Officials of Kanagawa Prefecture, near Tokyo, say hard disk drives with taxpayers' personal information were auctioned online. An employee of an outside contractor is suspected of selling the disks.
Prefectural officials say there were at least nine hard disk drives with a total of 27 terabytes of information. The disks contained administrative documents, including tax notification slips with the names of individuals and firms.
The prefecture rented the disks from a leasing company and used them as data storage devices at its shared server. It returned the disks to the leasing company in April to replace them with new ones.
The leasing firm ordered Tokyo-based contractor Broadlink to dispose of the disks and to make sure the data could not be restored.
But an employee of the contractor is suspected to have sold the disks on an auction website.
The winning bidder said many of the files were not readable, but one containing taxpayers' personal details could be accessed with data restoration software.
The prefectural officials say the Broadlink employee told the firm that he had put nine other disks up for auction. The officials are trying to retrieve them.
Broadlink offered an apology, and said it reported the incident to the police on Friday morning.
Leaks of personal information have taken place in other administrative offices across Japan when staff failed to delete data properly.
In 2017, it was found that a hard disk had been sold online that contained the names of about 750 junior high school students and teachers in Minokamo City, central Japan.