WASHINGTON – President Donald Trump has filed a $10 billion lawsuit against the Internal Revenue Service and the Treasury Department, alleging the agencies unlawfully allowed the leak of his tax returns and those of the Trump Organization. The suit, filed in federal court in Florida, claims the leak caused “reputational and financial harm, public embarrassment,” and negatively impacted his business and public standing.
The lawsuit stems from disclosures of Trump’s tax information that began in 2018 and continued through 2020. Charles Edward Littlejohn, a former IRS contractor, pleaded guilty to leaking the information to two news outlets and was sentenced to five years in prison in 2024. The outlets were not identified in court documents, but reporting aligns with stories published by The New York Times and ProPublica.
The legal action comes as the IRS faces mounting challenges, including a significant staffing shortage and concerns about its readiness for the 2026 filing season. A January memo from the Treasury Inspector General for Tax Administration highlighted these concerns, attributing them largely to staffing levels. The agency’s workforce has shrunk from over 100,000 in late 2024 to approximately 81,000, a nearly 20% decrease.
This reduction in personnel is expected to exacerbate existing problems, such as backlogs of returns and outdated technology. Experts warn that the loss of experienced employees – many of whom took buyouts – could impede operations, collections, and complex audits. Mark Mazur, who served as tax policy developer for the Obama and Biden administrations, noted that thousands of senior employees opted for buyouts, leaving the agency with diminished institutional knowledge.
The IRS’s struggles are further complicated by political factors. During the Trump administration, the agency reportedly shared protected tax information with the Department of Homeland Security amid an aggressive immigration enforcement push, raising concerns among groups like the National Immigration Law Center, who fear it will discourage undocumented individuals from filing returns and reduce overall revenue.
The agency is currently led by Social Security Administration Commissioner Frank Bisignano, who assumed the role of IRS CEO in October after the expiration of Treasury Secretary Scott Bessent’s term as acting commissioner. This follows the removal of former Congressman Billy Long from the commissioner post in August.
The staffing shortages also impact the IRS’s ability to address the “tax gap” – the difference between taxes owed and taxes collected. In 2021, the tax gap was estimated at around $600 billion, roughly 3% of the nation’s GDP. While the IRS has made progress in modernizing its systems, including the deployment of artificial intelligence, much of its core infrastructure still relies on decades-old technology, including a digital-file database dating back to the 1960s.
The lawsuit filed by Trump adds another layer of complexity to the IRS’s challenges. The agency has not commented on the specifics of the litigation, and it remains unclear how the case will proceed. The outcome could have significant implications for the IRS and its ability to fulfill its core functions.
Leave a Reply