Lawsuit Alleges Federal Agencies Failed To Protect Confidential Returns After Contractor Disclosure

Sunday, February 1, 2026, 10:15 A.M. ET. 4 Minute Read, By Haylee Ficuciello, Economy & Finance Editor: Englebrook Independent News,

WASHINGTON, DC.- President Donald Trump has filed a $10 billion civil lawsuit against the Internal Revenue Service and the U.S. Department of the Treasury, alleging the agencies failed to safeguard his confidential tax information after a private contractor unlawfully accessed and disclosed protected taxpayer data.

     The lawsuit was filed on Thursday, January 29, 2026, in the U.S. District Court for the Southern District of Florida, according to court filings. The plaintiffs include President Trump, his adult sons Donald Trump Jr. and Eric Trump, and The Trump Organization.

     At the center of the complaint is Charles Edward Littlejohn, a former IRS contractor who pleaded guilty in 2023 to unlawfully disclosing protected tax-return information and was sentenced in January 2024 to five years in federal prison.

     Federal prosecutors said Littlejohn accessed confidential IRS databases and disclosed taxpayer information without authorization during 2019 and 2020, providing materials to media organizations, including The New York Times and ProPublica. The disclosures included President Trump’s tax records and information belonging to thousands of other taxpayers, a breach prosecutors described as one of the most serious in IRS history.

Allegations Outlined In The Complaint;

     According to the lawsuit, the IRS and Treasury failed to implement and enforce “mandatory safeguards” required under federal law to protect taxpayer data. The plaintiffs allege that the agencies permitted excessive access to sensitive systems, failed to properly monitor contractor activity, and did not act swiftly enough to prevent the unlawful disclosures.

     The complaint asserts that these failures resulted in “significant and irreparable harm,” including reputational damage, personal and professional injury, and financial losses. The plaintiffs are seeking at least $10 billion in damages, citing what they describe as systemic negligence within federal agencies tasked with safeguarding some of the most sensitive financial data in the country.

     The lawsuit further argues that the public dissemination of private tax information placed the plaintiffs in a “false light,” subjected them to public ridicule, and damaged business relationships connected to the Trump Organization.

Contractor Case And Federal Fallout;

     Littlejohn was initially charged in October 2023 after an investigation revealed he had exploited his access as a contractor to download and disseminate protected tax data. He pleaded guilty the following month and was sentenced in January 2024.

     The breach prompted broader scrutiny of federal contractor oversight, particularly within the Treasury Department. In response to the incident, Treasury officials terminated all Treasury-related contracts with Booz Allen Hamilton on January 26, 2026, canceling 31 contracts valued at approximately $21 million.

     Treasury officials said the firm failed to ensure adequate safeguards were in place to prevent unauthorized access to sensitive taxpayer information connected to IRS operations. Booz Allen Hamilton had previously employed Littlejohn as a contractor.

     Treasury Secretary Scott Bessent stated publicly that taxpayer privacy is non-negotiable and that failures by contractors or agencies to protect sensitive information would result in immediate consequences.

Economic And Governance Implications;

     While the lawsuit centers on President Trump and his family, the case carries broader economic and institutional implications. Federal tax systems rely on public trust, particularly among individuals and businesses required to disclose extensive financial information to the government.

     Data breaches involving taxpayer records raise concerns about compliance, national security, and financial exposure. Restoring trust after such breaches often requires costly reforms, enhanced cybersecurity infrastructure, stricter contractor controls, and increased federal oversight, expenses ultimately borne by taxpayers.

     The lawsuit places President Trump in a rare position: suing federal agencies operating within the executive branch while serving as president. The filing underscores the seriousness with which the plaintiffs view the alleged failures, framing the case as a defense not only of personal rights but also of taxpayer privacy protections nationwide.

Agency Response;

     As of publication, neither the IRS nor the U.S. Department of the Treasury has issued a formal response to the lawsuit. Federal officials declined to comment following after-hours inquiries.

Editor’s Note:

This article was written by Haylee Ficuciello, Economy & Finance Editor for Englebrook Independent News, and is based on contemporaneous reporting organizations, as well as publicly available court filings. All allegations described herein are claims made in a civil lawsuit and do not constitute findings of fact unless and until proven in court.