Trump’s IRS Lawsuit Offers Lessons on Privacy and Legal Process

When news broke that President Donald Trump had filed a $10 billion lawsuit against the IRS for the unauthorized release of his tax return information, loud and varied criticism followed.

In moments like these, public debate can quickly devolve into partisan politics. But both the lawsuit itself and the reaction to it offer civic lessons that are easy to miss.

Need for Process

Let’s start with a basic lesson—one courts are likely to view as legally straightforward. The longstanding tradition of presidents voluntarily releasing their tax returns may be politically salient, but it’s largely beside the point in a court of law.

The more serious and legally relevant source of skepticism lies elsewhere. This case presents an unusual structural problem, one rarely encountered in our constitutional system: The president is effectively positioned on both sides of the litigation.

On one side, he appears as a private plaintiff seeking damages for alleged violations of federal tax-privacy laws. On the other sits the Department of Justice, an executive branch institution through which Trump exercises influence over litigation and settlement decisions, whether directly or indirectly. That proximity was underscored by the recent installation of a large presidential banner on DOJ headquarters.

Trump has publicly acknowledged the unusual nature of this arrangement, remarking that he is supposed to “work out a settlement with myself.” That dual role raises legitimate questions about whether the case can proceed in a manner that is appropriately adversarial and fair.

Here, another civic lesson emerges about how the legal system responds when fairness is threatened by the structure of the case regardless of the strength of the evidence or substance of the arguments. Fortunately, the law anticipates precisely this kind of problem.

As a recent amicus brief by former senior tax and Justice Department officials explains, the court could appoint an independent party to stand in the place of one of the conflicted parties—in this case, the US as defendant. Thus, for as long as the lawsuit continues, the party responding to the president’s claims would be represented by counsel who isn’t subject to presidential influence over litigation strategy or settlement decisions.

The result is a genuinely adversarial process—exactly what Article III courts are meant to provide. Additional lessons emerge even as we move beyond the four corners of the litigation itself.

Need for Privacy

This lawsuit reinforces a broader policy imperative—taxpayer privacy isn’t theoretical, and failing to protect it carries real, lasting consequences.

The alleged disclosures at issue in Trump’s lawsuit against the IRS trace back to the actions of Charles Littlejohn, a government contractor sentenced to five years in prison for illegally accessing and leaking tax return information from 2018 to 2020. This substantial breach revealed vulnerabilities in how highly sensitive information was accessed, monitored, and controlled.

In the aftermath, the Treasury Inspector General for Tax Administration issued more than 70 recommendations aimed at strengthening IRS data security. When I served as IRS commissioner, we used Inflation Reduction Act funds to implement every one of those recommendations, closing the very pathways Littlejohn exploited.

As a result, if a future bad actor attempts something similar, they would now would find any back doors bolted shut—met by chain-of-custody controls that lock down access, trigger alerts, and create a clear audit trail.

None of these new safeguards materialized by accident—they required investment. When that investment is absent, systems become vulnerable. The Littlejohn breach demonstrated the cost of underinvestment: lost data, shaken confidence, and years of litigation that continue to unfold.

Need for Security

Which brings us to a final, consequential lesson about policy choices and their costs. Trump is seeking $10 billion in damages, even as the IRS budget he recently signed includes roughly a $1 billion cut, layered atop tens of billions in previously appropriated modernization funds that have been rescinded.

At the same time, the federal government is expanding data-sharing arrangements between the IRS and other agencies, including the Department of Homeland Security. Each expansion increases the number of systems and individuals with access to sensitive taxpayer information—and with it, the need for stronger controls, better tracing, and the continued bolting shut of back doors.

Expanding access while constraining the resources needed to secure it doesn’t reduce risk. It compounds it, creating conditions in which future bad actors could replicate the very misconduct from which this case arose. Or, as news emerged recently of privacy violations in the IRS-DHS data share, expanded access can expose vulnerabilities when safeguards don’t keep pace.

No matter its fate, Trump’s IRS lawsuit should reinforce several lessons that extend well beyond this case: Taxpayer privacy is fundamental. Courts have tools to preserve fairness when structural conflicts arise. Presidential proximity to litigation decisions can heighten those conflicts. And policy choices about investment in technology and security have real-world consequences.

These aren’t partisan arguments. They are the fundamentals of a fair judicial process and a healthy tax system. And when these fundamentals are preserved, all Americans benefit.

Danny Werfel has twice served as IRS commissioner, most recently from 2023 to 2025. He is now executive in residence at the Johns Hopkins School of Government and Policy and a distinguished fellow at the Polis Center for Politics at Duke University, writing about the intersection of tax and policy.

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