House of Representatives passes law to protect taxpayer privacy after tax leaks between Trump and billionaire

House Democrats have passed the Taxpayer Data Protection Act, increasing penalties for unauthorized disclosure of tax information. The act is designed to prevent future theft and disclosure of Americans’ private tax information following revelations about the tax returns of former President Donald Trump and prominent billionaires such as Elon Musk and Jeff Bezos.

The measure, introduced by House Budget Committee Chairman Jason Smith, R-Missouri, came after the leaking of tax information of thousands of Americans by an Internal Revenue Service contractor named Charles Littlejohn, who was sentenced to prison in January. Maximum penalty: five years in prison and a $5,000 fine. Little John pleaded guilty last October to passing on information about Trump’s tax returns to the New York Times and the tax information of other billionaires to ProPublica.

“When Americans file their tax returns, they expect their personal and tax information to be confidential,” Smith said in a statement Tuesday. “But between 2017 and 2021, Charles Littlejohn, working as a contractor for the IRS, stole taxpayer information, and lots of it. He shared it with The New York Times and ProPublica, which published articles containing that confidential tax information about President Trump and other well-known figures. Mr. Littlejohn then destroyed evidence and obstructed law enforcement investigations. Current law has failed to stop Mr. Littlejohn from stealing and sharing private and sensitive taxpayer information. Moreover, the Department of Justice has only charged Mr. Littlejohn with a single count of unauthorized sharing of private tax information. Increasing the penalty for this crime will serve as a better deterrent to potential criminals and result in fewer crimes of this nature being committed.”

Under current law, any violation of unauthorized disclosure of tax information is a crime punishable by a fine of not more than $5,000 or imprisonment for not more than five years, or both. The law increases the maximum penalty to a fine of not more than $250,000 or imprisonment for not more than 10 years, or both. The law also clarifies that each taxpayer affected by an unauthorized disclosure of tax information is considered a separate violator of the law.