Monday, December 10, 2012

Fourth Circuit Rejects Claims of Wrongful Tax Return Information Disclosures by IRS CI Agents Assisting Grand Jury (12/10/12)

In Tucker v. United States, 2012 U.S. App. LEXIS 25076 (4th Cir. 12/5/12), here, unpublished, the taxpayer sued the United States for alleged wrongful disclosures of tax return information under Sections 6103, here, and 7431, here.  The alleged wrongful disclosures were by CI agents assisting in a tax grand jury investigation.  The alleged disclosures were that (1) someone -- being the taxpayer -- would be going to jail for tax evasion (or some variation thereof) and (2) that the CI agents were assisting a grand jury conducting a tax investigation.  The district court rejected the taxpayer's claims.  The Fourth Circuit affirmed.

The first claim addressed was that one Agent told the taxpayer's son that "he [the agent] didn't see any reason why he [the son] should go up the river for something somebody else did."  Without explanation for its conclusion, the Fourth Circuit held:
We agree with the district court that the alleged "up the river" comment did not constitute a disclosure of Tucker's return information as defined in § 6103(b)(2)(A), and therefore, is not actionable under § 7431(a)(1). Accordingly, we affirm the judgment in favor of the government with respect to this statement.
This holding is too cryptic to comment on it.  However, the Fourth Circuit panel's ex cathedra conclusion without analysis does not give a great deal of comfort that the holding is correct.  It may be; I just don't know.  Certainly, the statement as quoted does contain an allegation that "somebody else" committed a crime and, in context, that "somebody else" appears to be the taxpayer.  And, since that conclusion was likely reached based at least in part upon information developed in the IRS phase of the investigation, that information would appear to be return information.  So, I can wonder, but can conclude only that the Fourth Circuit did not articulate a basis for its conclusion.

The second claim was that the agents introduced themselves to third party witnesses, sixteen in all, as agents "assisting the United States Attorney in a grand jury investigation of Tucker."  The district court rejected this claim because it had not been presented timely and prejudicial because of untimeliness.  The district court said:
[P]laintiff Tucker did not make these allegations concerning the manner of introduction in the complaint, did not seek to amend the complaint, did not set forth these allegations in response to discovery, and did not include these matters at any pretrial conference or in the joint pretrial order. Not only is this information untimely, but the inclusion of this information at this point in the case would be unfairly prejudicial to the United States. As is noted by the United States, there are exceptions to the rules prohibiting improper return disclosures and the United States did not have an opportunity to adequately address those exceptions even though the United States did present some evidence at trial to demonstrate that it had met the requirements of § 6103(k)(6) allowing such disclosures. The United States submits that had it been aware of these allegations prior to trial, it could have conducted additional discovery on this issue in order to present trial testimony defending the assertions of plaintiff Tucker, including the presentation of evidence regarding a good faith defense under 26 U.S.C. § 7431(b)(1).
The Fourth Circuit summarily affirmed the dismissal, finding no abuse of discretion.

I have not independently researched the issue, but I would think that, normally, agents assisting the grand jury would be introduced either by themselves or by the prosecutors as agents assisting a grand jury investigation and that would not be disclosure of prohibited grand jury information.  (Readers will recall that Rule 6(e), FRCrP, here, prohibits disclosure of grand jury information.)  And, although prosecutors and persons assisting a grand jury investigation are prohibited from disclosing grand jury information (which is defined as sweepingly as return information), still they are allowed to make such disclosures as required by their investigation.  I would expect that, in order to effectively conduct an investigation of a target or subject of the investigation, some disclosures as to who and what they are investigating would be required to set context for further inquiry.  The subject of what they are investigating would itself in most cases disclose who they are investigating.  I think it is only disclosures that are unnecessary to the investigation that might implicate Rule 6(e) or Section 6103,

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