Billionaire Hedge Fund Manager Ken Griffin Sues the IRS

He’s seeking damages claiming the IRS leaked his tax returns to news organization ProPublica

On Tuesday, billionaire hedge fund manager Ken Griffin filed a lawsuit against the Internal Revenue Service (IRS) and the Treasury Department, seeking damages for the breach of privacy that occurred when his tax records were published by news organization ProPublica. The tax data of wealthy individuals, including Elon Musk and Jeff Bezos, was published by ProPublica starting in June 2021 in an unusual breach of the confidentiality of tax returns.

Griffin, the founder and CEO of Citadel, filed the lawsuit in federal court in the Southern District of Florida, where he lives. His lawsuit cites a section of the tax code that allows taxpayers to sue the government if a federal officer or employee discloses their information knowingly or negligently. The law allows taxpayers to receive at least $1,000 per disclosure and attorneys’ fees, and they can seek punitive damages if there was a willful disclosure or gross negligence. The exact path by which the tax data reached ProPublica is not publicly known. The lawsuit cites a series of inspector general reports dating back more than a decade that highlight various flaws and gaps in IRS information security.

The IRS and the Justice Department are currently investigating the disclosures, but so far, no reports have been released and no one has been charged with a crime. Republican lawmakers are also pressing the IRS and Treasury Department for more information about the disclosures. If there is an ongoing criminal investigation, the government may ask for the civil lawsuit to be held in abeyance until the criminal case is resolved. However, the existence of the civil case means that a judge will be monitoring progress.

As licensed a tax professional, I find it very disturbing that the IRS continually has problems with security breaches.  This is only one in numerous reports over the last ten years of such breaches. The IRS forces tax professionals to develop high standards regarding data security.  Unfortunately however, the IRS’s standards are subpar.