All taxpayers are supposed to be guaranteed privacy when it comes to their tax information filed with the Internal Revenue Service.
Unfortunately, the IRS’ system is not immune to security breaches. Most of the time, it’s regular taxpayers like you and me whose personal data is of interest to crooks who want it to file fraudulent tax returns.
But from 2018 to 2020, an IRS contractor stole years of tax returns and filing information related to thousands of the United States' wealthiest people. The contractor, Charles Littlejohn, then disclosed that tax info to the media, which published much of it.
Federal officials nabbed Littlejohn, who in 2023 pleaded guilty to disclosing tax return information to news organizations without authorization. He was sentenced in January 2024 to five years in prison.
However, the case didn’t end there for one of the billionaires whose tax data was splashed across the internet, newspapers, and TV screens for all to see.
Ken Griffin, founder and CEO of the investment firm Citadel, in 2022 filed a lawsuit (before Littlejohn was charged) against the IRS alleging that (as ultimately was proven) someone at the agency illegally leaked his tax returns.
Last week, Griffin reached an agreement with the IRS about the data breach. That deal included a rare public apology from the agency.
Principle not payback: While Griffin wasn’t the most recognizable name in the ultra-wealthy tax exposure list, he is definitely among the richest. The latest tally of the Bloomberg Billionaires Index shows Griffin having a net worth of about $42 billion, making him the 34th wealthiest person in the world.
At the time of the legal action, Griffin said it wasn’t about the money, which would be a pittance compared to what he has. Rather, Griffin want to use the courts to force the IRS to admit its data protection mistakes and improve its security.
It worked.
Griffin withdrew his lawsuit last week after reaching an agreement with the IRS. Officially, both the billionaire and IRS filed the paperwork in Florida federal court to dismiss the case.
Then the IRS said in a statement that it was improving its privacy protocols to address potential weaknesses like the one that exposed the tax data of Griffin, Jeff Bezos, Elon Musk, and Donald Trump.
And in a rare move, the IRS formally and publicly apologized to Griffin.
IRS says sorry: That apology is this weekend’s first Saturday Shout Out. You can read the IRS’ full (and brief) statement at your leisure.
But below is the mea culpa portion of the IRS statement.
The Internal Revenue Service sincerely apologizes to Mr. Kenneth Griffin and the thousands of other Americans whose personal information was leaked to the press. … The IRS takes its responsibilities seriously and acknowledges that it failed to prevent Mr. Littlejohn’s criminal conduct and unlawful disclosure of Mr. Griffin’s confidential data.
What about others? The IRS’ reference to “the thousands of other Americans” who were part of the Littlejohn media leak brings me to the second shout out of this weekend.
“It took hedge-fund billionaire Ken Griffin around a year and a half to get an apology from the Internal Revenue Service after he sued over the leak of his personal income-tax returns. But everyday taxpayers who are victims of identity theft face longer waits than that to get a resolution from the agency, and their wait times are getting worse, according to a new watchdog report that calls the situation ‘unconscionable,” writes Andrew Keshner in an article for MarketWatch, that is reprinted via Dow Jones Newswires on Morningstar.
You can check out the extent of the privacy protection problems for all, not just rich, taxpayers in Keshner’s article Taxpayers are facing longer wait times for the IRS to resolve identity theft cases, a new report finds.
I'm giving the IRS the benefit of the doubt on the sincerity of its apology to Griffin. But as far as how much it can or will do to protect data of taxpayers, rich or otherwise, I'll wait for some proof.
You also might find these items of interest:
- How to report tax scams and fraud
- Tax ID theft victims waiting 2 years for refunds
- IRS emphasizes its commitment to taxpayer privacy (2016)
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