IRS Leak of Billionaires’ Tax Data Has Gone Unpunished for One Year

In June 2021, ProPublica published confidential IRS tax information about wealthy Americans provided by a still-unidentified source. While we don’t yet know who dumped the data, we do know that this is far from the first time that the tax agency, which forces people to reveal sensitive details about their finances, has proven to be an unreliable custodian of that information, and that’s putting it nicely. Too often, federal tax collectors misuse official records for fun, profit, and political advantage.

“Today, ProPublica is launching the first in a series of stories based on the private tax data of some of our nation’s richest citizens,” ProPublica’s Stephen Engelberg and Richard Tofel wrote on June 8, 2021. “Many will ask about the ethics of publishing such private data. We are doing so—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.”

Included in the treasure trove of tax data were details about the tax bills of people including Jeff Bezos and Warren Buffett. Drawn from IRS records, the information was provided through “secure systems that allow whistleblowers to transmit information to us without revealing their identity.” The data revealed that many wealthy Americans successfully minimize their tax burdens, which might have been the source’s purpose, though that’s anybody’s guess. People have many motivations for releasing information and ProPublica admits it doesn’t know the source’s intentions.

In fact, the IRS leaks like a sieve on a regular basis for all sorts of reasons.

†[T]he IRS completed 1,694 investigations into the willful unauthorized access of tax data by employees—and 27% were found to be violations,” the US Government Accountability Office reported last month.

†[Michael Kasper] was almost certainly one of the more than 330,000 Americans who fell victim to an audacious hack of the Internal Revenue Service (IRS), which was disclosed earlier this year,” quartz noted in 2015 of a man who discovered that somebody else collected his tax refund.

“Tea Party, anti-abortion and other conservative groups told Congress on Tuesday that the Internal Revenue Service held up their applications for tax exemptions, harassed them with questions and leaked their donor lists to political opponents,” USA Today reported in 2013.

Outsiders penetrate inadequate security for gain while IRS employees often access and disclose financial information to satisfy personal curiosity, to make money, and to advance political causes. Sometimes those political causes are their own, and other times they’re part of the agenda of whoever holds power in the federal government.

“The history of the IRS is riddled with repeated instances of agents acting out of self-interest or pursuing their own ideological agenda, as well as examples of Presidents, White House staff and Cabinet officials pressuring the tax agency to take political actions,” The New York Times pointed out in 1989.

That abuse began early in the accumulation of the tax agency’s powers.

“My father,” Elliott Roosevelt, son of former President Franklin Delano Roosevelt, once commented“may have been the originator of the concept of employing the IRS as a weapon of political retribution.”

FDR’s administration may have been the first to weaponize the tax-collection agency, but it wasn’t the last. John F. Kennedy established an “Ideological Organizations Audit Projectwithin the IRS to target his conservative political critics. Richard Nixon infamously used the tax agency as a political hit man against prominent Democrats. That the misuse of tax information continued is obvious from the times story on the matter during the administration of Bush Sr. as well as from the scandal about the Obama era mistreatment of Tea Party groups and, more recently, the ProPublica leak.

So, the use of tax data by ProPublica and its source to make a policy point isn’t exactly groundbreaking. Some of the agents and politicians who weaponized the IRS in the past intended to make the world a better place by their lights, or at least to hurt only people and organizations they were convinced were bad. And leaks from government agencies often do achieve beneficial ends. Where would we be without Daniel Ellsberg’s copies of the Pentagon Papers, Mark Felt’s role as “Deep Throat” in the Watergate scandal, or Edward Snowden’s revelations of government surveillance?

But leaks from the IRS aren’t war plans, misuses of power, or politicians’ schemes; they’re sensitive, private financial information that we’re forced to surrender to government agents. We have no choice but to fill out our tax forms even though we know that the federal employees receiving our information have a track record of abusing that data for their own ends and to our detriment.

And political goals aren’t objectively good justifications for invading people’s financial privacy. The National Taxpayers Union Foundation’s Andrew Moylan and Andrew Wilford warned in Reason that ProPublica’s use of the data was “deceptive and sure to lead to ill-advised policy making.” Under the most charitable interpretation, that indicates a tendentious misuse of sensitive private information.

Not that the tax authorities necessarily care. History suggests that IRS leaks carry minimal consequences for the agency.

“The Treasury Inspector General for Tax Administration (TIGTA) previously issued an audit report in September 2006 on the IRS’s Office of Privacy and found that the IRS was not complying with legislative privacy requirements,” TIGTA reported in 2013. “Despite its commitment toward privacy and improvements from our prior review, the IRS continues to face challenges in meeting legislative privacy requirements.”

And here we are in 2022 with, apparently, still a good deal of room for improvement after decades of abuses of privacy by tax collectors and wrist-slaps by their watchdogs. Almost a year after the initial ProPublica story, and after Treasury Secretary Janet Yellen promised “to get to the bottom of this criminal activity,” the federal government still claims to have no idea who leaked the data. “There have been no judgments nor any official hints about how the wall of secrecy around tax records was broken; it is unknown whether the IRS has found or closed any security gaps,” reports the Wall Street Journal

Many of us complain about the bite the government takes out of our paychecks. Even more pernicious, though, is that the information tax collectors force us to surrender is likely to be turned against us by politicians, government agents, and activists who see the details of our finances as tools with which to achieve their goals. The IRS isn’t just a powerful federal agency, it’s a weapon against the public.

Leave a Reply

Your email address will not be published.