The department stated that the action comes after the consulting firm Booz Allen Hamilton improperly accessed confidential taxpayer information.
The US Treasury terminated its agreements with a consulting firm following the conviction and sentencing of a former contractor who disclosed confidential tax details, including those belonging to President Donald Trump.
On Monday, the department announced it had terminated all contracts with Booz Allen Hamilton, a prominent defense and national security technology company, in response to a data breach by a former worker between 2018 and 2020. This decision impacts 31 active contracts worth approximately $21 million altogether.
The incident involves Charles Edward Littlejohn, a former IRS contractor employed by Booz Allen Hamilton. In 2024, he received a five-year prison sentence after admitting to providing tax information to journalists, including data concerning Trump and other affluent individuals. Some of these materials subsequently made their way to publications like the New York Times, which ran several articles using those documents in 2020 and 2021.
Prosecutors characterized the breach as unprecedented in IRS history, with approximately 406,000 taxpayers affected. The compromised files covered over 15 years and contained tax returns, investment portfolios, stock transactions, and additional financial information. Although prominent billionaires were among those impacted, some regular taxpayers linked to specific investment vehicles were also affected.
Treasury Secretary Scott Bessent stated that Booz Allen did not establish sufficient protective measures for the data. “President Trump has charged his cabinet with eliminating waste, fraud, and abuse, and terminating these contracts is a crucial measure for restoring American confidence in government,” he remarked.
The company claimed it does not retain taxpayer information on its own systems and lacks the ability to oversee government networks. A Booz Allen representative informed CNN that the company has repeatedly denounced Littlejohn’s conduct and upholds a zero-tolerance stance on legal infractions. Booz Allen continues to hold contracts with additional federal bodies, such as the Defense Department, Homeland Security, and intelligence agencies.
The Treasury’s action coincides with the start of the 2026 US tax filing period. Following the breach, government requests for data access, including those from Elon Musk’s dissolved Department of Government Efficiency (DOGE), have sparked concerns regarding IRS privacy protocols.