Treasury ends Booz Allen contracts over tax information leak

The U.S. Treasury Department has ended its contracts with Booz Allen Hamilton, citing the defense contractor’s failure to safeguard confidential tax information. The decision follows the 2024 conviction of Charles Edward Littlejohn, a former Booz Allen employee who worked as an IRS contractor and was sentenced to five years in prison for leaking tax data about thousands of wealthy Americans, including President Donald Trump.

The action underscores the government’s emphasis on contractor accountability for security breaches involving sensitive taxpayer information, particularly data on the nation’s wealthiest citizens.

Background on the Leak

Littlejohn worked as a contractor for Booz Allen from 2018 to 2020 while accessing IRS systems. During that period, he deliberately searched for and extracted tax data about thousands of wealthy Americans, providing it to The New York Times and ProPublica, prosecutors said.

In court filings, prosecutors said Littlejohn “applied to work as a contractor to get Trump’s tax returns” and “carefully figured out how to search and extract tax data to avoid triggering suspicions internally.” The data he obtained appeared “unparalleled in the IRS’s history,” according to the government.

Treasury’s Action

Treasury Secretary Scott Bessent said the firm “failed to implement adequate safeguards to protect sensitive data, including the confidential taxpayer information it had access to through its contracts with the Internal Revenue Service.”

The 31 terminated contracts represent $4.8 million in annual spending and $21 million in total obligations. Booz Allen is headquartered in McLean, Virginia.

Company Response

Brian P. Hale, a Booz Allen spokesperson, said the firm “has consistently condemned Littlejohn’s actions and has zero tolerance for violations of the law.” He added that “Booz Allen fully supported the U.S. government in its investigation, and the government expressed gratitude for our assistance, which led to Littlejohn’s prosecution.”

The company stated it does not store taxpayer data on its own systems and has no ability to monitor activity on government networks. Booz Allen maintains extensive government contracts with the Defense Department, Department of Homeland Security, and various intelligence agencies.

Market Reaction

Stock prices for Booz Allen fell sharply after the announcement, declining from $102 per share on Friday to $91 on Monday. The company’s latest SEC filing identifies as a major risk “any issue that compromises our relationships with the U.S. government or damages our professional reputation, including negative publicity concerning government contractors in general or us in particular.”