https://newrepublic.com/article/205998/trump-lawsuit-irs-more-outrageous
Trump’s Lawsuit Against the IRS Is Even More Outrageous Than It Seems
You don’t know the half of it.
Last week Donald Trump filed suit against the IRS, demanding $10 billion in compensation for the unauthorized disclosure of his taxes in September 2020.
Oftentimes a news story will seem outrageous at first glance but, on closer inspection, will become less outrageous, or perhaps not outrageous at all. On such occasions, it’s the duty of a sober journal of opinion like The New Republic to set the record straight.
This is not one such occasion.
Rather, this is a story that, the more you dig into the details, the more outrageous it becomes. News coverage has actually failed to capture fully how very stupid this lawsuit is. I have now reviewed the relevant documents and can attest that, even for Trump, this lawsuit is an outlier. It’s batshit crazy.
And now, I’ll be happy to take your questions.
Has a president of the United States ever before sued the executive branch over which he presides?
Wait, didn’t Trump previously sue the Justice Department over the FBI’s Russiagate investigation and its Mar-a-Lago search for documents that he refused to turn over to the National Archives?
Trump wasn’t a sitting president then, and that wasn’t a lawsuit but rather two administrative claims filed with the Justice Department. An administrative claim bypasses the courts to seek settlement under threat of filing a lawsuit. The Russiagate claim was filed in 2023, and the Mar-a-Lago claim was filed in 2024. You can read a copy of the latter here.
The administrative claims were unresolved after Trump began his second term, and as recently as October The New York Times reported that they remained so and that Trump was demanding the Justice Department pay him $230 million. In one respect, the administrative claims are even more kleptocratic than the IRS lawsuit: The decision about whether to settle, and for how much, resides entirely with Trump’s own Justice Department.
“It looks bad,” Trump admitted in October. “I’m suing [sic] myself, right? So I don’t know. But that was a lawsuit [sic] that was very strong, very powerful.” It’s possible that Trump is suing the IRS for $10 billion to make his demand for a $230 million settlement seem reasonable.
OK, so Trump just became the first sitting president to sue the executive branch. But he’s suing over something that happened not recently, but years ago. Who was president when Trump’s taxes were disclosed?
Donald J. Trump! Trump’s taxes were downloaded and then made public during Trump’s first term. This is a president not only suing his own executive branch, but suing it over something that happened while he was running it.
Do we know who stole the tax records?
Yes. It was an enterprising IRS contract employee named Charles “Chaz” Littlejohn (whose surname, yes, is also how the Merry Men addressed Robin Hood’s second-in-command). Littlejohn downloaded Trump’s tax information in October 2018 and gave it to The New York Times in May 2019. The Times then used the material in a September 27, 2020, story headlined “Long-Concealed Records Show Trump’s Chronic Losses and Years of Tax Avoidance.”
Littlejohn also downloaded tax filings by thousands of rich people and gave those to ProPublica, which, starting in June 2021 (after Trump was president), published a series of stories documenting how the ultrarich avoid paying taxes.
Where is Littlejohn today?
Between now and 2029, you’ll find him at the Federal Correctional Institution in Marion, Illinois. Although Littlejohn’s removal of the tax filings went undetected for three years, after the Times piece was published the IRS tracked Littlejohn down and prosecuted him for unauthorized disclosure of tax information. Littlejohn entered a guilty plea and is now serving a five-year sentence.
Is five years a lot?
Sure is. Federal sentencing guidelines recommend 10 months, and if the judge had followed these, Littlejohn would have gotten out last March. But the prosecution asked for five years to make an example of Littlejohn, and the judge (a Biden appointee, incidentally) assented.
Do people who cheat on their taxes get five years?
Not even close. More than a third who are prosecuted get no prison time at all, and among those who do, the average sentence is 16 months. Of course, every case is different. But in May 2024, Reuven Avi-Yonah of Tax Notes reviewed recent cases of massive tax fraud and couldn’t find anybody sent up the river even for three years. In effect, the federal judiciary would rather you commit tax fraud than that you make public the tax returns of the only president since Richard Nixon who refused to do so.
Trump’s lawsuit says it’s the IRS’s fault that Littlejohn downloaded his files. How did Littlejohn do it?
He explained all in a video deposition taken in March 2024. This was in a lawsuit that the hedge fund billionaire Ken Griffin brought against the IRS because he was mad that details of his tax returns turned up in ProPublica. Although the IRS’s internal computer safeguards prevented anyone from downloading tax files to Dropbox or other large-file storage sites (something that was well known inside the agency), Littlejohn discovered that the safeguards didn’t prevent him from downloading these to a private web page set up for that purpose. Then he transferred the tax files to a flash drive.
OK, Trump was president when Littlejohn downloaded his taxes and gave them to The New York Times. Still, how was Trump supposed to know there were vulnerabilities in the IRS’s internal computers?
Because while he was president, the IRS inspector general told him so. In support of its argument that the IRS is culpable, the Trump complaint says:
“Every year from 2010 through 2020, the Treasury Inspector General for Tax Administration (“TIGTA”) has warned the IRS about security deficiencies related to the protection of taxpayers’ confidential tax return information.” “Many of these deficiencies went uncorrected and … allowed Littlejohn to misappropriate the information, upload it to a private website, and then disclose it[.]”
But for four of those years Trump was president. If the IRS was negligent in not responding sufficiently to these inspector general warnings, then Trump’s White House was negligent too. As Harry Truman said, the buck stops here. And for crying out loud, these reports were available not just to the Oval Office but to the general public.
It’s weird that Trump’s lawyers think mentioning the IRS inspector reports helps Trump’s case when so clearly it does the opposite. Probably this language is included because Griffin’s lawsuit included near-identical language. The Trump lawyer who cribbed this language doesn’t seem to have considered that Trump’s relationship to the IRS is markedly different from Griffin’s.
So Griffin’s lawsuit was the dry run for Trump’s. What happened?
The case was more or less thrown out of court. Griffin filed his lawsuit in 2022 and reached a puny settlement with the IRS in 2024. In the settlement, Griffin received no money; the IRS apologized. It was a complete waste of Griffin’s time and lawyer’s fees.
I can’t resist voicing my disappointment that the IRS apology didn’t say the following: “We are sorry there was an unauthorized disclosure that showed Ken Griffin paid a scandalously low average effective income tax rate of 29.2 percent when Griffin was the fourth-highest paid human in the United States.” The apology just said the IRS “failed to prevent Mr. Littlejohn’s criminal conduct,” that it was working hard to prevent such disclosures in the future, et cetera.
In his lawsuit, Griffin demanded $1,000 for every unauthorized disclosure of his tax returns, including subsequent disclosures. Trump’s demand for $10 billion follows the same formula, which according to Trump’s complaint works out to $10 billion. But again: Griffin didn’t get a dime. You’d think that would discourage Trump. Maybe nobody told him. (Trump deals harshly with subordinates who deliver bad news.)
Why did Griffin settle?
Because the judge tossed out Griffin’s claim that the IRS violated the 1974 Privacy Act, on the grounds that Griffin (net worth: $51 billion) couldn’t show he suffered pecuniary harm. Trump’s lawsuit similarly claims that the IRS violated the Privacy Act. But since the Times published his tax data, Trump’s net worth has more than tripled to $6.5 billion. That should make it very difficult for Trump to show pecuniary harm.
Griffin also faced steep obstacles demonstrating, as Trump’s lawsuit also seeks to, that Littlejohn was a joint employee of his contracting firm, Booz Allen, and of the IRS.
“Joint employee.” That terminology sounds familiar. Don’t Republicans typically move heaven and earth to prevent contract employees from being assigned legal status as joint employees, in order to shield big corporations that routinely contract out work, especially low-paid work?
Bingo. Trump’s expansive definition of joint employment in his IRS lawsuit flatly contradicts his own administration’s policy, which is to narrow that definition to maximally benefit big business. In this, as in so many other instances, Trump is a total hypocrite.
During his first administration, Trump’s Labor Department issued a regulation dramatically limiting the circumstances under which the law would consider a contract employee to be jointly employed by the company (again, typically a large corporation) that hired out the work. Doing so effectively gave big corporations carte blanche to outsource labor violations to smaller and less visible firms. It also freed those big corporations from having to provide legally required benefits like Social Security, Medicare, and unemployment insurance. The human cost of this practice is documented extensively in David Weil’s 2014 book, The Fissured Workplace.
The Biden administration reversed Trump’s rule, but the Trump administration is expected to reverse Biden’s reversal, restoring a narrow definition of joint employment.
If Trump actually pried $10 billion from the IRS, would it be the biggest civil judgment in history?
The very biggest was the $206 billion tobacco company settlement in 1998. But the plaintiff in that case was not one person but forty state governments.
The second biggest judgment was in a lawsuit against a 13-year-old boy who sexually assaulted and then set fire to an 8-year-old boy, who years later died from related causes. In 2011, the jury gave the child’s estate $150 billion, but of course the perpetrator didn’t have and would never have the money to pay even a fraction of that. The case was brought mainly to pressure prosecutors in Montgomery County, Texas, to bring murder charges against the 13-year-old, who was now an adult. The prosecutors did so, and in 2015 the killer was convicted of murder.
Trump’s $10 billion, if he got it, would be the third-biggest civil judgment in U.S. history. It would be the the biggest civil judgment ever awarded to a plaintiff in a case where the defendant didn’t kill at least one person.
What’s the IRS’s overall budget?
The Trump administration has requested $15 billion to fund the IRS this fiscal year. So yes, Trump wants to help himself to two-thirds of the IRS’s annual budget.
So, wow, the whole thing is pretty nuts, huh.
You can say that again.
