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I'm rather amazed at the way so many people here have been bootstrapping the information in the letter to make points that are entirely unsupported by the facts.
The LW invaded his/her boss's privacy? How do you know? He or she is legally liable to report the information, or legally culpable if s/he does?
No offense, but no matter WHAT the truth is, a lot of people are talking out of their asses here. The fact is that we don't know how the LW got the information; it may have been pursuant to his professional duties, or not. And that may, or may not, matter. I often disagree with Cary, but in this case he nailed it right on the head: it's time for the LW to check into his professional responsibilities and code of ethics.
I'd add that it would be a damned good idea to speak to a tax lawyer about the entire issue as soon as possible, because it's certainly possible (either way) that the LW could be in legal jeopardy. And yes, if I were the LW I'd damned well be looking for a new job ASAP - no matter what.
I spent eight years in a hellish job myself. That sort of toxic atmosphere can do serious, long-term psychological damage. You need to get yourself out of there as quickly as you can.