True the Vote, Inc. v. Internal Revenue ServiceTrue the Vote, Inc. v. Internal Revenue Service
Although these cases are not officially consolidated, they were separately argued before the same panel on the same day and are governed by the same legal principles on decision. We have therefore determined that a single opinion is sufficient for the disposition of both. Although there are differences in factual detail, those differences are immaterial to our ultimate decision on all issues, and therefore, all our statements of law hereinafter are applicablе to both.
I. BACKGROUND
Appellants appeal from judgments of the district court dismissing some of their claims under
Instead of processing these applications in the normal coursе of IRS business, as would have been the case with other taxpayers, the IRS selected out these applicants for more rigorous review on the basis of their names, which were in each instance indicative of a conservative or anti-Administration orientation, as we will set out in more detail below, and as was admitted by the Department of Treasury in the 2013 report of the Treasury Inspector General for Tax Administration (TIGTA).
The appellants before us, plaintiffs below, are applicants who were afforded this unequal treatment. They brought the present actions against the IRS and several of its individual employees, sеeking money damages by way of relief under Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971), and equitable relief by way of injunction and declaratory judgment. Additionally, the complaints alleged that the IRS invaded the plaintiffs’ statutory rights by violating
After the initiation of the suits, the Internal Revenue Service toоk action to end some unconstitutional acts against at least a portion of the plaintiffs. Based on these actions, the district court dismissed the equitable claims as moot. See True the Vote, 71 F.Supp.3d at 226-29; Linchpins of Liberty, 71 F.Supp.3d at 244-47. True the Vote and Linchpins of Liberty were decided by the same district court judge on the same day and rely on the same reasoning. Going forward, we will only cite to the Linchpins of Liberty decision.
We review the district court‘s
Accordingly, we affirm the district court‘s decisions as to the Bivens actions and statutory claims, but hold that the equitable actions are not moot. Even if we accord deference to the district court, the
II. ANALYSIS
We once again consider the implications of the Internal Revenue Service affording unequal treatment in the processing of applications for tax exempt status by applicants whose names might suggest certain political orientations. Cf. Z St. v. Koskinen, 791 F.3d 24, 28 (D.C. Cir. 2015) (concerning allegations that the IRS had an Israel-special policy “delay[ing] the processing of section 501(c)(3) applications from organizations whose views on Israel differ from the administration‘s“). This time, appellants allege that their applications for tax exempt status were selected out on the basis of an “IRS targeting scheme” that idеntified for enhanced scrutiny the applications of applicants with names associated with “conservative” causes, such as “Tea Party” and “patriot,” and perhaps “liberty.” According to the complaint, this enhanced examination involved, “among other things, a multitier review process, ... harassing and unconstitutional questions and requests for information that often required applicants to disclose donor lists, communications with members, and internet passwords and usernames.” Linchpins of Liberty, Pl.-Appellants’ Br. at 4 (citing Second Am. Compl. at 32-56). Perhaps most tellingly, the Service sorted the “targeted” names of organizations to be subjected to the allegedly unconstitutional treatment through the use of a “Be-On-The-Lookout” list referred to as BOLO. Because their applications were subjected to extended delay and were not receiving the same processing as those of other organizations, and as they learned from other sources that the IRS might be employ
Also in May of 2013, the Department of the Treasury received what is referred to by the government as the “TIGTA” Report, for the Treasury Inspector General for Tax Administration. See J.A. in Linchpins of Liberty, аt 87-140. That report, which we will often refer to as the Inspector General‘s Report, to avoid overburdening our opinion with acronyms, from Michael E. McKenney, Acting Deputy Inspector General for Audit, to the Acting Commissioner for Tax-Exempt and Government Entities Division of the Internal Revenue Service, bore the principal heading “Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review.”
The Inspector General‘s Report was produced in response to requests by members of Congress resulting from what had become fairly high profile complaints against the apparently improрer failure to normally process exemption applications by applicants like or including appellants. The district court disposed of the action in a judgment supported by a reported opinion, Linchpins of Liberty v. United States, 71 F.Supp.3d 236 (D.D.C. 2014).
A. The Bivens Claims
The court first took up the government‘s motion to dismiss the Bivens actions under
B. The Claims Under 26 U.S.C. § 6103
As the district court viewed the statutory claims, the plaintiffs were attempting to turn their grievances for the discriminatory acquisition of information into a claim that the information was improperly “inspected” by one or more IRS employees who had no need to inspect it because the information was not material to their applications for tax exempt status. See Linchpins of Liberty, 71 F.Supp.3d at 247. There is no controlling appellate decision concerning the application of
Both parties rely on the decision of the Southern District of Ohio in NorCal Tea Party Patriots v. IRS, No. 1:13-cv-341, 2014 WL 3547369 (S.D. Ohio July 17, 2014). Both parties are correct that the decision contains a careful analysis of the governing law, though they come to opposite conclusions as to its effects. In NorCal, the plaintiffs raised similar claims to those we consider today. As in the cases before us, the IRS moved to dismiss the statutory claims under
The statute defines “return information” as including the following:
a taxpayer‘s identity, the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, overassessments, or tax payments, whether the taxpayer‘s return was, is being, or will be examined or subject to other investigation or processing, or any other data, received by, recorded by, prepared by, furnished to, or collected by the Secretary with respect to a return or with resрect to the determination of the existence, or possible existence, of liability (or the amount thereof) of any person under this title for any tax, penalty, interest, fine, forfeiture, or other imposition, or offense....
If any officer or employee of the United States knowingly, or by reason of negligence, inspects or discloses any return or return information with respect to a taxpayer in violation of any provision of section 6103, such taxpayer may bring a civil action for damages against the United States in a district court of the United States.
However, we further note, as did the Ohio district court, that
The NorCal court denied the
Plaintiff Groups will have to establish that the IRS officials who inspected or disclosed the return information did so knowing that the information was not necessary for tax administration purposes, regardless of whether the IRS officials who requested the information knew or believed it was necessary for the § 501(c)(4) application.
NorCal, 2014 WL 3547369, at *13.
While the question may be a close one, review of the complaints in the district court in this case does not reveal allegations sufficient to support the statutory requirements which were set forth, we believe correctly, by the NorCal court. As the district court correctly noted, unlike in NorCal, the complaint in this case makes only conclusory allegations and “general averments” regarding the handling of tax return information. See Linchpins of Liberty, 71 F.Supp.3d at 248 n.18 (observing that “the plaintiffs admit that certain individual defendants were using tax rеturn information ‘to conduct official IRS business,‘” and paragraph 296 of the complaint “does not allege that any of the defendants improperly inspected or disclosed the plaintiffs’ tax return information ... “). Further, “[b]ecause § 7431 represents a waiver of sovereign immunity, it must be ‘strictly construed, in terms of its scope, in favor of the sovereign.‘” Snider v. United States, 468 F.3d 500, 509 (8th Cir. 2006) (quoting Lane v. Pena, 518 U.S. 187, 192, 116 S.Ct. 2092, 135 L.Ed.2d 486 (1996)). Therefore, we affirm the dismissal of the section 6103 counts of the complaints by the district court.
C. The Other Equitable Claims
None of the above disposes of the other equitable claims of appellants for violation of their constitutional rights by the viewpoint based targeting of their applications by the IRS. The district court concluded that those claims were moot, depriving it of jurisdiction, and therefore dismissed the claims pursuant to
As the district court rightly recognized, see Linchpins of Liberty, 71 F.Supp.3d at 244, the courts of the United States, pursuant to
Here the IRS contended, and the district court agreed, that plaintiffs’ claims have become moot because the IRS has stopped using its admittedly improper discriminatory criteria and handling of appli
1. The Inspector General‘s Report
At the outset, we note that the Inspector General‘s Report was properly before the district court in its consideration of the motions to dismiss, and is properly before this court in our consideration of the appeal. In both actions, the plaintiffs attached and incorporated the full report with their complaints. The IRS has, obviously, taken no action to disavow or discredit the report of investigation by its parent depаrtment.
On May 14, 2013, the Treasury Inspector General for Tax Administration issued the audit report styled “Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review,” and bearing the reference number: 2013-10-053 (citations to the report will be shown as “TIGTA“).
The gist of the Inspector General‘s Report is clear from its name. The first sentence of the 25-page “Results of Review” states, “The Determinations Unit [of the IRS] developed and used inappropriate criteria to identify applications from organizations with the words Tea Party in their names.” TIGTA at 5. Elucidating on that point, the audit determined that “according to the IRS, а Determinations Unit specialist was asked to search for applications with Tea Party, Patriots, or 9/12 in the organization‘s name as well as other ‘political-sounding’ names.” Id. at 6.
Indeed, officials from the IRS function in charge of exempt organizations stated to the Inspector General that
in May 2010, the Determinations Unit began developing a spreadsheet that would become known as the “Be On the Look Out” listing (hereafter referred to as the BOLO listing), which included the emerging issue of Tea Party applications. In June 2010, the Determinations Unit began training its specialists on issues to be aware of, including Tea Party cases. By July 2010, Determinatiоns Unit management stated that it had requested its specialists to be on the lookout for Tea Party applications.
Id. (citation omitted).
The report goes on to remind the IRS that its function is to help American taxpayers to “understand and meet their tax responsibilities and” to “apply[] the tax law with integrity and fairness to all.” Id. In recognizing that the IRS‘s handling of exemption applications from persons of disfavored viewpoints utterly failed that mission, the report states, “the criteria developed by the Determinations Unit gives the appearance that the IRS is not impartial in conducting its mission. The criteria focused narrowly on the names and рolicy positions of organizations instead of tax-exempt laws and Treasury Regulations.” Id. at 6-7.
Although the TIGTA reports that some change was made in the criteria in June of 2011, the report goes on to observe that by January 2012, “criteria again focused on the policy positions of organizations instead of tax-exempt laws and Treasury Regulations.” Id. at 7. In the meantime, the employees using these improper criteria delayed, denied, and generally mishandled the applications of disfavored applicants. “As of December 17, 2012, many organizations had not received an approval or denial letter for more than two years after they submitted their applications. Some cases ha[d] been open during two election cycles (2010 and 2012).” Id. at 11.
The audit report is replete with details of discriminatory processing and delay.
The TIGTA includes specific examples, e.g.:
- The names of the donors, contributors, and grantors. If the donor, contributor, or grantor has run or will run for a public office, identify the office. If not, please confirm by answering this question “No.”
- The amоunts of each of the donations, contributions, and grants and the dates you received them.
- How did you use these donations, contributions, and grants? Provide the details.
Id. at 19.
The Inspector General went on to list “seven questions identified as unnecessary by the [exempt organization] function.”
- Requests the names of donors.
- Requests a list of all issues that are important to the organization and asks that the organization indicate its position regarding such issues.
- Requests 1) the roles and activities of the audience and participants other than members in the activity and 2) the type of conversations and discussions members and participants had during the activity.
- Asks whether the officer, director, etc., has run or will run for public office.
- Requests the political affiliation of the officer, director, speakers, candidates supported, etc., or otherwise refers to the relationship with identified political party-related organizations.
- Requests information regarding employment, other than for the organization, including hours worked.
- Requests information regarding activities of another organization—not just the relationship of the other organization to the applicant.
Id. at 20.
2. Viewpoint Discrimination
To place in context our discussion of TIGTA‘s findings, we recall that under the
Just last term, we stated directly that, “in administering the tax code, the IRS may not discriminate on the basis of viewpoint....” Z St., 791 F.3d at 30. We
3. The Mootness Ruling
It being plain to the Inspector General, the district court, and this court that the IRS cannot defend its discriminatory conduct on the merits, the governing issue is now whethеr the controversy is moot. The district court held that it was; we conclude that it is not. The fundamental concept of mootness is quite straightforward. As applied in the context of injunctive litigation, if there remains no conduct to be enjoined, then normally there is no relief that need be granted, the case or controversy has ceased, and the jurisdiction of the court has expired under
Here, voluntary cessation has never occurred. The IRS has admitted to the Inspector General, to the district court, and to us that applications for exemption by some of appellant-plaintiffs have never to this day been processed. The IRS proudly boasts that “no more than ‘two’ applications for exemption remain pending with the IRS.” Appellee United States Br. in Linchpins of Liberty, at 14. Further, they claim, “the vast majority of the plaintiffs lack a personal stake in the outcome of the lawsuit....” Id. We would advise the IRS that a heavy burden of establishing mootness is not carried by proving that the case is nearly moot, or is moot as to a “vast majority” of the parties. Their heavy burden requires that they establish cessation, not near cessation.
The IRS offers a rather puzzling explanation for why the continued failure to afford proper processing to at least some of the victim applicants should not prevent a finding of cessation. That explanation is that the organizations whose applications were still pending “were involved in ‘litigation’ with the Justice Department....” Id. at 27. The Service‘s brief further illuminates this point with a footnote explaining that “[u]nder long-standing procedures, administrative action on an application for exemption is ordinarily suspended if the applicant files suit in court.” Id. at 28 n.4.
Parallel to Joseph Heller‘s catch, the IRS is telling the applicants in these cases that “we have been violating your rights and not properly processing your applications. You are entitled to have your applications processed. But if you ask for that processing by way of a lawsuit, then you can‘t have it.” We would advise the IRS: if you haven‘t ceased to violate the rights of the taxpayers, then there is no cessation. You have not carried your burden, be it heavy or light.
The IRS‘s only further attempt to justify the lack of cessation as to some of the applicants is to refer to its Catch-22 litigation rule as a “longstanding policy.” To this we would advise the IRS: if you haven‘t ceased discriminatory conduct, the fact that you have been failing to cease it for a long time does not create cessation. You still have not carried your burden.
The IRS further calls our attention to a later follow-up report from the Treasury Inspector General for Tax Administration. The IRS argues, with support in the text of the document, that this report evidences further progress toward alleviation of the past discriminatory actions in the processing of the targeted applications. That second report, dated March 27, 2015, is not a part of the record before us. Indeed, it did not exist until over five months after the issuance of the district court opinion under review. While the IRS may be correct that we could consider this extra-record evidence by granting judicial notice to the official document, that does not in itself make the document ripe for consideration in our review. As noted, it is not part of the record. As further evident from the date of the document and the date of the opinions under review, it was not before the district court.
As we noted above, a dismissal under
Even if we assumed there was voluntary cessation, we would still conclude that the government has not carried its burden to establish mootness because it has not demonstrated that “(1) there is no reasonable expectation that the conduct
The IRS‘s response to the Inspector General‘s Report further caused the Service to announce that it “specifically ... has suspended the use of BOLO lists in the application process for tax-exempt status....” Id. (internal punctuation omitted) (emphasis added). And most tellingly, the IRS announced that “[e]ffective immediately, the use of watch lists to identify cases or issues requiring heightened awareness is suspended until further notice....” Id. (emphasis added).
A violation of right that is “suspended until further notice” has not become the subject of voluntary cessation, with no reasonable expectation of resumption, so as to moot litigation against the violation of rights. Rather, it has at most advised the victim of the violation—“you‘re alright for now, but there may be another shoe falling.”
To this point, we, like the Inspector General, have focused on the BOLO segment of the targeting scheme. We note that the complaints alleged extensive discriminatory conduct including “delayed processing ... harassing, probing, and unconstitutional requests for additional information that ... required applicants to disclose, among other things, donor lists, direct and indirect communications with members of legislative bodies, Internet passwords and user names, copies of social media and other Internet postings, and even the political and charitable activities of family members.” Linchpins Sec. Am. Compl. at ¶ 2. While the Inspector General‘s Report references many of these discriminatory actions, neither it nor anything else presented by the government meets the heavy burden of establishing that “interim relief or events have completely and irrevocably eradicated the effects of the alleged violation.” Qassim, 466 F.3d at 1075 (citation omitted). While a court‘s inquiry into possible mootness in response to a
Finally, although not addressed by the district court, the void-for-vagueness challenges raised by appellants in Linchpins of Liberty, to
III. CONCLUSION
For the reasons set forth above, we affirm the district court‘s dismissal of appellants’ Bivens actions and statutory claims, but reverse the district court‘s dismissal of the actions for injunctive and declaratory relief and remand for further proceedings consistent with this opinion.
So ordered.