The IRS issued an apology Tuesday to tens of thousands of American millionaires whose taxpayer data was stolen by an agency contractor and then leaked to a news outlet to embarrass them, saying the government “failed” them.
The apology came as part of a lawsuit filed by one of the leak victims, Kenneth Griffin, founder of Citadel Securities, a Wall Street giant that is responsible for one of every five stock trades in the U.S.
Mr. Griffin and the IRS have now agreed to close his lawsuit after the tax agency’s mea culpa.
“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 agency said in an unattributed statement.
The IRS heaped blame for the incident on Charles Littlejohn, the contractor who was sentenced to five years in federal prison for stealing the wealthy taxpayers’ data. He also stole and independently leaked then-President Trump’s tax information.
Littlejohn “violated the terms of his contract and betrayed the trust that the American people place in the IRS,” the agency said, though it did accept some of the blame.
“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. Accordingly, the IRS assures Mr. Griffin and the other victims of Mr. Littlejohn’s actions that it has made substantial investments in its data security to strengthen its safeguarding of taxpayer information,” the agency said.
Mr. Griffin, who has an estimated net worth of $37 billion, said the outcome was a victory for taxpayers.
“I am grateful to my team for securing an outcome that will better protect American taxpayers and that will ultimately benefit all Americans,” he said in a statement.
In court filings, Mr. Griffin said he was proud of both his success and of paying “his fair share of taxes.” The Pro Publica report that published information about Mr. Griffin’s reported income said he paid a 29.2% federal income tax rate from 2013 to 2018.
“Mr. Griffin apparently pays federal income taxes at a higher effective tax rate than many of the top wage earners in the United States,” his lawyers said.
Littlejohn admitted in court filings that he took the job with an IRS contractor at least in part because he wanted to get a peek at Mr. Trump’s tax information.
He saw himself as a sort of data Robin Hood, giving the public information he thought it had a right to see, despite the law making it illegal to disclose taxpayers’ information. Even after his conviction, he cast himself as a well-meaning crusader.
Prosecutors had reached a plea deal with Littlejohn to plead to one count of unauthorized disclosure of tax information. That deal enraged Republicans on Capitol Hill, who said it fell far short of the severity of Littlejohn’s theft. Reports have said as many as 70,000 people had their data pilfered.
Littlejohn said his job meant he could access tax returns “at will.”
In court filings he had asked for leniency, saying that serving five years would hurt his ability to start a family with his girlfriend.
He is scheduled to be released from prison in July 2028.
Littlejohn leaked the Trump information to The New York Times, and gave information on the others, including Mr. Griffin, to Pro Publica. That outlet published pieces revealing Mr. Griffin’s reported income, tax deductions and effective tax rate.
Mr. Griffin had argued in his lawsuit that the IRS was to blame for ignoring warnings about security lapses in its systems.
Tuesday’s apology comes seven years after the IRS had to issue a formal apology to tea party groups that the tax agency improperly targeted for intrusive scrutiny during the Obama administration.
The IRS said its apology was “sincere.”
• Stephen Dinan can be reached at sdinan@washingtontimes.com.