More than two years ago, investigative journalism outlet ProPublica released a report based off of a trove of confidential tax returns that the outlet never should have had access to in the first place. For that whole time, it remained a mystery how it came across this information — of course someone leaked it, but there was no hint as to who did it.
That is, until now. Charles Littlejohn, a consultant for the IRS, has been charged with a single count of unauthorized disclosure of tax returns — a crime that carries a maximum of five years in prison. For knowingly leaking thousands of taxpayers’ confidential tax information, that’s little more than a slap on the wrist.
The leak in question involved thousands of the wealthiest Americans’ tax returns, and was almost certainly politically motivated — the choice of left-wing ProPublica and the New York Times was likely not a coincidence.
After receiving this information, ProPublica released notable for how unsurprising the data it contained was. The report did not contain proof of widespread tax evasion or fraud, just the fairly obvious point that the rich held a lot of non-liquid assets. Nevertheless, ProPublica attempted to spin the data as some massive revelation.
But regardless of the merits of ProPublica’s ensuing report, the initial leak should be worrisome for all taxpayers. Tax returns are confidential for a reason, and even taxpayers who thought the data contained in ProPublica’s report was important should have grave concerns about the precedent set by politically-motivated leaks of private taxpayer information.
The IRS is entrusted with extraordinary powers in its dealings with taxpayers, and should be held to correspondingly high standards. After all, not only are taxpayers forced to trust the IRS with their hard-earned money, they also have no choice but to give the IRS personal information that could be financially ruinous if left in the wrong hands.
That’s not theoretical — past IRS leaks have been used not to advocate for policy changes, but to enable identity theft schemes. The IRS holds all the information anyone could ever need to steal the identity of or defraud any taxpayer, and leaks of any kind represent an existential threat to taxpayers’ financial security.
This failure to safeguard taxpayer information it is already entrusted with is particularly concerning given the IRS’s recent push for even more taxpayer data. As part of the negotiations for the Inflation Reduction Act, the IRS asked for — and Congress considered giving — access to taxpayers’ bank account information. Though it was eventually tabled, the IRS still secured tens of billions of additional enforcement dollars.
In this context, a single charge with a maximum of a five year sentence seems disproportionately lenient given the gravity of Littlejohn’s alleged crimes. It’s even more confusing given the IRS’s recent position in another legal case.
That case concerned Alexandru Bittner, a Romanian-American who misunderstood his foreign bank account reporting requirements. Bittner reported only information on his largest foreign account, not all of them.
Bittner rectified the error when he was made aware of it, but the IRS assessed $10,000 fines for each of the five years he incompletely filed information on his foreign accounts. However, while Bittner contended he owed the fine for each of the reports he mistakenly filed incompletely, the IRS wanted him to pay per account that was not reported. It represented a difference between $50,000 in fines and $2.72 million in fines.
The Supreme Court eventually sided with Bittner, but it’s worth noting how different the charges are in Littlejohn’s case. Applying the IRS’s logic in Bittner’s case, Littlejohn should be facing thousands of charges of unauthorized disclosure of tax returns, not one. But to the IRS, leaking taxpayers’ information that it is entrusted with is evidently far less of a concern than failing to give it the information it wants in the first place.
While taxpayers should be glad the leaker was (hopefully) finally caught, they should demand real, meaningful reform. For someone entrusted with access to taxpayer information to perpetrate a leak of this magnitude is an enormous blight on the IRS’s trustworthiness, particularly given the agency’s demands for access to ever-more enforcement resources. An agency that wants extraordinary powers should first have to prove that it can handle them.
