Perhaps I am the last person on the planet to know about this case, but in an opinion issued on March 9, 2018, Judge Burroughs of the District of Massachusetts found that the broadcasting of a conversation between a taxpayer and an IRS collector working at its Automated Call Site (ACS) did not give rise to a claim against Howard Stern nor could that taxpayer seek a claim against the IRS under the Federal Tort Claim Act; however, the case can move forward as a violation of the disclosure laws under IRC 6103. For anyone with a curious nature and the love of an amazing story, find the opinion in Barrigas v. United States here.
When I read the opening lines of the case I wondered how in the world would someone calling ACS have their conversation broadcast on a radio show. Not long into the opinion I found out. Truth is stranger than fiction and no one could have made up a case like this. An ACS employee decided that it would be a good idea while he was working to give a call to the Howard Stern radio show. His call was placed on hold by the show (some poetic justice there) and he remained on hold for some unspecified time. While on hold with the Howard Stern show, he received a call from a taxpayer concerning her account. The taxpayer had a payment plan, and while paying on the plan the IRS offset her current year tax return.
So, the ACS employee and the taxpayer begin a 53 minute conversation about her issue and at some point in that conversation the ACS employee comes off of hold with the Howard Stern show and goes live. Now the conversation, at least the ACS’ employee’s side of the conversation, gets broadcast to the listeners of the Howard Stern show. Mr. Stern is puzzled by the conversation taking place. He and another gentleman make comments about it and apparently tried without success to get the attention of the ACS employee. At the end of the three minute portion of the conversation which was broadcast (the transcript of which is spelled out in the opinion), the ACS employee provides the telephone number of the taxpayer. The providing of that telephone number apparently allowed alert listeners of the show to light up the phone of the taxpayer.
The taxpayer was not happy or amused that her conversation with ACS was partly broadcast over the radio, and available for some time thereafter on its web site, so she brought suit against the IRS and Howard Stern. We do not learn from the case the fate of the ACS employee. One suspects that the manager of the ACS employee will be writing memos for the remainder of their career. The career of the ACS employee may be cut short by this episode. Look for a new provision in the IRM directing ACS employees not to call talk radio shows while on duty.
read more...Reading this post will not bring you much tax knowledge, but how could we not write about such a case. It’s probably best to read the opinion rather than the post but I will provide you with a distilled version of the legal issues and the approach the court took to those issues. For me, the most important thing about the case is that it could exist at all.
Tort Claim Against IRS
The first issue addressed is the taxpayer’s claim against the IRS using the Federal Tort Claims Act. This Act provides a limited waiver of sovereign immunity. Although the Act waives sovereign immunity, it includes a specific exception to the waiver for tax matters for “”[a]ny claim arising in respect of the assessment or collection of any tax or customs duty. . . .” 28 U.S.C. § 2680(c). In the end, the court finds that the exception applies to this situation. This determination keeps the IRS from having liability for damages to the taxpayer arising out of the on air conversation. The taxpayer argued that the phone call by the ACS employee was clearly outside of his duties as an IRS employee and that created an exception to the rule limiting the waiver of sovereign immunity. The court found that basically every time the IRS would get into a bad situation, the agent would be acting outside the scope of their duties since the IRS was not going to give them duties that would harm people in a tortious manner. In this section of the court’s discussion, it did cite to another case in which an IRS employee checking out a casualty loss on a taxpayer’s property took a picture that captured someone standing in a house adjacent to the property in question in less clothes than the individual wanted to be caught on camera. That case provides just another example of the many ways one could not predict that trouble could arise.
Claim against Howard Stern
After dismissing the claim against the IRS for tort damages, the court next looked at the claim against Howard Stern. It determined that Mr. Stern had done nothing wrong by picking up the call from the IRS employee and acknowledged that the call was confusing to Mr. Stern when first received. Her first claim is one of invasion of privacy under Massachusetts’s law. The court found that the actions of Mr. Stern could not be viewed as an intentional act to invade her privacy. The court further found that even if Mr. Stern’s actions were viewed as intentional, “[p]laintiff has not plausibly alleged an unreasonable, substantial, or serious intrusion into highly personal information. To state a claim for invasion of privacy, Plaintiff must prove that there was ‘[1] a gathering and dissemination of facts of a private nature that [2] resulted in an unreasonable, substantial or serious interference with [her] privacy.’”
She alleged that Mr. Stern was negligent in broadcasting the information. Here, the court found ‘[p]laintiff has failed to state a claim under the Massachusetts Privacy Act because, among other things, the disclosed information was not sufficiently personal or intimate in nature.” Most of the conversation disclosed no information about her because the radio show only picked up what the IRS employee was saying and not what the taxpayer was saying. This was not a conference call situation. The data available from the one-sided conversation provided little information about the taxpayer and if the IRS employee had not mentioned her phone number would have provided no information about her.
Her last claim was for intentional infliction of emotional distress. Here again, the court could not find the intent on the part of Mr. Stern necessary for her to succeed. So, it dismissed this count as well and dismissed Mr. Stern and his company from the case.
Disclosure
What remains after this opinion is the cause of action seeking damages for the IRS disclosing tax return information. The court did not discuss the disclosure violation aspect of the lawsuit other than to say that it was not dismissing that part of the case. I will be surprised if we ever see an opinion on that part of the case because I expect that the IRS will work hard to settle that aspect of the case. If it does not, however, we will get the chance for another interesting blog post.
“Judge Burroughs of the District of Massachusetts found that the broadcasting of a conversation between a taxpayer and an IRS collector working at its Automated Call Site (ACS) did not give rise to a claim against Howard Stern nor could that taxpayer seek a claim against the IRS under the Federal Tort Claim Act; however, the case can move forward as a violation of the disclosure laws under IRC 6103.”
Unfortunately, even though Massachusetts isn’t in the 9th Circuit, circuit courts outrank district courts to some extent.
When the IRS and DOJ both publicly disclosed my social security number, that also was found exempt from tort legislation because it involves assessment or collection of tax, but subject to Section 6103. Next, the public disclosures were ruled to be legal because Section 6103 authorizes public disclosures when the return information is the subject of litigation. The 9th Circuit was not swayed by the DOJ’s position published in its Criminal Tax Manual that Section 6103 only authorizes disclosing social security numbers TO THE DOJ but does not authorize disclosing them to the public.
Furthermore, when unauthorized collection actions (e.g. embezzlement) are exempt from tort law, they are furthermore also exempt from Section 7433 because assessment actions are exempt from Section 7433. The 9th Circuit was not swayed by the fact that the IRS did not assess tax. No tax was owing, overpayments had been legally collected by withholding, the overpayments were embezzled, and coverups are perfectly legal.
By the way I thought ACS stands for Automated Collection something-or-other not Automated Call. I wonder if automated embezzlement would really be exempt from Section 7433, but TIGTA reported embezzlement by human employees.