Texas Billionaire Sues IRS Contractor Booz Allen for Allowing Access to His Tax Returns

Government IT contractor Booz Allen Hamilton disclosed the tax return information of Energy Transfer Partners Executive Chairman Kelcy Warren “with the intent that ProPublica would widely publish the information through its website or through other means and accordingly injure" him, alleged Warren's complaint Monday (docket 8:24-cv-01252) in U.S. District Court for Southern Maryland in Greenbelt.

The complaint cites ex-Booz Allen employee Charles Littlejohn, who was sentenced in January to five years in prison after pleading guilty last year to leaking former President Donald Trump's confidential tax information to The New York Times in 2019. Warren was one of thousands of the country’s “wealthiest taxpayers” whose income tax returns Littlejohn exposed to ProPublica and other publications, the complaint said. ProPublica has published nearly 50 articles using the “stolen tax data,” it said.

Since 2008, Booz Allen, has operated under one or more multimillion-dollar contracts with the Treasury Department or the IRS, through which the defendant “accessed and reviewed tax returns and return information while performing IT, data processing, cybersecurity, and tax administration services for the IRS,” said the complaint.

Booz Allen “willingly allowed its employees unrestricted and unmonitored access to IRS databases and systems,” enabling them to run “tailored searches” to retrieve taxpayer data, including returns, over a 15-year period, alleged the complaint. The contractor allowed private downloads of Warren’s confidential information to local machines and private uploads of his tax data to remote and cloud-based storage, “all without sufficient tracing, monitoring, or security in place,” it said.

The complaint alleges a 2021 ProPublica article “repeatedly mischaracterized Warren’s tax records and payments” by focusing solely on years in which Energy Transfer “had large depreciation resulting from large infrastructure investments, which were deductible from its other income.” The publication “seized on this misimpression to malign Warren as a billionaire ‘able to wipe out his income tax liabilities,’ who allegedly used millions in distributions to ‘fund an outsize lifestyle,’” said the complaint, noting the article listed details from Warren’s tax returns and personal property.

An April 2022 ProPublica article mentioning Warren also had confidential tax return and return information, saying the billionaire is “able to receive hundreds of millions of dollars from his company tax-free while reporting vast losses to the IRS thanks to energy-industry and other tax breaks,” said the complaint.

Booz Allen’s “theft and disclosure through Littlejohn” also included information sent to the IRS about income and taxes, investments, stock trades, gambling winnings and “even the results of audits,” the complaint said. The disclosure of Warren’s financial information was “precisely what 26 U.S.C. § 6103 and related statutes were designed to prevent,” it said -- “the disclosure of private tax information and the political weaponization of that information.”

Warren brings the action against Booz Allen for violations of federal law, negligence and invasion of privacy, including unlawful inspections and disclosures of his tax return information; its “willful and intentional failure” to establish appropriate administrative, technical, and/ physical safeguards over access to IRS tax data; and its failure to ensure the security and confidentiality of Warren’s tax return information, the complaint said.

Warren seeks a declaration that Booz Allen unlawfully inspected his confidential tax return information in violation of the Internal Revenue Code; damages of $1,000 for each unauthorized disclosure of his tax return information; actual and punitive damages; pre- and post-judgment interest; and attorneys’ fees and costs.

A Booz Allen spokesperson emailed Tuesday that the company has "zero tolerance for violations of the law and operates under the highest ethical and professional guidelines. We wholly condemn Littlejohn’s criminal actions and fully cooperated with the government’s investigation in this matter. These actions were those of a rogue actor hiding his misconduct on government systems. Each day, thousands of Booz Allen employees support critical client missions with dedication and excellence – their professionalism, values and ethics are what define our company, and we take pride in the role we play in supporting our government.”