71 F. Supp. 3d 236
D.D.C.2014Background
- Forty-one organizations sued the United States, the IRS, and individual IRS officials alleging viewpoint-based targeting of conservative applicants for 501(c)(3) and 501(c)(4) tax-exempt status between 2009–2012 (delays, BOLO lists, unnecessary information requests).
- Plaintiffs sought Bivens monetary damages for First and Fifth Amendment violations, APA declaratory and injunctive relief, a §7428 declaratory judgment (for pending 501(c)(3) applicants), and damages under §6103/§7431 for improper handling/disclosure of return information.
- Treasury Inspector General report and public IRS statements acknowledged the BOLO practice; IRS suspended BOLO lists and announced remedial steps during litigation.
- Defendants moved to dismiss various counts on multiple grounds: lack of a Bivens remedy, mootness/voluntary cessation for APA claims, statutory interpretation of §6103/§7431, and that Congress provided other remedies (e.g., §7428).
- Court dismissed all claims: Bivens claims (Counts I–III) dismissed with prejudice (no Bivens remedy against IRS officials); APA claims (Counts IV–VII) dismissed as moot for lack of live controversy; §7431/§6103 claim (Count IX) dismissed for failure to plead an unauthorized inspection/disclosure; Count VIII (§7428 declaratory relief) dismissed as moot for two plaintiffs who received favorable determinations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Availability of Bivens damages against IRS officials for alleged constitutional violations during tax-exempt application review | Bivens relief is appropriate for constitutional harms caused by IRS targeting | Bivens is unavailable here because Congress provided a comprehensive tax remedial scheme; Kim forecloses a Bivens remedy | No Bivens remedy; counts I–III dismissed with prejudice |
| Mootness/voluntary cessation of APA claims seeking declaratory/injunctive relief against BOLO policy | Injunctive/declaratory relief still warranted because risk of recurrence and ongoing harms | Government suspended BOLO, implemented remedial measures; voluntary cessation moots claims absent reasonable expectation of recurrence | Counts IV–VII dismissed for lack of subject-matter jurisdiction as moot |
| Viability of §6103/§7431 claim based on IRS requesting and handling allegedly unnecessary return information | §6103 liability arises because IRS inspected/handled return information obtained via viewpoint-based, unnecessary requests | §6103 governs inspection/disclosure (information handling), not the propriety of collection or requests; plaintiffs failed to plead unauthorized inspection/disclosure | Count IX dismissed with prejudice for failure to state a §6103/§7431 claim |
| §7428 declaratory relief for pending 501(c)(3) applicants after agency action during litigation | Plaintiffs sought declaratory judgment on 501(c)(3) status | Defendants noted some applicants received determinations and sought partial dismissal | Count VIII dismissed as moot for applicants who received favorable determinations; remaining applicants proceed (defendants to answer for those plaintiffs) |
Key Cases Cited
- Kim v. United States, 632 F.3d 713 (D.C. Cir. 2011) (refusing to create Bivens remedy where Internal Revenue Code provides comprehensive remedial scheme)
- Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388 (Sup. Ct. 1971) (recognition of implied damages remedy against federal officials for constitutional violations)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (Sup. Ct. 1992) (plaintiff bears burden to establish standing for subject-matter jurisdiction)
- Ashcroft v. Iqbal, 556 U.S. 662 (Sup. Ct. 2009) (plausibility standard for pleading)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Sup. Ct. 2007) (Iqbal/Twombly pleading standard explained)
- Mann v. United States, 204 F.3d 1012 (10th Cir. 2000) (§6103 regulates information handling, not collection activity)
- Venen v. United States, 38 F.3d 100 (3d Cir. 1994) (same: §6103 concerns disclosure/inspection; collection activity is separate)
- Wilkerson v. United States, 67 F.3d 112 (5th Cir. 1995) (disclosures held not wrongful despite procedural lapses in collection)