Leaked Tax Returns Spark $10 Billion Legal Battle Between Trump and US Agencies

Former U.S. President Donald J. Trump has escalated a long-running legal battle into one of the most high-profile and unusual lawsuits in recent American history, filing a $10 billion civil claim against two federal government agencies — the Internal Revenue Service (IRS) and the U.S. Department of the Treasury. The lawsuit, filed in a federal court in Miami, Florida, accuses both agencies of failing to safeguard Trump’s confidential tax returns, allowing them to be leaked to the news media and causing significant reputational, financial and political damage to Trump, his adult sons, and the family business.

The unusual legal action was lodged by Trump in his personal capacity, along with his sons Donald Trump Jr. and Eric Trump, and the Trump Organization — the corporate entity overseeing the family’s various business ventures. The complaint asserts that taxpayer confidentiality protections were violated when sensitive tax information from Trump’s returns was disclosed between 2018 and 2020, during his first presidential term and its aftermath.

At the heart of the case is the allegation that the IRS and Treasury failed to prevent unauthorised access and disclosure of Trump’s tax data to media outlets such as The New York Times and ProPublica. The suit asserts that the agencies “failed to take mandatory precautions” and lacked adequate safeguards, which Trump’s legal team says amounts to negligence and a breach of their duty to protect taxpayer information.

According to court filings cited by Reuters and other outlets, the legal claim paints a picture of profound harm caused by the leaks. The complaint alleges that the disclosures caused “reputational and financial harm, public embarrassment, and unfairly tarnished their business reputations,” and even asserts that the leak campaign could have negatively influenced voter perceptions during the 2020 presidential election.

The IRS Data Leak and Its Origins

The leak central to this lawsuit stems from the conduct of Charles Edward Littlejohn, a former IRS contractor who later pleaded guilty to unauthorised disclosure of confidential tax information. Prosecutors described Littlejohn’s actions — which involved extracting tax data from IRS systems and providing it to investigative reporters — as without precedent in the history of the agency. Littlejohn was sentenced in 2024 to five years in prison for the breach after admitting that he accessed and shared millions of lines of confidential data, including Trump’s returns and those of other high-profile individuals.

Littlejohn’s leak was published in a high-profile New York Times investigation in 2020 that revealed, among other details, that Trump had paid a very low amount of federal income tax in certain years. ProPublica later published a series in 2021 based on the same trove of data that spotlighted broader issues of tax avoidance among wealthy taxpayers. These disclosures drew intense media and public scrutiny.

As part of the government’s response to the scandal, the Treasury Department terminated contracts with the consulting firm that employed Littlejohn at the time of the leak, signaling internal recognition of the failure to protect sensitive information.

The Legal Basis for the Lawsuit

Trump’s lawsuit emphasises that federal law, particularly IRS Code Section 6103, imposes strict controls on access to and disclosure of tax returns and related information. Trump’s legal team argues that the IRS and Treasury, by failing to enforce strict data protections and oversight, allowed Littlejohn’s unlawful conduct to occur and go unchecked, creating what they describe as a systemic failure.

The complaint seeks $10 billion in damages, a figure that reflects not only estimated financial losses but also punitive measures to hold the government accountable for what the plaintiffs describe as gross negligence. Legal analysts note that winning such a claim against the government is historically difficult due to sovereign immunity and other legal protections, making this lawsuit both ambitious and highly contentious.

Political and Legal Reverberations

The lawsuit is unfolding amid broader national conversations about privacy, government transparency, and the balance between taxpayer confidentiality and public accountability. Trump’s legal team frames this legal fight as part of a larger political struggle, arguing that the leaked information was disseminated in a way that unfairly influenced public opinion and media narratives about him.

Critics, meanwhile, see this case as another of Trump’s frequent legal actions targeting institutions that he perceives as hostile to his interests. Trump has a record of filing high-value lawsuits against media organisations and government entities in past years, often drawing both legal scrutiny and political debate.

The U.S. government has not yet publicly responded to the lawsuit. Historically, federal agencies typically have robust legal teams to defend against such claims, and many similar suits are dismissed before reaching trial due to procedural hurdles. Whether this case will survive preliminary challenges and proceed to substantive litigation remains a key question for legal observers.

Broader Implications

Beyond the individuals involved, this lawsuit highlights broader issues around data security in government agencies, the responsibilities of federal departments to protect personal information, and the consequences when those protections fail. In an era when digital records and privacy are central political and societal concerns, the outcome of Trump’s legal action could set important precedents for how taxpayer data breaches are handled and what accountability mechanisms exist for executive branch agencies.

As this case continues to unfold in the courts, it will remain a focal point for discussions about privacy, political power, and the relationships between government institutions, the media, and public figures in the United States.