I.R.S. Contractor Charged With Leaking Tax Returns
A contractor for the Internal Revenue Service has been charged with leaking tax return information from a senior government official and wealthy taxpayers to two news organizations, according to an indictment unsealed in federal court in Washington on Friday.
Charles Edward Littlejohn, who worked as a contractor for the tax agency from 2017 to 2021, was accused of stealing tax returns and other information of a “Public Official A and thousands of the nation’s wealthiest people,” according to a three-page indictment signed by prosecutors with the Justice Department’s public integrity division.
The indictment did not name the official, the other taxpayers or the news organizations. The public official is former President Donald J. Trump, and the two outlets identified in the indictment as “News Organization 1” and “News Organization 2” are The New York Times and ProPublica, according to a person familiar with the situation.
Prosecutors said that Mr. Littlejohn, 38, stole tax information “dating back more than 15 years,” the indictment said. He retrieved the returns between 2018 and 2020, when he was working for a company contracted by the I.R.S. He then provided the tax information to the news organizations, the indictment said.
“Both news organizations published numerous articles describing the tax information they obtained from the defendant,” the indictment added.
The company that employed the contractor was not named, and it was not clear why a contractor had access to sensitive taxpayer information that is supposed to be protected by numerous legal and procedural safeguards. The indictment said he had access to the returns “for purposes of tax administration.”
Mr. Littlejohn is charged with one count of unauthorized disclosure of tax returns and return information. If convicted, he faces a maximum penalty of five years in prison.
A Justice Department spokesman and Mr. Littlejohn’s lawyer declined to comment. A spokesman for Mr. Trump did not respond to a request for comment.
A spokesman for The Times declined to comment. A spokesman for ProPublica declined to comment on the indictment but added, “As we’ve said previously, ProPublica doesn’t know the identity of the source who provided this trove of information on the taxes paid by the wealthiest Americans.”
The I.R.S. declined to comment on the details of the case. But the agency said that it had been using its new funding to improve the protections of taxpayer data and add new safeguards against unauthorized access and disclosure of sensitive information.
“Any disclosure of taxpayer information is unacceptable,” Daniel Werfel, the I.R.S. commissioner, said in statement. “The I.R.S. has put in place new protocols and protections that tightened security, and our aggressive work in this critical area continues in order to protect the tax and financial information of taxpayers.”
In 2020, The Times published stories it said were based on tax information Mr. Trump and his companies provided to the I.R.S. over the previous two decades, including information from his first two years in office. Among other findings, the reporting by The Times showed that he paid $750 in federal income taxes in 2016, when he won the presidency, and paid no income taxes in 10 of the previous 15 years — largely because he reported losing much more money than he made.
A 2021 report by ProPublica documented how the 25 richest Americans, including Jeff Bezos, Michael Bloomberg and Elon Musk, paid relatively little — and sometimes nothing — in federal income taxes between 2014 and 2018. It also revealed that the nation’s richest executives paid just a fraction of their wealth in taxes — $13.6 billion in federal income taxes during a time period when their collective net worth increased by $401 billion.
The revelations renewed calls by Democrats to enact a so-called wealth tax that would prevent billionaires from using creative financial strategies to lessen their tax burdens.
The leak to ProPublica of information about how little rich taxpayers paid was met with outrage by Republicans who believed that the disclosures were intended to buttress the Biden administration’s policies of increasing taxes on the wealthiest Americans.
Mr. Trump’s tax returns were long viewed as crucial to gaining insight into the former president’s wealth and business practices and were so sought after that a former I.R.S. commissioner, John Koskinen, installed a special vault in the agency to secure hard copies of his filings. (Six years of Mr. Trump’s tax returns were made public at the end of last year by Democrats on the House Ways and Means Committee, who had fought in court to obtain them.)
The leaks provided fresh fodder for critics of the I.R.S. who for years have accused the agency of acting with political motivations and being reckless with taxpayer data.
The slow pace of the investigation put I.R.S. and Biden administration officials on the defensive at congressional hearings over the last two years, as they were able to offer no information about how such sensitive data could escape.
“I really am anxious to see some results here as well,” Treasury Secretary Janet L. Yellen said at a hearing in May 2022. “I regret that I’m not able to do so.”
A report from the Government Accountability Office this month found problems with how the I.R.S. handles taxpayer data. It said that since 2010, 77 of its recommendations for stronger safeguards had gone unheeded. The watchdog agency singled out the 14,000 I.R.S. contractors as a potential weakness, noting that a third of the contractors had not completed a training course on protecting the records of taxpayers.
“As a result, I.R.S. contractors are at increased risk of being unprepared to handle taxpayer information,” the Government Accountability Office report said.
Katie Robertson contributed reporting.
