804 F.2d 297 | 5th Cir. | 1986
Lead Opinion
In Huckaby v. United States Dept, of Treasury, IRS, 794 F.2d 1041 (5th Cir. 1986), we held that the government was liable to the plaintiff Don Huckaby for an unlawful disclosure of his tax return information under 26 U.S.C. § 7431. The case was remanded for determination of costs and a reasonable attorney’s fee. Id. at 1050-51. The government petitions for rehearing on the issue of attorney’s fees, arguing that Huckaby is not entitled to attorney’s fees, either under 26 U.S.C. § 7430, or under the Equal Access to Justice Act, 28 U.S.C. § 2412. In the alternative, the government requests that the issue of Huckaby’s entitlement to attorney’s fees be remanded to the district court. Because we conclude that Huckaby is entitled to attorney’s fees under 26 U.S.C. § 7430, the government’s petition for rehearing is denied.
Section 7430 of the Internal Revenue Code, 26 U.S.C. § 7430, governs the awarding of costs and fees to litigants in tax cases. Section 7430(a) specifies when litigation costs may be recovered:
(a) In general. — In the case of any civil proceeding which is—
(1) brought by or against the United States in connection with the determination, collection, or refund of any tax, interest, or penalty under this title, and
(2) brought in a court of the United States (including the Tax Court and the United States Claims Court),
the prevailing party may be awarded a judgment for reasonable litigation costs incurred in such proceeding.
Section 7430(c)(l)(A)(iv) specifies that litigation costs include: “reasonable fees paid or incurred for the services of attorneys in connection with civil proceedings.”
We conclude that section 7430 applies to Huckaby’s suit brought under section 7431 because Huckaby’s underlying claim
A more difficult question is whether Huckaby qualifies as a “prevailing party.” Section 7430(c) provides the following definition of “prevailing party”:
(A) In general. — The term “prevailing party” means any party to any proceeding described in subsection (a) (other than the United States or any creditor of the taxpayer involved) which—
(i) establishes that the position of the United States in the civil proceeding was unreasonable, and
(ii) (I) has substantially prevailed with respect to the amount in controversy, or
(II) has substantially prevailed with respect to the most significant issue or set of issues presented.
(B) Determination as to prevailing party. — Any determination under sub-paragraph (A) as to whether a party is a prevailing party shall be made—
(1) by the court, or
(ii) by agreement of the parties.
The government argues that Huckaby is not a prevailing party because he has not shown that the government’s position was unreasonable, nor has he substantially prevailed as to the most significant issues presented. We disagree and hold that Huckaby does qualify as a prevailing party.
On balance, however, we conclude that the government’s position was unreasonable because the actual arguments advanced by the government either rang hollow or were specious or defied its own regulations. We rejected the government’s argument that collateral estoppel- precluded Huckaby’s claim because there was no identity of issues with the prior proceeding and thus it was clear that the government’s argument failed. Huckaby v. United States Dept. of Treasury, IRS, 794 F.2d at 1046. We also rejected the interpretation of 26 U.S.C. § 6103
The government argues that Huckaby has not met the second prong of the “prevailing party” requirement of section 7430(c)(2)(A)(ii) since he collected only $1,000 out of a possible $8,000 statutory award, and failed to collect punitive damages (which could have added another $20,-000 to the award). Furthermore, Huckaby has prevailed on only one of his allegations of unlawful conduct (Agent Martin’s pro
We are aware of the fact that the issues posed by the government’s request for a rehearing are novel ones on which there is a scarcity of authority. Nevertheless, for the reasons we have stated, we are convinced that our prior decision to award Huckaby attorney’s fees was indeed correct. We therefore deny the government’s petition for a rehearing.
PETITION FOR REHEARING DENIED.
. 26 U.S.C. § 7431 provides relief to persons whose tax returns have been unlawfully disclosed by government employees. In this case, we found that the government had violated seetion 6103 which requires written authorization prior to the release of federal tax information to state tax authorities.
. 26 U.S.C. § 6103 provides in relevant part:
(d) Disclosure to State tax officials.—
(1) In general. — Returns and return information with respect to taxes imposed by chapters 1, 2, 6, 11, 12, 21, 23, 24, 31, 32, 44, 45, 51, and 52 and subchapter D of chapter 36 shall be open to inspection by, or disclosure to, any State agency, body, or commission or its legal representative, which is charged under the laws of such State with responsibility for the administration of State tax laws for the purpose of, and only to the extent necessary in, the administration of such laws, including any procedures with respect to locating any person who may be entitled to a refund. Such inspection shall be permitted, or such disclosure made, only upon written request by the head of such agency, body, or commission, and only to the representatives of such agency, body or commission designated in such written request as the individuals who are to inspect or to receive the returns or return information on behalf of such agency, body, or commission. (Emphasis added.)
Rehearing
ON PETITION FOR REHEARING
(794 F.2d 1041, 5th Cir.1986, July 23, 1986)