estimates hearing on Tuesday that the 2015 matter would be investigated after an internal Tax Office whistleblower made disclosures to Fairfax and the parliament, invoking statutory protection from official reprisals.

During the hearing, Mr Jordan said he knew nothing of the fresh allegations against Mr Cranston.

When asked by Labor senators if there specific directions against senior tax officials being approached by accountants, tax agents or lawyers, Mr Jordan said he did not know of any such rules.

"The system has to work on people talking to each other," the Commissioner said.

"This is part of the problem that we had; people were sitting in the office and writing these long letters that no-one understood and I have been agitating for people to get out of the office and talk to people so they understand what you're saying.

"When you say an instruction about how an accountant or someone could talk to an SES office, well, that would happen every day, all over the place, so I don't know what that instruction would mean."

Although Mr Cranston was cleared by the internal probe by the ATO's internal affairs unit, the public servant who was ordered to drop the case is demanding a "proper and independent" investigation and says they were ordered to act outside approved ATO procedures in stopping the prosecution.

The Tax Office's chief operating officer Jacqui Curtis, who also said she knew nothing of the individual case, told the committee that the disclosure, made to Fairfax and Labor shadow assistant Treasurer Andrew Leigh, would be investigated.

"It's being handled as a public interest disclosure and we do always investigate, as we have to, under the legislation," Ms Curtis said.

Dr Leigh told Fairfax on Tuesday that the questions at Estimates were the beginning of Labor's efforts to follow-up the whistleblower's disclosure.

"We take those allegations very seriously and we'll be following up," Dr Leigh said.