¶50,629] Stuart A. Leithliter and Judith R. Leithliter, Plaintiffs v.
United States of America, Department of The Treasury, Internal Revenue
Service, and Chief of The Collection Branch, Defendants
District Court, So. Dist. Ind., Evansville
Div., EV 95-107-C R/H, 10/19/95
[Code Secs. 6103 and
Disclosure of return information: Disclosure upheld: Necessary to
effectuate lien.--The act of providing a notice of levy to a
taxpayer's employer was not an improper disclosure of return information
because such a disclosure was expressly authorized. The IRS could
disclose return information necessary to effectuate notices of liens.
ON MOTION TO DlSMISS
comes before the Court on defendants' Motion to Dismiss and Brief in
Support of Defendants' Motion to Dismiss filed
August 17, 1995
. An Amended Brief in Support of Defendants' Motion to Dismiss, changes
not substantive in nature, was filed
August 28, 1995
. Plaintiffs' Answer brief, to be construed as Plaintiffs' Brief in
Opposition to Defendants' Motion to Dismiss, was filed
August 28, 1995
, and Defendants' Reply Memorandum in Support of Motion to Dismiss was
September 11, 1995
Stuart A. and Judith R. Leithliter flied an action in this Court June 8,
1995, alleging no less than ten wrongful disclosures of tax information
in violation of 26 U.S.C. §§6103
and 7431 . In
particular, Plaintiffs allege that the Internal Revenue Service's (IRS)
failure to properly process their payments for tax years 1988 and 1989
directly lead to five separate unlawful disclosures of the Leithliter's
as a couple, alternatively ten individual disclosures.
remuneration for the alleged violations Plaintiffs seek both actual and
have filed their motion to dismiss generally alleging Plaintiffs'
failure to state a claim upon which relief can be granted.
As an initial
matter the Court notes the liberal construction to be afforded the
pleadings and practice of these pro se litigants. See Haines
v. Kerner, 404 U.S. 519 (1972) (per curiam); Wright v. Tackett,
39 F.3d 155, 157 (7th Cir. 1994).
A complaint is
properly dismissed under Federal Rule of Civil Procedure 12(b) when all
well-pleaded factual allegations are taken as true and all reasonable
inferences therefrom are drawn in favor of the Plaintiff, but
nonetheless "it appears beyond doubt that the Plaintiff can prove
no set of facts in support of his claim which would entitle him to
relief." Conley v. Gibson, 335
41, 45-46 (1957).
instance the Defendants' Motion to Dismiss must be granted because the
Plaintiffs have failed to allege a violation of a relevant statutory
provision. Title 26, United States Code, Section
6103 provides in relevant part as follows:
revenue officer or employee may, in connection with his official duties
relating to any audit, collection activity, or civil or criminal tax
investigation or any other offense under the internal revenue laws,
disclose return information to the extent that such disclosure is
necessary in obtaining information, which is not otherwise reasonably
available, with respect to the correct determination of tax, liability
for tax, or the amount to be collected or with respect to the
enforcement of any other provision of this title. Such disclosures shall
be made only in such situations and under such conditions as the
Secretary may prescribe by regulations.
U.S.C. §6103(k)(6) .
Section 7431 provides
in relevant part as follows:
If any officer
or employee of the
knowingly, or by reason of negligence, discloses any return or return
information with respect to a taxpayer in violation of 6103, such
taxpayer may bring a civil action for damages against the
in a district court of the
U.S.C §7431(a)(1) .
Section 7431 further
provides that "[n]o liability shall arise under this section with
respect to any disclosure which results from a good faith, but
erroneous, interpretation of section
6103 ." 26 U.S.C. §7431(b)
In its Brief
in Support of Defendants' Motion to Dismiss, the Defendants sets forth
three elements a Section
7431 plaintiff must establish prior to recovery thereunder: 1) the
disclosure was unauthorized; 2) the disclosure was made knowingly or by
reason of negligence; and 3) the disclosure was in violation of 26
U.S.C. §6103 . Jones
v. United States [94-2
USTC ¶50,562 ], 869 F.Supp. 747, 753 (D.Neb. 1994); Fostvedt v.
United States [93-1
USTC ¶50,299 ], 824 F.Supp. 978, 983 (D.Colo. 1993), aff'd,
16 F.3d 416 (10th Cir. 1994); Flippo v. United States [87-2
USTC ¶9476 ], 670 F.Supp. 638, 641 (W.D.N.C. 1987), aff'd per
curiam 849 F.2d 604 (4th Cir. 1988). As Defendants note, Plaintiffs'
complaint fails to allege what information was disclosed, to whom it was
disclosed, when it was disclosed, and the form in which it was
Armed with the
knowledge of their complaint's fatal defects as alleged by the
Defendants, Plaintiffs' Brief in Opposition details only a single notice
of levy sent to the "employer of one of the plaintiffs" on
June 8, 1993, and assures the Court "[i]t is similar regarding
other wrongful disclosures...." (Plaintiff's Brief in Opposition at
contest the notice of levy as a wrongful disclosure in and of itself,
they are doomed for dismissal. The regulations developed pursuant to 26
U.S.C. §6103(k)(6) expansively
provide for areas of permissive disclosure by the Government. Disclosure
is broadly permitted, for instance, to
verify the financial status or condition and location of the taxpayer
against whom collection activity is or may be directed, to locate assets
in which the taxpayer has an interest, to ascertain the amount of any
liability ... to be collected, or otherwise to apply the provisions of
the Code relating to establishment of liens against such assets, or levy
on, or seizure, or sale of, the assets to satisfy any such liability....
6323(f) of Title 26 expressly authorizes the filing of a notice of
tax lien in any state, county, or federal office and provides for
disclosure of return information necessary to effectuate notices of
liens. See 26 U.S.C. §6323(f)
; 26 C.F.R. §301.6323(f)-1
. Finally, the ultimate tax lien itself may be disclosed as a matter
of public record. 26 C.F.R. §301.6323(i)-1(c)
have failed to establish disclosure activity in contravention of these
established statutes and regulations. The very act of providing notice
of a levy to the "employer of one of the plaintiffs" fails to
accomplish this task because such disclosures are expressly authorized.
while Plaintiffs argue wrongful disclosure, the Government correctly
notes that Plaintiffs appear to contest the amount of taxes owed or
owing. However, this line of argument is no more accommodating to
jurisdiction over a tax matter is governed by 28 U.S.C. §1346(a) which
gives the "district courts ... original jurisdiction ... [over]
[a]ny civil action against the United States for the recovery of any
internal-revenue tax alleged to have been erroneously or illegally
assessed or collected ... 28 U.S.C §1346(a)(1) (1992). In Flora v.
United States [58-2
USTC ¶9606 ], 357 U.S. 63 (1958), and later on rehearing 362 U.S.
145 (1960), the Supreme Court held full payment of the assessed taxes is
a prerequisite to filing a refund suit in a federal district court. In
this case it is not sufficiently clear whether the Plaintiffs have
fulfilled this prerequisite to suit, but it is ultimately irrelevant to
the outcome of this action. Assuming arguendo the Government was
entirely mistaken and in fact prematurely pursued its levy and lien
options, the Government would be no more liable because any error with
respect to assessment would not cause the collection activity to
constitute an improper disclosure of tax return information.
Gibson requires the Court to draw all inferences in favor of the
plaintiff, however, the Court need not speculate over the nature of the
plaintiff's claim or refuse to grant a motion for judgment on the
pleadings simply because the plaintiff may, theoretically, be entitled
to recover under a cause of action based upon facts never stated in the
complaint. Murphy v. White Hen Pantry Co., 691 F.2d 350, 353 (7th
Cir. 1982). To be sure, a complaint is not required to narrate all
relevant facts or recite the law, all it has to do is set out a claim
for relief, Hrubec v. National R.R. Passenger Corp., 981 F.2d
962, 963 (7th Cir. 1992), but in this instance Plaintiffs have failed to
set forth requisite factors by which liability can attach. Plaintiffs'
complaint, be it allegations of wrongful disclosure or claims of
improper assessment, must be DISMISSED for failure to state a
claim upon which relief can be granted.
IT IS SO
By and through this single "example" the Court will assume, arguendo,
that this action is not barred by the statute of limitations. This
assumption is made only because alternative grounds for dismissal are
more readily apparent.