Citadel's Ken Griffin sues IRS over 'unlawful' tax return leak

Billionaire investor Ken Griffin, the founder and CEO of multinational hedge fund Citadel, filed a lawsuit against the Internal Revenue Service (IRS) and the Treasury Department after his tax records were leaked to the press.

In 2021, the news outlet ProPublica obtained Griffin's tax records along with those of numerous other billionaires, including Twitter and Tesla's Elon Musk and Amazon's Jeff Bezos. Tax records are considered confidential by law and the breach has prompted investigations by the Treasury Department's Inspector General for Tax Administration (TIGTA) and the Department of Justice. 

Griffin's lawsuit mentions several inspector general reports that found previous lapses in the security of taxpayer data at the IRS and alleges the agency "willfully failed to establish appropriate administrative, technical, and physical safeguards to insure the security and confidentiality" of his tax records. 

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His lawsuit claims that with respect to the leak of his tax records, "The IRS made these unlawful disclosures knowingly, or at the very least negligently or with gross negligence."

In cases where the IRS is found to have disclosed confidential taxpayer information without authorization, the aggrieved party is entitled to $1,000 in statutory damages for each act of unauthorized disclosure. The law also allows for punitive damages to be awarded in such cases, although it's unclear how much Griffin could be awarded.

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Following the leak of the tax records, ProPublica published a pair of articles this year that utilized Griffin's tax records to compare his effective tax rate to those of other high-earning Americans over the 2013-18 period. The outlet has written that it doesn't know who provided the records or how they were obtained.

An article published in April showed Griffin earned an average of nearly $1.7 billion annually from 2013 to 2018 and had an average effective tax rate of 29.2% in that period — the third-highest effective tax rate of the 10 largest earners in the report but below the top marginal rate of 37% that prevailed during that time.

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ProPublica followed with a subsequent piece in August about his opposition to a proposal that would have increased personal income tax rates in Illinois, which was his home state at the time. Illinois has a single income tax rate of 4.95%.

Griffin has since relocated Citadel's headquarters to Miami and moved his family there. Florida doesn't have a personal income tax.

"IRS employees deliberately stole the confidential tax returns of several hundred successful American business leaders. It is unacceptable that government officials have failed to thoroughly investigate this unlawful theft of confidential and personal information," Griffin said in a statement. "Americans expect our government to uphold the laws of our nation when it comes to our private and personal information — whether it be tax returns or health care records."

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The IRS and DOJ haven't released any public reports or charged any individuals with a crime in connection with the breach of tax records. The IRS and TIGTA did not respond to a request for comment.

The Wall Street Journal noted that Griffin's civil lawsuit against the IRS and Treasury Department will require a written response from the government agencies and could prompt officials to disclose whether there is a related criminal investigation, which would likely take precedence over the civil suit and delay it until the criminal probe concludes or moves ahead with charges.

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