IRS Data Breach - Introduction
In a concerning development, on April 12, 2024, the Internal Revenue Service (IRS) began notifying numerous taxpayers about a significant data breach.
This breach, which spanned from 2018 to 2020, involved the unauthorized disclosure of sensitive tax return information by Charles Littlejohn, an independent contractor working for the IRS.
This information pertained primarily to high-net-worth individuals and their associated entities.
The Breach and Its Aftermath
Charles Littlejohn disclosed these confidential details to ProPublica, which subsequently published them in a series of exposés.
These publications laid bare the financial intricacies of several high-profile taxpayers, sparking widespread concern about privacy and data security.
In January 2024, Littlejohn was sentenced to five years in prison after pleading guilty to unauthorized disclosure of tax return information.
Four years post-breach, the IRS has commenced the process of notifying affected taxpayers about the potential repercussions and their rights, including possible steps they might consider to protect their financial identity.
Understanding Tax Disclosure Rules
Under I.R.C. § 6103, it is illegal for any officer, employee, or affiliate of the U.S. or any local law enforcement agency to disclose tax returns or tax return information without authorization.
This law covers a broad array of information, including a taxpayer's earnings, deductions, liabilities, and even their involvement in any investigations or audits.
Violations of these provisions can lead to severe civil and criminal penalties, ensuring the confidentiality of taxpayer information is maintained strictly within legal bounds.
Contents of the IRS Disclosure Notification
The IRS's notification to the impacted taxpayers, referred to as Letters 6613-A, elaborates on the unauthorized disclosures linking them to the independent contractor's illicit activities.
These letters also guide affected individuals on how to inquire further about the ongoing criminal prosecution and how they might engage with the provisions of the Crime Victims’ Rights Act.
Legal Recourse and Protective Measures
Taxpayers receiving these notifications are advised to consider various protective measures to secure their personal and financial identity.
This includes obtaining an Identity Protection PIN from the IRS and monitoring their financial transactions and credit activity closely.
Additionally, the IRS suggests that these taxpayers could explore the option of initiating a civil lawsuit if they find substantial grounds for claims of unauthorized disclosure.
Lingering Questions and Legal Considerations
Despite the clear legal frameworks and the ongoing prosecution of Littlejohn, several questions remain.
These include the determination of whether Littlejohn could be considered as an IRS employee and whether the IRS itself could be held accountable for his actions.
Moreover, establishing the scope of damages and linking them directly to the breach poses a considerable challenge.
Affected taxpayers and related entities also need to consider their responsibilities towards investors or partners who might not have been directly notified by the IRS.
IRS Data Breach - Conclusion
As the legal proceedings continue and taxpayers begin to assess their positions, the IRS’s data breach serves as a critical reminder of the importance of stringent data protection measures and robust legal strategies to safeguard taxpayer information.
Those impacted should take immediate action to protect their identities and consult with legal advisors to understand their rights and potential responses fully.
Final thoughts
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