AGENT DID NOT VIOLATE DISCLOSURE PROVISION.

                 IN THE UNITED STATES DISTRICT COURT

BACKGROUND

[2] The facts are undisputed. Since 1996, Plaintiff has been under investigation by the Criminal Investigation Division of the Internal Revenue Service for failure to file personal income tax returns for the years 1994 and 1995. After an unsuccessful attempt by IRS Special Agent Alexander to interview Plaintiff, Plaintiff's case was reassigned to Special Agent Taggart in June 1997. After Special Agent Taggart learned from IRS information returns that Principal Mutual Life Insurance Company and Princor Financial Services were likely to have information about Plaintiff's income, she authorized summonses to be served on the two companies. Special Agent Taggart's business card, which identified her as being employed in the Criminal Investigation Division, was included with the summonses. She later served summonses on Merritt and Petway, P.A., Plaintiff's accountant, and on Central Carolina Bank, seeking information about Plaintiff's financial status, and including her business card with each summons. Special Agent Taggart also directly contacted two third-party witnesses alleged to have information about Plaintiff's dentistry practice. She gave each of them her business card and notified them verbally that she was conducting an investigation of Plaintiff. In addition, Plaintiff alleges that Special Agent Taggart routinely used envelopes and/or stamps bearing the title "Criminal Investigation Division" in her correspondence and made "other oral disclosures" to unknown parties.

[3] Plaintiff brings his action under 26 U.S.C. section 7431, and seeks statutory damages of $1000.00 for each alleged disclosure in addition to punitive damages. Defendant has filed a Motion for Summary Judgment. All pending motions in this matter are fully briefed and ripe for ruling.

ANALYSIS

[4] A motion for summary judgment cannot be granted unless there are no genuine issues of material fact for trial. Fed. R. Civ. P. 56(c); See Celotex Corp. v. Catrett, 477 U.S. 317 (1986). The movant must demonstrate the lack of a genuine issue of fact for trial, and if that burden is met, the party opposing the motion must "go beyond the pleadings" and come forward with evidence of a genuine factual dispute. Id. at 324 (1986). The Court must view the facts and the inferences drawn from the facts in the light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986). Conclusory allegations are not sufficient to defeat a motion for summary judgment. Cf. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

[5] Plaintiff Steven A. Roebuck ¹ alleges that Special Agent Taggart improperly disclosed to third parties the criminal nature of the investigation regarding Plaintiff's income tax liability, in violation of 26 U.S.C. section 6103. The United States' response is two-pronged. It first contends that Special Agent Taggart acted within her statutory authority by requesting proper and authorized disclosures, while correctly recognizing that the issue of indirect disclosure of return information by presentation of an agent's credentials has not been squarely addressed by the courts. The United States also asserts the defense of erroneous but good faith belief provided by section 7431(b). For the reasons discussed below, this Court finds that Special Agent Taggart's actions fall within the exceptions to the rule of non-disclosure provided by section 6103. Therefore, the section 7431(b) defense of qualified immunity need not be addressed.

[6] Section 6103 provides a general confidentiality for "returns" and "return information," and expressly proscribes United States officers and employees from disclosure of such information. Treasury Regulation 26 C.F.R. section 301.6103(k)(6)-1(a), promulgated by the Secretary under an express grant of authority from section 6103(k)(6), presents several exceptions to the general rule of non-disclosure. It authorizes IRS agents to disclose, under certain circumstances, "taxpayer identity information . . . , the fact that the inquiry pertains to the performance of official duties, and the nature of the official duties." Id. Allowed disclosures are those (1) regarding determination of taxes, liability for taxes, or the amount to be collected, (2) not otherwise reasonably available, and (3) necessary in order to obtain the additional information sought. See DiAndre v. United States, 968 F.2d 1049, 1052 (10th Cir. 1992), cert. denied, 507 U.S. 1029, 113 S. Ct. 1843, 123 L.Ed.2d 468 (1993).

[7] A civil action against the United States for violation of section 6103 is authorized by 26 U.S.C. section 7431(a), and qualified immunity for government employees regarding disclosures made under a good faith but erroneous belief is granted under section 7431(b). In order to recover under section 7431, a taxpayer must show (1) that the alleged disclosure was unauthorized, (2) that it was made knowingly or by reason of negligence, and (3) that it was in violation of section 6103. See Flippo v. United States, 670 F. Supp. 638, 641 (W.D.N.C. 1987), aff'd per curiam, 849 F.2d 604 (4th Cir. 1988). Additionally, section 7431 requires that improper disclosures be specially identified in the complaint. See id. Plaintiff must specify, for example, the circumstances surrounding the disclosures, the items disclosed, the dates of disclosure, and to whom the items were disclosed. See id. The parties in this case agree that information about the criminal nature of the IRS investigation of Plaintiff was disclosed to third parties. They further agree that the disclosures fall under the rubric of return information, since they pertain to ". . . whether the taxpayer's return was, is being, or will be examined or subject to other investigation or processing." Section 6103(b)(2)(A). However, Plaintiff has failed to prove either that the disclosures were unauthorized, or that they were made in violation of section 6103. The alleged disclosures made by correspondence and the "other unknown oral disclosures" are not properly specified under section 7431, and thus the Court rejects them outright.

[8] The actions taken by Special Agent Taggart constitute authorized disclosure of return information, as they fall squarely within the exceptions to non-disclosure provided for in 26 C.F.R. section 301.6103(k)(6)-1(a). First, it is undisputed that Special Agent Taggart's inquiries were related to Plaintiff's tax liability; they arose exclusively and directly from the ongoing criminal investigation of Plaintiff for tax fraud. She contacted the aforementioned parties, both directly and through summonses, for the express purpose of obtaining information regarding Plaintiff's failure to file income tax returns. See DiAndre, 968 F.2d at 1053.

[9] Secondly, the specific financial information sought by Special Agent Taggart was not otherwise reasonably available, but could be obtained only from parties to the transactions in question. See 26 C.F.R. section 301.6103(k)(6)-1(a). Although the IRS is not required to seek information directly from the taxpayer under investigation, see Chen Chi Wang v. United States, 757 F.2d 1000, 1002 (9th Cir. 1985), the IRS in this case had previously allowed Plaintiff a reasonable opportunity to cooperate with the investigation, which Plaintiff had refused. Thus, Special Agent Taggart was left with no other avenue than to contact third parties who had engaged in prior business dealings with Plaintiff. Furthermore, even if Plaintiff had provided Special Agent Taggart with the requested information, under standard IRS operating procedure the third parties still would have been contacted in the interest of verifying the accuracy of the information.

[10] Finally, the disclosures were necessary under the circumstances. Necessity, according to section 301.6103(k)(6)-1(a), must be determined by the particular circumstances surrounding the disclosures in question. In the case at bar, Special Agent Taggart could not have otherwise reasonably obtained the information sought without impairing the proper performance of her official duties. See id. Special Agent Taggart indirectly informed the parties of the nature of the investigation as a service, in order to ensure that the parties knew who she was and what she was doing. Indeed, responding to a similar scenario in Fostvedt v. United States, 824 F. Supp. 978, 983 (D. Colo. 1993), aff'd, 16 F.3d 416 (10th Cir. 1994), that court noted that "no investigation could ever proceed without disclosure of such minimal 'nonsensitive' facts as the taxpayer's name, tax number, and the reason for the letter of inquiry."

[11] The necessity of the disclosures made to third parties in this case is hotly contested by Plaintiff. However, he erroneously frames his argument around regulations and cases dealing with circular letters, which are materially different from the individual and discrete contacts made by Special Agent Taggart. See Diamond v. United States, 944 F.2d 431, 432 (8th Cir. 1991). Circular letters are a type of mass mailing sent out by the IRS to numerous parties (i.e., more than ten), see Special Agent Handbook section 347, when the IRS is unable to identify particular parties from whom information is desired. See Diamond, id. As the IRS Special Agent Handbook notes, when circular mailings are issued, the words "Criminal Investigation Division" may not be included in the heading or signature block. See section 347.2(4)-(5). Rather, when numerous parties are contacted, strict observance of the confidentiality of taxpayer return information is required to protect the taxpayer's reputation. See id. In contrast, the case at bar does not involve a circular mailing, but only a handful of discrete parties (none of whom were Plaintiff's customers), who were contacted in order to obtain specific information about Plaintiff.

[12] While Plaintiff correctly notes in his reply to Defendant's motion for Summary Judgment that the Tax Reform Act of 1976 provided unprecedented broad protection for taxpayers, he overlooks the fact that the Act functions to protect ALL parties involved in the IRS inquiry, not just the individual under investigation. Had Special Agent Taggart not indirectly disclosed the subject and nature of the investigation to the parties, it is likely that the parties might have erroneously assumed that they themselves were the target of IRS investigation. See Rhodes v. United States, 903 F. Supp 819, 823 (M.D. Pa. 1995). A refusal on the part of the IRS to identify the nature of its inquiries to third parties would be remarkably similar to the very type of "intolerable" and "widespread" government intrusion that, as Plaintiff notes, the Tax Reform Act of 1976 was intended to protect against. IRS employees are entitled, and indeed, encouraged by the Internal Revenue Manual to identify themselves by displaying their credentials in the course of performing their official duties. See 977(11).1(4). Prior litigation regarding disclosure of return information teaches that, had Special Agent Taggart NOT identified herself, she may have faced misrepresentation charges and suppression of evidence at a subsequent trial. See United States v. Tweel, 550 F.2d 297 (5th Cir. 1977). Thus, Special Agent Taggart's actions were not in violation of 26 U.S.C. section 6103.

CONCLUSION

[13] After full consideration of the parties' arguments, and for the multiple reasons given above, Defendant's Motion for Summary Judgment is GRANTED, and Plaintiff's action is accordingly dismissed. As Plaintiff has failed on the merits of his case, this Court need not address Defendant's Motion to Strike Jury Demand, which is DENIED.

[14] SO ORDERED.

     This 7th day of June, 1999.