IRS to Ken Griffin: I apologize

In 2021 ProPublica initiated the publication of a series it called The Secret IRS Files. Running to some 50 stories, ProPublica’s series served “a crusade for higher taxes, especially a wealth tax,” as the Wall Street Journal puts it in an editorial today.

ProPublica based its series on information stolen by IRS contractor Charles Littlejohn. Littlejohn’s theft was criminal and the IRS was responsible for it.

ProPublica proclaimed ignorance of its source and professed its high-minded devotion to the truth:

In an essay published alongside the first article in the Secret IRS Files series, ProPublica’s editor-in-chief, Stephen Engelberg, and its then-president, Dick Tofel, explained that ProPublica was publishing the tax information “quite selectively and carefully” because “we believe it serves the public interest in fundamental ways, allowing readers to see patterns that were until now hidden.” The Secret IRS Files series sparked a broad conversation about the fairness of the U.S. tax system, and a number of legislative proposals followed in its wake, including a proposal by the Biden administration for a billionaire’s tax.

ProPublica has declined to elaborate on how and when we obtained the tax information or to comment on any investigations of the leak. We do not know who the source or sources of the tax information was.

ProPublica gingerly avoided acknowledgment that its source for the IRS Files must have disclosed the information illegally. Rather, ProPulica patted itself on its back for its selectivity and care in trafficking in information whose confidentiality was protected by law.

It was all in a good cause. We were to be impressed to learn that the Internal Revenue Code spares some successful Americans the top rates otherwise that might otherwise apply to their income.

This isn’t exactly news. It is an old hobbyhorse of tired journalists such as Donald Barlett and James Steele. Barlett and Steele purported to blow this particular whistle in their syndicated series and book America: Who Really Pays the Taxes? (1994). John Hinderaker and I blew the whistle on Barlett and Steele in our National Review article “George Bush’s Tax Return.” ProPublica’s series appears to be following in the well-trod footsteps of Barlett and Steele.

Citadel founder Ken Griffin was among the successful American whose tax return information ProPublica drew on in its series. Griffin was in good company. It wasn’t just Griffin! Other successful Americans including Elon Musk, Jeff Bezos, and Donald Trump also “manage[d] to keep their income tax rates lower than those of average Americans…” Shocker!

Griffin, however, chose to do something about it. In 2022 Griffin sued the IRS and the Treasury for damages under 26 U.S.C. § 7431 and the Privacy Act, 5 U.S.C. § 552a. As a basis for both counts, Griffin alleged that the IRS failed to safeguard its record systems and that, because of this failure, unidentified IRS personnel wrongfully obtained his tax return information and provided it to ProPublica.

ProPublica quoted Griffin’s complaint in its story on the lawsuit (the story on which I have drawn above):

“Despite being aware of its security deficiencies for over a decade, the IRS willfully failed to establish appropriate administrative, technical, and physical safeguards to insure the security of confidential tax return information, including Mr. Griffin’s confidential tax return information,” it says. “IRS personnel exploited these willful failures to misappropriate Mr. Griffin’s confidential tax return information and unlawfully disclose that information to ProPublica for further publication.”

The IRS moved to dismiss Griffin’s lawsuit for failure to state a claim. It premised the motion on Griffin’s inability to identify the individual responsible for the disclosure of his return information:

[T]he IRS employed nearly 80,000 individuals each year between late 2019 and March 2022. Without any clue as to which employee(s) allegedly misappropriated Griffin’s return information and gave that information to ProPublica, the Government would have to canvass all those employees to investigate the allegations. Simply put, Griffin’s allegation would require the Government to search for a needle in a haystack. But the needle may not even be in the haystack. ProPublica does not know if the source of the information was the IRS and acknowledges that the source may be a hostile state actor.

IRS contractor Charles Littlejohn stole Griffins tax information in September 2020. He disclosed Griffin’s information to ProPublica in November 2020. A year later Treasury Tax Inspector General for Tax Administration (TIGTA) agents contacted Littlejohn. In December 2021 the Department of Justice began investigating Littlejohn. In March 2022 Littlejohn took the Fifth Amendment before a grand jury, leading to litigation with the government. The following month the IRS Commissioner questioned publicly whether “tax information was actually stolen from the IRS.”

On April 13 and July 7, 2022, ProPublica published its stories on Griffin’s confidential tax information. In December Griffin commenced his lawsuit against the IRS. In April 2023 the government represented it had no clue who stole Griffin’s information.

In September 2023 the government charged Littlejohn with unlawful disclosure of tax information. In January 2024, following a sweetheart deal with the Biden Department of Justice, Littlejohn was convicted and sentenced to five years in prison (which he has yet to serve).

In March of this year Littlejohn’s deposition was taken in Griffin’s case. Littlejohn testified he could “access tax returns at will.”

On Tuesday the IRS settled Griffin’s lawsuit with an apology and a promise to do better:

The Internal Revenue Service sincerely apologizes to Mr. Kenneth Griffin and the thousands of other Americans whose personal information was leaked to the press.

Charles Littlejohn was a government contractor providing services to the IRS at the time he made the illegal disclosures. He violated the terms of his contract and betrayed the trust that the American people place in the IRS to safeguard their sensitive information.

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.

These investments address potential weaknesses in the IRS’s systems as identified by the Treasury Inspector General for Tax Administration (TIGTA), which provides independent oversight of the IRS.

Additionally, the IRS continues, and will continue on a going-forward basis after this resolution, to work with TIGTA, the Government Accountability Office, other government agencies and independent third parties to assess the IRS’s systems for potential vulnerabilities.

The IRS routinely reports to the Senate Committee on Finance and the House Committee on Ways and Means, which exercise Congressional oversight of the IRS, on its efforts to strengthen any security deficiencies identified by the IRS, TIGTA, GAO and third parties.

The agency believes that its actions and the resolution of this case will result in a stronger and more trustworthy process for safeguarding the personal information of all taxpayers.

Cue Mr. B.

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