Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-91-01248/USCOURTS-ca10-91-01248-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OP APPEALS 

TENTH CIRCUIT 

HOWARDS. LONG, ) 

) 

Plaintiff-Appellant, ) 

) 

FIL B D 

United States Co~rt <?! Ap,c.i.b 

Tenth Ctrcm, 

AUG 171992 

ROBERT L. HOECKER 

Clerk 

v. ) No. 91-1248 

) 

UNITED STATES OF AMERICA, INTERNAL) 

REVENUE SERVICE, and COLORADO ) 

DEPARTMENT OF REVENUE, ) 

) 

Defendants•Appellees. ) 

APPEAL PROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OP COLORADO 

(D.C. RO. 89-P-1683) 

Charles F. Murray, Denver, Colorado, attorney for Appellant. 

Jonathan s. Cohen, Tax Division, Department of Justice, 

Washington, D.C. (Shirley D. Peterson, Assistant Attorney General; 

Gary R. Allen, Gayle P. Miller and Randolph L. Hutter, Attorneys, 

Tax Division, Department of Justice, Washington, D.C.; Michael J. 

Norton, United States Attorney, of counsel) for the federal 

Appellees. 

Thomas D. Fears, Assistant Attorney General, State of Colorado, 

Denver, Colorado, Gale A. Norton, Attorney General, Raymond T. 

Slaughter, Chief Deputy Attorney General, Timothy M. Tymkovich, 

Solicitor General, Maurice G. Knaizer, Deputy Attorney General, 

and Larry A. Williams, First Assistant Attorney General, filed an 

answer brief for Appellee Colorado Department of Revenue. 

Before ARDERSOR, EBEL, Circuit Judges and VAR SICKLE,* District 

Judge. 

* Honorable Bruce M. Van Sickle, Senior Judge, United States 

District Court for the District of North Dakota, sitting by 

designation. 

Appellate Case: 91-1248 Document: 010110276734 Date Filed: 08/17/1992 Page: 1
ANDERSON, Circuit Judge. 

This appeal requires us to determine whether the Internal 

Revenue Service (IRS) unlawfully disclosed tax information concerning Howard Long, in violation of 26 u.s.c. S 6103, by sending 

liens and levies to various financial institutions, county recorders, and the Social Security Administration in an effort to 

collect income taxes pursuant to a jeopardy assessment against 

Long. We must also determine whether the IRS unlawfully disclosed 

tax information concerning Long to the Colorado Department of 

Revenue (CDR), and, inter alia, whether the district court 

properly dismissed the CDR for lack of subject matter 

jurisdiction. 

We hold that no unlawful disclosures occurred; that the CDR 

was properly dismissed as a party; and that the other issues 

raised by Long are meritless. Accordingly, we affirm the judgment 

of the district court dismissing the CDR, and the summary judgment 

of the district court dismissing Long's action against the United 

States and the IRS (collectively, the federal appellees) for damages from wrongful disclosure pursuant to 26 U.S.C. § 7431. Our 

decision is based in part on grounds other than those relied upon 

by the district court, but supported by the record. Griess v. 

Colorado, 841 F.2d 1042, 1047 (10th Cir. 1988). 

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BACKGROUND 

On July 29, 1985, the IRS imposed a $138,961 jeopardy assessment against Long pursuant to 26 u.s.c. S 6861(a) 1 to collect 

unpaid taxes, interest, and penalties for the years 1978-1984. In 

an effort to collect the sums assessed, the IRS then caused 

federal tax lien notices to be recorded in various counties, and 

issued a series of notices of levy to the General Electric Pension 

Trust regarding Long's account, and to the Social Security Administration. In addition, between July 23, 1985, and December 31, 

1987, the IRS issued notices of levy to the Bank of Applewood in 

Wheatridge, Colorado and to several other banks. The IRS also 

disclosed information to the CDR regarding Long's federal tax 

liabilities. 

In September 1985, after Long failed to avail himself of his 

right to seek a review of the jeopardy assessment by administrative proceedings or suit in federal district court, the IRS issued 

to Long a statutory notice of deficiency in the amount of the 

jeopardy assessment. On December 19, 1985, Long filed a petition 

in the United States Tax Court challenging the proposed 

1 

If the Secretary believes that the assessment or 

collection of a deficiency, as defined in section 6211, 

will be jeopardized by delay, he shall, notwithstanding 

the provisions of section 6213(a), immediately assess 

such deficiency (together with all interest, additional 

amounts, and additions to the tax provided for by law), 

and notice and demand shall be made by the Secretary for 

the payment thereof. 

6 u.s.c. § 6861(a). 

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deficiency. After Long failed to comply with orders of the Tax 

Court, judgment was entered against him in the full amount of the 

deficiency and his petition was dismissed. Long appealed that 

decision to this court, then voluntarily dismissed the appeal, and 

the Tax Court judgment became final. 

Long filed this action in the district court in 1989, asserting multiple causes of action against the federal defendants and 

the CDR. All were subsequently dismissed. The only cause of 

action pursued by Long in this appeal is his claim for damages 

2 against all defendants, pursuant to 26 U.S.C. S 7431, for unlawfully disclosing information about his taxes in violation of 26 

u.s.c. S 6103. 3 

2 

If an officer or employee of the United States 

knowingly, or by reason of negligence, discloses any 

return or return information with respect to a taxpayer 

in violation of any provision of S 6103, such taxpayer 

may bring a civil action for damages against the United 

States in a district court of the United States. 

26 U.S.C. S 743l(a)(l). 

3 

S 6103 . Confidentiality and disclosure of returns 

and return information 

(a) General rule 

Returns and return information shall be confidential, and except as authorized by this title--

(1) no officer or employee of the United 

States, 

(2) no officer or employee of any State, any 

local child support enforcement agency, or any 

local agency administering a program listed in 

subsection (1)(7)(D) who has or had access to 

returns or return information under this section, 

and 

[footnote continued] 

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Long's unauthorized disclosure claims fall into three 

categories. First, he contends that the liens and levies were 

unauthorized disclosures because the jeopardy assessment was 

defective. Next, he asserts that the IRS improperly divulged his 

tax information to the CDR because the requirements of S 6103(d) 

permitting such an exchange were not followed. Finally, he argues 

that the levies issued to the Bank of Applewood were unnecessary, 

and therefore unauthorized, because Long had no account or money 

at the bank, and the bank notified the IRS of that fact. Br. of 

Appellant at 2. 

The district court dismissed the CDR for lack of subject 

matter jurisdiction. After discovery, the court granted the 

federal appellee's motion for summary judgment on the unauthorized 

[footnote continued] 

(3) no other person (or officer or employee 

thereof) who has or had access to returns or return 

information under subsection (e)(l)(D)(iii), 

paragraph (2) or (4)(B) of subsection (m), or 

subsection (n), 

shall disclose any return or return information obtained 

by him in any manner in connection with his service as 

such an officer or an employee or otherwise or under the 

provisions of this section. For purposes of this subsection, the term "officer or employee" includes a 

former officer or employee. 

26 u.s.c. § 6103(a). 

"Return information" is a term of art that includes, among 

other things, the taxpayer's identity, the amount of his income, 

the amount of any deficiencies, whether the taxpayer's return was, 

will be, or is being examined or subject to other investigation, 

and any information the IRS obtains in respect to a return. See 

26 U.S.C. § 6103(b)(2)(A). 

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disclosure claims. It ruled: that the provisions of§ 6103(d) 

were satisfied, permitting the disclosures to the CDR; that no 

challenges to the liens and levies could be entertained because 

the Tax Court proceedings were~ judicata; and that the levies 

issued to the Bank of Applewood were also authorized under§ 6103. 

Finally, the district court denied Long's motion for leave to 

amend his complaint. 

Long contests those rulings and reasserts his arguments on 

appeal. We review de novo the district court's dismissal of the 

CDR for lack of subject matter jurisdiction under Fed. R. Civ. P. 

12(b)(l). Redmon, ex rel. Redmon v. United States, 934 F.2d 1151, 

1155 (10th Cir. 1991). We review the district court's decision to 

grant summary judgment de novo. Bacchus Indus., Inc. v. Arvin 

Indus., Inc., 939 F.2d 887, 891 (10th Cir. 1991). Summary judgment is appropriate when the record shows "that there is no genuine issue as to any material fact and that the moving party is 

entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). 

DISCUSSION 

I. DISMISSAL OF THE CDR FOR LACK OF JURISDICTION 

Long sued the CDR pursuant to 26 U.S.C. § 743l(a)(2) for the 

receipt and alleged unlawful disclosure of information about Long 

which the CDR obtained from the IRS. Section 743l(a)(2) provides: 

(2) Disclosure by a person who is not an employee of 

United States. -- If any person who is not an officer or 

employee of the United States knowingly, or by reason of 

negligence, discloses any return or return information 

with respect to a taxpayer in violation of any provision 

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of section 6103, such taxpayer may bring a civil action 

for damages against such person in a district court of 

the United States. 

26 u.s.c. § 743l(a)(2) (emphasis added). 

The district court held that the Anti-Injunction Act, 28 

U.S.C. § 1341, divested the court of jurisdiction, and dismissed 

the CDR as a party. Long argues that the Anti-Injunction Act does 

not apply because there is no "plain, speedy and efficient remedy" 

for wrongful disclosure in the state court. It is unnecessary for 

us to resolve that contention since S 7431(a)(2) fails to confer 

any right of action against a state agency. First, SS 7431(a)(2) 

and 6103(a) punish the disclosure, not the receipt or use, of 

return or return information under S 6103. Second, the statutes 

impose liability on "persons," "officers," or "employees" who 

disclose information "in connection with [their] service as such 

an officer or employee." Those terms do not contemplate liability 

against a state agency.

4 Accordingly, the dismissal of Long's 

suit against the CDR, a state agency, was proper.

5 

4 Administrative law distinguishes between "persons" and 

"agencies." See, ~, 5 u.s.c. SS 551, 552a, 701. Similarly, 26 

u.s.c. § 7701 defines "person:" "to mean and include an 

individual, a trust, estate, partnership, association, company, 

corporation." 26 u.s.c. § 7701(a) (1). 

or 

5 The CDR has filed a motion to dismiss Long's appeal as untimely. It claims that the Order of Dec. 4, 1989 dismissing it as 

a party was a final order appealable at that time under 28 u.s.c. 

S 1291. Long's appeal as to all parties was filed July 5, 1991, 

following the May 9, 1991, judgment of the district court dismissing the federal appellees. We deny. the CDR's motion to dismiss 

Long's appeal. Finality does not attach to an order that 

dismisses some but not all defendants in an action. See Perington 

Wholesale, Inc. v. Burger King Corp., 631 F.2d 1369, 1370 n.2 

(10th Cir. 1979); 15A Wright, Miller & Cooper, Federal Practice 

and Procedure: Jurisdiction 2d § 3914.7, at 549-51. 

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II. ALLEGED UNAUTHORIZED DISCLOSURES TO THE CDR 

On or about August 25, 1985, w. E. Zimmerman, an IRS officer, 

conveyed tax information about Long to the CDR. Additionally, in 

January, 1989, the IRS provided the CDR with three Forms 5278 

containing tax information regarding Long. Through discovery, 

other IRS documents relating to Long were found to be in the 

possession of the CDR. Long contends that all of these documents 

constituted actionable unauthorized disclosures. 

Section 6103(d)(l) permits disclosures by the IRS to state 

agencies under certain conditions. That section provides, in 

pertinent part: 

Returns and return information •.• shall be open to 

inspection by, or disclosure to, any State agency ... 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 •••• 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. 

26 U.S.C. S 6103(d)(l) (emphasis added). 

In order to satisfy the "written request" and other provisions of S 6103(d), the IRS has entered into Agreements on 

Coordination of Tax Administration ("Agreement on Coordination") 

with each of the 50 states and the District of Columbia. The 

Agreement on Coordination between the CDR and the IRS is standard 

in form, nineteen pages in length, App. of Appellant, Vol. II at 

334-353, and provides, in part, as follows: 

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3.2 This agreement constitutes the requisite 

authorization pursuant to§ 6103(d)(l) of the Code for 

IRS to disclose to, and permit inspection by, an agency 

representative of Federal returns and Federal return 

information relating to taxes imposed by Chapter(s) 1, 

2, 6, 11, 12, 24, 31, 32, and 36 Subchapter D of the 

Code. 

Id. at 338. 

Additionally, the Agreement on Coordination, consistent 

with other such agreements between the states and the IRS, 

provides that it "may be supplemented by an Implementing 

Agreement, prescribing the nature, quantity and mechanics for 

the continuous exchange of tax information ••. II Id. at 

334. There was such an Implementation Agreement between the 

CDR and the IRS. Id. at 348-362. Subparagraphs E. and F. of 

that agreement are as follows: 

E. Tax Year Terminations and Jeopardy Assessments 

1. The Denver district and the Agency agree to 

exchange information involving the seizure of 

currency and other disposable assets by other 

Federal, state, and local law enforcement 

agencies. 

2. The Denver District will provide the Agency 

copies of examination workpapers and reports 

for tax year terminations and jeopardy 

assessments made pursuant to Sections 6851 and 

6861 of the Internal Revenue Code. The shared 

information will be limited to individual 

income tax matters involving -- (illegible) 

in the custody of other Federal, state, and 

local agencies. 

3. The Agency's Special Agent listed in attached 

B will be contacted by telephone when termination assessment or other agency seizure 

information is available. The Special Agent 

personally will pick up the information or 

will dispatch a messenger for pick-up. The 

information will be transmitted in a doublesealed envelope to be opened by the Special 

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Agent only. Form 3210, Document Transmittal, 

will be used to acknowledge receipt of the 

information. The yellow copy will be returned 

to the Denver District by the Special Agent 

after verification of the shipment. 

4. The Agency will reciprocate by furnishing the 

Denver District like information. The 

District Disclosure Officer listed in attachment A will be contacted by telephone and a 

Special Agent from the Criminal Investigation 

Division will pick up the information. 

5. There will be no charge for information 

furnished pursuant to the program. 

F. Disclosure of Possible Violations of State 

Administration Statutes 

1. The Agency will be contacted when the Denver 

District has a Federal return and/or return 

information which will not be transmitted to 

the Agency under other provisions of this 

agreement, but may be evidence of an 

intentional or inadvertent understatement or 

violation of any State tax described in 

Section 3 of the agreement on Coordination of 

Tax Administration. 

2. The District Disclosure Officer shall, if the 

understatement of tax potentially exceeds any 

amount or if the understatement or violation 

is potentially a criminal tax violation, 

contact the Agency's Deputy Director listed in 

attachment B, and describe the return and/or 

return information (without disclosing 

identifying information) in sufficient detail 

to ascertain the Agency's need and potential 

use of the return or return information. 

3. If, in the judgment of the District Disclosure 

Officer, the Agency has a need and use of the 

return and/or return information, he/she shall 

then transmit the return and/or return 

information to the Agency. The information 

will be transmitted by double-sealed mailing 

to the Deputy Director. 

Id. at 354-355. 

Long argues that the Agreement on Coordination and the 

Implementation Agreement do not constitute the written request for 

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information required by S 6103(d), since all such requests, 

according to Long, must be individualized. Alternatively, he 

argues that if they do satisfy the written request requirement of 

the statute, the terms of the Implementation Agreement were not 

followed. Br. of Appellant at 18. We disagree. The two agreements contain substantial safeguards, consistent with the purpose 

of the statute, while permitting the affected tax agencies to 

function effectively. 

We hold that the Agreement on Coordination, together with the 

Implementation Agreement referred to above, satisfy the written 

request requirement of§ 6103(d). See Smith v. United States, 

Nos. 90-1011, 90-1760, 90-1857 and 90-2771, 1992 U.S. App. LEXIS 

10872 (7th Cir. May 15, 1992). We also hold that the disclosures 

by the IRS to the CDR in this case were in accordance with the 

Implementation Agreement. In this regard, we note that there is 

some confusion in the briefs of the parties as to which of the 

various provisions of the Implementation Agreement applied in this 

case. Long concentrates on sections IV(A) and V of the agreement, 

as well as section IV(F). Br. of Appellant at 20-21, while the 

federal appellees rest their argument on the provisions of section 

IV(F). Br. of Appellees at 44-47. In the latter regard, the 

federal appellees reflect the August 8, 1985, communication from 

IRS officer Zimmerman to the CDR, stating, in part: 

I have enclosed copies of two potential violations of 

C.R.S. Title 39 we discussed by telephone on August 8, 

1985. The information item is disclosed to you in 

accordance with section IV.F of the Implementation 

Agreement between your agency and the Internal Revenue 

Service. 

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App. of Appellant, Vol. II at 363, Ex. 10. A review of 

Zimmerman's deposition testimony, however, discloses that section 

IV(E) of the agreement also applied. 

Zimmerman testified that all the disclosures he made to the 

CDR on behalf of the IRS were done pursuant to section IV(E) of 

the Implementation Agreement, dealing with jeopardy assessments. 

App. Vol. II at 589-90. 6 In his briefs, Long raises no objection 

to disclosures made pursuant to that section. In any event, our 

6 Zimmerman engaged in the following colloquy with Long's 

counsel: 

A: On a routine process case, this one though fell 

outside of that once they made the jeopardy determination. Then I brought it into the implementation agreement under the section I referred to. 

Q: Under the jeopardy -- the fact that there is a 

jeopardy assessment? 

A: Yes. 

Q: And because there was a jeopardy assessment, 

meaning somebody determined that he may try and dispose 

of assets so they wouldn't be available to the IRS? 

A: Yes, sir, and the state may want to make that 

same determination to protect state tax administration 

revenues. 

Q: Normally speaking, if there is not a jeopardy 

assessment, the process wouldn't be -- the information 

wouldn't be disclosed until the process was complete; is 

that .•. 

A: Yes, sir. 

Q: But because there was a jeopardy assessment, 

then the information is disclosed right away? 

A: Yes. 

App. Vol. II at 589-90 (emphasis added). 

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review of the record reveals sufficient compliance with the 

provisions of the Implementation Agreement. Accordingly, we 

conclude that the challenged disclosures made by the IRS to the 

CDR did not violate the provi-sions of S 6103 because they were 

specifically exempt under S 6103(d). 

III. ALLEGED WRONGFUL DISCLOSURE: LIENS AND LEVIES 

It is undisputed that§ 6103(k)(6) authorizes an IRS employee 

to disclose tax return information in the issuance of liens and 

levies. Thus, the general rule is that liens and levies do not 

constitute unauthorized disclosures under S 6103. Section 

6103(k)(6), as is pertinent here, provides: 

An internal revenue officers or employee may, in 

connection with his official duties relating to any 

audit, collection activity, or civil or criminal tax 

investigation or any other offense under the internal 

revenue laws, disclose return information to the extent 

that such disclosure is necessary in obtaining information, which is not otherwise reasonably available ... 

with respect to the enforcement of any other provisions 

of this title. Such disclosures shall be made only in 

such situations and under such conditions as the 

Secretary may prescribe by regulation. 

26 U.S.C. § 6103(k)(6). 

Also, Treasury Regulations provide, inter alia, specific 

authority to "apply the provisions of the Code relating to 

establishment of liens against •.. assets [in which the taxpayer 

has an interest], or levy on, or seizure, or sale of, the assets 

to satisfy any such [tax] liability." Treas. Reg. 

§ 301.6103(k)(6)-(l)(b)(6) 

To avoid this exception, Long offers a multiple-step 

argument. He contends that: in their motion for summary judgment, 

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the federal appellees offered improper evidence of (1) the 

jeopardy assessment against him and (2) notice to him; thus, there 

being no cognizable proof of a jeopardy assessment, it must be 

assumed that the assessment was never made, or was procedurally 

defective; thus, the liens and levies were unauthorized; thus, the 

exception under S 6103(k)(6) cannot apply. 7 Br. of Appellant at 

28, Reply Br. at 10. 

In support of their motion for summary judgment, the federal 

appellees submitted a certified copy of IRS Form 4340, 

"Certificate of Assessments and Payments, 118 which, among other 

things, disclosed the fact, date, and amount of the jeopardy 

assessment against Long. 

Long directs a multitude of arguments against the propriety 

of Form 4340, contending that the district court could not accept 

it as evidence of a procedurally proper jeopardy assessment 

against him. He asserts that Form 4340 is inadmissable hearsay; 

that it violates internal IRS directives that it be used only for 

7 The district court rejected this argument on res judicata 

grounds, holding that challenges to the procedural validity of the 

jeopardy assessment could have been made by Long in the Tax Court 

in connection with his petition for a redetermination of the deficiency asserted against him. However, we are not persuaded that 

Long's procedural defect arguments are barred by the doctrine of 

res judicata, although we agree with the conclusion that he has 

failed to make out a cause of action for wrongful disclosure with 

respect to the liens and levies issued by the IRS. 

8 Form 4340 is a transcript that specifies that name of the 

taxpayer, the taxpayer's address, social security number, type 

amount of tax involved, and the date of each assessment. The 

document is certified -- in this case, by the director of the 

Ogden Service Center. 

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and 

Appellate Case: 91-1248 Document: 010110276734 Date Filed: 08/17/1992 Page: 14
non-automated data processing accounts; that it does not 

correspond to the exhibit included in the IRS manual; that the 

District Director of the Ogden Service Center was ineligible to 

certify the document since his authority relates only to documents 

under his custody and control and the custodian of the computer is 

the District Director of the national computer center in 

Martinsburg, West Virginia; that it is at best secondary evidence; 

it summarizes other records maintained by the IRS; and that the 

IRS claims the document represents something that it is not. Br. 

of Appellant at 33-40. 

We reject all of these arguments. For purposes of granting 

summary judgment, a Certificate of Assessments and Payments is 

sufficient evidence that an assessment was made in the manner 

prescribed by§ 6203 and Treas. Reg. 301.6203-1. See James v. 

United States, No. 91-8056, slip op. at 11 (10th Cir. July 23, 

1992); Hughes v. United States, 953 F.2d 531, 539-40 (9th Cir. 

1992). See also United States v. Chila, 871 F.2d 1015, 1017-18 

(11th Cir.), cert. denied, 493 U.S. 975 (1989); United States v. 

Nuttall, 713 F. Supp. 132, 135 (D. Del.) (citing cases) (Form 4340 

establishes government's prima facie case that assessment valid 

for purposes of summary judgment), aff'd, 893 F.2d 1332 (3rd Cir. 

1989); United States v. Dixon, 672 F. Supp. 503, 505-06 (M.D. Ala. 

1987) (Certificate of Assessments and Payments presumptive proof 

of valid assessment in absence of contrary evidence in motion for 

summary judgment), aff'd, 849 F.2d 1478 (11th Cir. 1988); United 

States v. Miller, 318 F.2d 637, 639 (7th Cir. 1963) (Certificate 

of Assessments and Payments demonstrates that assessment made in 

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manner prescribed and proper for district court to consider copy 

in ruling on motion for summary judgment); Gentry v. United 

States, 962 F.2d 555, 557 (6th Cir. 1992) (Certificate of Assessments and Payments sufficient- proof of adequacy and propriety of 

notices and assessments absent evidence to the contrary). 9 

Long acknowledges that he received notice of the assessment, 

but he contests the general validity of that notice. Appellant's 

Br. at 28. Specifically, he contends that he did not receive the 

exact forms listed in the IRS Manual. Reply Br. at 10. The IRS 

must "give notice to each person liable for the unpaid tax, 

stating the amount and demanding payment thereof." 26 U.S.C. 

§ 6303(a). Not only does the IRS Manual not confer on the taxpayer a substantive right to receive a particular form, but also 

"[t]he form on which a notice of assessment and demand for payment 

is made is irrelevant as long as it provides the taxpayer with all 

the information required under 26 u.s.c. S 6303(a)." Elias v. 

Connett, 908 F.2d 521, 525 (9th Cir. 1990). Additionally, proper 

notice and demand can be established through a series of documents, and need not be conveyed by one, and only one communication 

9 Long also argues that even if a presumption of correctness 

attaches to the Form 4340, that presumption should dissolve if the 

taxpayer objects to its admission into evidence. Reply Br. at 

22. However, the taxpayer has the burden of going forward with 

evidence and the burden of persuasion to overcome the presumption 

attaching to the Forms 4340. Gentry v. United States, 962 F.2d 

555, 558 (6th Cir. 1992); Psaty v. United States, 442 F.2d 1154, 

1160 (3rd Cir. 1971); Higginbotham v. United States, 556 F.2d 

1173, 1175 (4th Cir. 1977) (taxpayer has burden of showing erroneous assessment); United States v. Nuttall, 713 F. Supp. 132, 135 

(D. Del.), aff'd, 893 F.2d 1332 (3rd Cir. 1989). 

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with the taxpayer. See Hughes, 953 F.2d at 536. We are satisfied 

that Long received proper notice under the statute. 

Because Long has failed to establish any genuine issue with 

respect to the regularity of the jeopardy assessment against him 

in 1985, his arguments that liens and levies issued pursuant to 

that assessment were not permitted by§ 6103(k)(6) fail . We hold 

that no unlawful disclosure occurred. Our disposition of this 

issue makes it unnecessary to address other arguments raised by 

the parties on the subject. 

IV. DISCLOSURES TO BANK OF APPLEWOOD 

Long separately argues that monthly levies to the Bank of 

Applewood ("Bank") following notice to the IRS that Long had no 

account or money at the Bank were unnecessary and, therefore, 

unauthorized disclosures falling outside the exception provided in 

S 6103(k)(6). The facts underlying Long's argument are as 

follows: In 1984, Long sold property to George and Nadine Jarvis, 

who executed a promissory note to Long. On February 20, 1985, 

Long notified the Jarvises that he was donating the balance due on 

the note to the Faith Baptist Church of Louisville, Nebraska, and 

executed an assignment in favor of the Church in March , 1985. 

Long and the Jarvises established an escrow account at the Bank to 

receive the funds which, subsequent to the assignment, the Bank 

was expected to pay over to the Church. Pursuant to the jeopardy 

assessment against Long, the IRS issued monthly levies to the Bank 

from July 23, 1985, to September 15, 1987. The Bank returned the 

first levy with the notation "Escrow Acct only - No Funds." App. 

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of Appellant, Vol. II at 437. On or about October 7, 1985, the 

IRS sent a collection summons to the Bank seeking all the records 

and correspondence surrounding the escrow agreement, and again the 

Bank responded. Following the issue of the levies, the Bank began 

paying over the money assigned to the Church to the IRS. 

In July, 1987, the pastor of the Church filed suit against 

the Bank alleging that the Bank had improperly paid over to the 

IRS money rightfully belonging to the Church. The Church 

prevailed in that suit, and judgment was entered against the Bank 

in May 1989. 

Long asserts that, under the circumstances, the IRS knew or 

reasonably should have known that he had no right, title or 

interest to the escrow account at the bank; therefore, he 

concludes that the IRS was not authorized to issue levies to the 

Bank disclosing tax information about him. Br. of Appellant at 

42, 45. The basic premise of Long's argument is that he in fact 

had no interest in the property represented by the escrow account 

at the Bank. While that may be so for purposes of the Church and 

the Bank, inter~, the Bank's unilateral notation in 1985 that 

Long had no interest in the escrow account could in no way bind 

the IRS. The IRS is entitled to scrutinize and challenge 

transfers of assets by individuals who owe taxes to the federal 

government. And, as we have previously indicated, the jeopardy 

assessment against Long was properly made and fully in effect at 

the time the levies in question were issued. Whether or not Long 

in fact had funds at the Bank for purposes of the federal tax 

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laws, or had unlawfully transferred assets to defeat the collection of taxes owed, continued to be open questions, especially in 

the face of a jeopardy assessment stating that Long was attempting 

to conceal assets by, inter alia, putting his property in the 

names of nominees. 

As discussed above, the law permits disclosures of tax return 

information when necessary to "establish or verify the financial 

status or financial condition and location of the taxpayer against 

whom collection action is or may be directed, [and] to locate 

assets in which the taxpayer has an interest. II Treas. Reg. 

S 301.6103(k)(6)-l(b)(6). We hold, therefore, that the levies to 

the Bank were legitimate disclosures made in the course of 

permitted collection or investigation activities, and did not 

violate the nondisclosure provisions of S 6103. 

V. DENIAL OF MOTION TO AMEND COMPLAINT 

Long's final ground of appeal is that the district court 

erred in denying his motion to amend his complaint under Fed. R. 

Civ. P. 15(a). Long contends that the amendment was necessary to 

present additional information regarding his claims of unauthorized disclosures of return information. Appellant's Br. at 47. 

The district court denied the motion, without explanation, in a 

Minute Order of April 1, 1991. Appellant's App. Vol. II at 554. 

The grant or denial of leave to amend a complaint is within 

the discretion of the trial court, and we review that determination for an abuse of discretion. Stichting Mayflower Recreational 

Fonds v. Newpark Resources, Inc., 917 F.2d 1239, 1249 (10th Cir. 

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1990). As a general rule, leave to amend a complaint under Fed. 

R. Civ. P. lS(a) "shall be freely given when justice so requires" 

and the district court must give a reason for a refusal. Federal 

Ins. Co. v. Gates Learjet Corp., 823 F.2d 383, 387 (10th Cir. 

1987). However, the failure to state a reason can be harmless 

error where the reason is apparent, as it is here. See Drake v. 

City of Fort Collins, 927 F.2d 1156, 1163 (10th Cir. 1991) 

(apparent that amendment unable to cure defect in pleadings). 

CONCLUSION 

For the reasons stated above the judgments of the district 

court dismissing the Colorado Department of Revenue, and dismissing Long's action against the United States and the Internal 

Revenue Service, are AFFIRMED. The motion by the Colorado Department of Revenue to dismiss the appeal against it on jurisdictional 

grounds is DENIED. 

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