A senior Internal Revenue Service leader has taken the agency to federal court, accusing her own colleagues of leaking confidential information to the media in an effort to destroy her career. The explosive lawsuit, filed Thursday in Washington, D.C., federal court, pits IRS Commissioner of the Large Business and International Division Holly Paz against the very institution she has served for nearly two decades.

Paz claims the IRS and the U.S. Treasury Department engaged in a “vindictive, retaliatory undertaking” by funneling information from her protected records to news outlets, including Fox News and Bloomberg.

“This behavior is the epitome of unprofessionalism,” Paz declared in her complaint, saying her Privacy Act–protected employment details were deliberately handed to journalists without her consent.

Dispute Over Employment Status

The conflict stems from July 29, when Paz was abruptly placed on administrative leave without explanation. On Sept. 2, the IRS issued a notice proposing to terminate her federal service, citing her role in the agency’s controversial scrutiny of conservative groups seeking tax-exempt status more than a decade ago.

But only days later, on Sept. 9, Fox News reported she had already been fired—an assertion Paz insists was false. The outlet later edited its story after being told she remained on leave. Bloomberg also published reports about her status within an hour of her being notified by the agency, she said, again citing unnamed sources.

Old Scandals Resurface

The IRS’s proposed action against Paz invokes allegations tied to the 2010–2012 controversy in which conservative organizations complained the agency unfairly delayed their applications for tax-exempt status. That scandal forced the resignation of senior IRS officials and became a lightning rod in Washington.

Yet a 2017 Treasury Inspector General report concluded the IRS had not acted with partisan bias. Paz maintains those issues were investigated and resolved long ago in her favor, making their revival now a weaponized tactic.

Seeking Relief in Court

Paz, who became permanent head of the Large Business and International Division in July 2023 after 18 years at the agency, argues the leaks have irreparably damaged her reputation and career. She contends the IRS has no legal grounds under the Privacy Act to share her records or employment status with media outlets or outside parties.

She is asking the court for declaratory relief, monetary damages, and a ruling that the government’s actions violated federal law.

“This is not the first time they’ve used private records to smear me,” Paz alleged in her filing, pointing to prior leaks of sensitive employment information.

Representatives of the IRS, Fox News, and Bloomberg did not immediately respond to requests for comment Thursday.