Treasury Cancels Booz Allen Contracts After Tax-Return Leak

The Treasury Department canceled all contracts with Booz Allen Hamilton on January 26, 2026, after concluding a former Booz Allen employee stole and leaked IRS tax returns. The move removes federal work tied to sensitive taxpayer data from the company’s portfolio.

Treasury Ends 31 Contracts Over Data Leak

The Treasury said it was canceling all 31 contracts with Booz Allen, representing $4.8 million in annual spending and $21 million in total obligations. The department attributed the cancellations to Booz Allen’s failure to protect IRS taxpayer information. Treasury Secretary Scott Bessent said, “Booz Allen 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.”

Booz Allen disputed that characterization, stating the employee’s criminal conduct occurred on government systems, not its own. The company said it does not store taxpayer returns on its networks and cannot monitor activity on government systems. Booz Allen also said it supported the prosecution of the former employee.

IRS Tax Data Leak and Conviction

The incident involved an IRS tax data leak affecting about 406,000 taxpayers, including Donald Trump and other wealthy individuals. Charles Edward Littlejohn, who worked at Booz Allen from 2018 to 2020, stole and disclosed the returns. He pleaded guilty in October 2023 to unauthorized disclosure of tax-return information and was sentenced in January 2024 to five years in prison.

Prosecutors linked the conduct to violations of Internal Revenue Code Section 6103, which governs tax-return confidentiality, and to the unauthorized-disclosure statute used in the criminal case.

The Treasury’s action immediately removes a defined portion of federal spending from Booz Allen’s government work, creating a near-term revenue and obligations gap for the company.