Cape News

House lawmakers voted to strengthen penalties for unauthorized disclosure of tax information by passing the Taxpayer Data Protection Act on Tuesday. The measure, introduced by Ways and Means Committee Chairman Jason Smith (MO-08), follows the leak of thousands of Americans' tax information, including President Trump's tax returns, by an Internal Revenue Service (IRS) contractor. The contractor has been sentenced to five years in prison and a $5,000 fine.

Ways and Means Chairman Smith stated:

"When Americans file their tax returns, they expect their personal data and tax information are confidential. But between 2017 and 2021, Charles Littlejohn, who worked as a contractor for the IRS, stole taxpayer information, and he stole a lot of it. He gave it to The New York Times and ProPublica, who published articles containing that confidential tax information about President Trump and other notable figures. Mr. Littlejohn then destroyed evidence and obstructed law enforcement investigations.

"Current law failed to deter Mr. Littlejohn from stealing and leaking private and sensitive taxpayer information. Moreover, the Department of Justice only charged Mr. Littlejohn with a single count of unauthorized disclosure of private tax information.

"Increasing the punishment for this crime will result in better deterrence for potential criminals, and fewer crimes of this sort being committed."

Current law states that any violation for unauthorized disclosure of tax information shall be a felony punishable by a fine not exceeding $5,000 or imprisonment of not more than five years or both. The new legislation increases the maximum penalty to a fine up to $250,000 or imprisonment of not more than ten years or both. It also clarifies that each taxpayer impacted by an unauthorized disclosure counts as a distinct violation.

The Department of Justice charged the IRS contractor with only one count of unauthorized disclosure despite multiple disclosures affecting thousands of Americans. This limited the judge to impose a maximum sentence of five years imprisonment and a $5,000 fine. The bill ensures every impacted taxpayer counts as a separate instance of unauthorized disclosure.

In September 2020, after President Trump's confidential tax information was leaked to The New York Times, concerns were raised about the breach by Republicans on the Ways and Means Committee. In June 2021, following another leak published by ProPublica appearing to come from inside the IRS, Republican tax writers called for transparency and investigation.

In February 2023, Chairman Smith wrote to the Treasury Inspector General for Tax Administration demanding explanations for why Americans remained uninformed 19 months after the latest leak. In March 2023, Smith called on Secretary Yellen to explain her actions regarding the leak investigation; she referred the matter to investigators.

In September 2023, DOJ charged Charles Littlejohn with one count of unauthorized disclosure despite multiple disclosures admitted in his plea agreement. In January 2024, Ways and Means Republicans sent a letter requesting Judge Reyes impose the maximum sentence allowed under law on Littlejohn.

The Taxpayer Data Protection Act passed out of the Ways and Means Committee in May 2024 on a bipartisan basis with a vote tallying at 40-1.