By: Mark Gallegos, CPA, MST, Partner
On April 12, 2024, the Internal Revenue Service began notifying thousands of taxpayers about a data breach involving an independent contractor who worked for the agency. Between 2018 and 2020, Charles Littlejohn stole the tax return information of thousands of high-net-worth individuals and their related entities and disclosed it to ProPublica and other entities. ProPublica used this information to publish a series of articles that shared sensitive financial data of high-profile taxpayers with the public. Littlejohn pleaded guilty to unauthorized disclosure of return information and was sentenced to five years in prison in January 2024. Now, four years after the data breach, the IRS is notifying affected taxpayers, who are now left to ponder the impact and next steps.
The IRS issued Letters 6613-A to affected taxpayers, notifying them of the data breach involving Littlejohn. These letters state that an IRS independent contractor was charged with the unauthorized disclosure of taxpayers' return or return information between 2018 and 2020. They also highlight that the Department of Justice is prosecuting the case.
The notice invites taxpayers with questions to email the IRS at notification.7431@irs.gov, cautioning against including sensitive information like tax identification numbers, addresses, or account numbers in the email. The notice doesn't specify a timeline for responses or explain how the IRS will verify the identity of the taxpayer. If someone other than the taxpayer involved contacts the IRS for more information, they must submit Form 2848 (Power of Attorney).
Letters 6613-A encourage affected taxpayers to consult with an attorney to determine whether they have a right to take legal action over the unauthorized disclosure.
Although four years have passed since the unauthorized disclosures, taxpayers who receive Letters 6613-A should consider steps to safeguard their personal identity. These steps include:
Affected taxpayers may also consider pursuing a civil action against Littlejohn and/or the IRS. Currently, one case related to Littlejohn’s unauthorized disclosures is pending in the U.S. District Court for the Southern District of Florida. Recently, the court denied the government’s motion to dismiss the plaintiff’s I.R.C. § 7341 claim but dismissed the plaintiff’s alternative Privacy Act claim for failure to allege actual damages. The outcome of the case remains to be seen, but it highlights the complexities involved in determining whether to pursue a civil action against the IRS.
Although four years have passed since Littlejohn’s unauthorized disclosures, affected taxpayers who receive Letters 6613-A should take steps to safeguard their personal identity. They may also want to consult with an attorney to assess whether pursuing a civil action is a viable option in their circumstances.
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