F I L E D

United States Court of Appeals

Tenth Circuit

JAN 28 1999

PATRICK FISHER

Clerk

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

 

JERRY V. RICE and JVR

ACCOUNTING, INC., formerly known as

Rice and Associates, C.P.A., P.C. ,

Plaintiffs-Appellants,

v. No. 97-2276

UNITED STATES OF AMERICA,

INTERNAL REVENUE SERVICE,

BERNARD BARELA, GEORGE LUNA,

MARGARET RICHARDSON, and

LAURA CRIEL,

Defendants-Appellees.

 

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW MEXICO

(D.C. No. CIV-96-78-JC)

 

Jerry V. Rice, pro se.

Stephen McIlwain, Albuquerque, New Mexico, for Plaintiff-Appellant JVR

Accounting, Inc.

Jonathan S. Cohen (Karen D. Utiger with him on the brief), Tax Division, Department of

Justice, Washington, D.C., for Defendants-Appellees.

 

Before SEYMOUR, Chief Judge, BALDOCK, and BRORBY, Circuit Judges.

 

BALDOCK, Circuit Judge.
1

 The district court later reduced Rice’s sentence to twenty-four months

imprisonment. See United States v. Rice, 52 F.3d 843 (10th Cir. 1995), after remand, No.

95-2174, 1996 WL 44452 (10th Cir. 1996) (unpublished).

2

 

In March 1994, a jury convicted Plaintiff Jerry V. Rice on two counts of filing a

false tax refund claim and three counts of making and subscribing a false tax return in

respective violation of 18 U.S.C. § 287 and 26 U.S.C. § 7206(1). The district court

imposed a thirty-month term of imprisonment on Rice, ordered him to pay restitution, and

fined him $20,000.1 Consistent with its policy of publicizing successful tax prosecutions,

the Internal Revenue Service (IRS) issued two press releases regarding the criminal

proceedings against Rice. The first release, issued March 2, 1994, reported Rice’s

conviction. See Addendum A. The second release, issued June 13, 1994, reported Rice’s

sentence. See Addendum B.

Rice, a certified public accountant and lawyer, subsequently filed a pro se civil

action against the United States, the IRS, and those officials responsible for issuing

the press releases, alleging that Defendants wrongfully disclosed confidential tax

information about him. The district court dismissed all but three of Rice’s claims

pursuant to Fed. R. Civ. P. 12. Remaining were (1) a claim against the United States

arising under the Internal Revenue Code, 26 U.S.C. §§ 6103 & 7431; (2) a claim against

the United States arising under the Federal Tort Claims Act, 28 U.S.C. §§ 2671-80; and
2

 Rice’s accounting firm, JVR Accounting, Inc., (formerly known as Rice and

Associates, C.P.A., P.C.), filed a separate complaint seeking damages from the United

States and IRS under 26 U.S.C. §§ 6103 & 7431, for wrongful disclosure of confidential

tax information. Because the factual basis for JVR’s complaint was identical to the

factual basis for Rice’s complaint, the district court consolidated the complaints. All

references to Defendant Rice in our opinion may be deemed to include JVR Accounting,

Inc.

3

(3) a claim against the IRS arising under the Federal Privacy Act, 5 U.S.C. § 552a.2

Following discovery, the United States and IRS moved for summary judgment

pursuant to Fed. R. Civ. P. 56 on the remainder of Rice’s claims. In a thorough

memorandum opinion, the district court concluded that no genuine issue of material fact

existed as to whether the two press releases disclosed confidential tax information about

Rice. The court found that all the information contained in the press releases came from

public documents and proceedings. Specifically, the court found that to prepare the

releases, an IRS public affairs officer had reviewed the indictment against Rice, attended

his trial and sentencing, and researched the possible criminal penalties for his crimes.

These the court found were the only sources for the information contained in the press

releases. Accordingly, the district court held that Rice had no claim against the United

States or the IRS for violating the confidentiality provisions of the Internal Revenue

Code. The court further determined that because the IRS had not released confidential

taxpayer information about Rice from its records, but obtained the information for the

releases from public sources, he similarly had no claim against Defendants under the

Federal Torts Claim Act or the Federal Privacy Act.
4

On appeal, Rice raises two issues worthy of review. First, Rice contends that

because the information contained in the press releases was, as a matter of law,

confidential tax return information, Defendants necessarily violated the confidentiality

provisions of the code by issuing the releases. In the alternative, Rice contends that

genuine issues of material fact precluding summary judgment exist as to the source of the

information contained in the press releases. Our jurisdiction arises under 28 U.S.C.

§ 1291. We review a grant of summary judgment de novo employing the same legal

principles as the district court. Kane v. Capital Guardian Trust Co., 145 F.3d 1218, 1221

(10th Cir. 1998). Applying these principles, we affirm.

I.

Section 6103(a) of the Internal Revenue Code prohibits disclosure of tax return

information unless expressly authorized by an exception. See generally Baskin v. United

States, 135 F.3d 338, 340-42 (5th Cir. 1998) (discussing history of disclosure

prohibition). Section 6103(a) provides generally that “no officer or employee of the

United States, . . . 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

under the provisions of this section.” 26 U.S.C. § 6103(a)(1). Subsection (b) defines

“return information” as “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
5

taxpayer’s return was, is being, or will be examined or subject to other investigation or

processing, . . . .” Id. § 6103(b)(2)(A). One of the numerous exceptions to § 6103's

general prohibition allows disclosure of “return information” in federal court where “the

taxpayer is a party to the proceedings.” Id. § 6103(h)(4)(A).

Section 7431(a) of the code in turn provides a cause of action to an aggrieved

taxpayer for a violation of § 6103: “If any 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 section 6103, such taxpayer may

bring a civil action for damages against the United States . . . .” 26 U.S.C. § 7431(a)(1). 

Subsection (b) of § 7431 provides an exception to liability where the officer’s or

employee’s disclosure “results from a good faith, but erroneous interpretation of section

6103.” Id. § 7431(b)(1).

II.

Rice complains that the press releases contain “return information” as defined in

§ 6103(b) because they identify him, his accounting firm, and the fact that he unlawfully

claimed tax refunds for the years 1988 and 1989, based on false withholdings. Regardless

of the source of the information contained in the releases, Rice claims that the

government’s dissemination of such information without his authorization violated

§ 6103(a). In other words, Rice asks us to hold that an IRS press release which contains

information about a taxpayer’s criminal tax liability necessarily constitutes an
6

unauthorized disclosure of tax return information, exposing the government to liability

under § 7431. We decline to do so.

The Seventh Circuit rejected an identical argument in Thomas v. United States,

890 F.2d 18 (7th Cir. 1989). In that case, the taxpayer claimed a violation of § 6103,

although he admitted that the immediate source of the information contained in an IRS

press release about him was a tax court opinion. The court acknowledged that the

disclosed information may have come indirectly from the taxpayer’s tax return.

Notwithstanding, the court stated:

Nothing in the background of the statute suggests so broad a scope as

Thomas is urging and so direct a collision with the policies that animate the

free-speech clause of the First Amendment. . . . [W]e believe that the

definition of return information comes into play only when the immediate

source of the information is a return, or some internal document based on a

return, as these terms are defined in § 6103(b)(2), and not when the

immediate source is a public document lawfully prepared by an agency that

is separate from the Internal Revenue Service and has lawful access to tax

returns.

Thomas, 890 F.2d at 21. We adopt this reasoning. If, as the government claims, the two

press releases about which Rice complains were based solely on public documents and

proceedings, i.e. the IRS public affairs officer’s review of the indictment, her attendance

at trial and sentencing, and her research into the possible criminal penalties, then Rice’s

assertion that the government violated § 6103 by issuing the press releases must fail.

Despite Rice’s assertion, our decision in Rodgers v. Hyatt, 697 F.2d 899 (10th Cir.

1983), is not to the contrary. In Rodgers, we rejected the government’s argument that the
7

disclosure of return information in a public record bars a taxpayer from complaining

about any subsequent disclosure of such information. Accord Chandler v. United States,

887 F.2d 1397, 1398 (10th Cir. 1989); Johnson v. Sawyer, 120 F.3d 1307, 1317-19 (5th

Cir. 1997); Mallas v. United States, 993 F.2d 1111, 1120-21 (4th Cir. 1993). Contra

Rowley v. United States, 76 F.3d 796, 799-802 (6th Cir. 1996); Schrambling

Accountancy Corp. v. United States, 937 F.2d 1485, 1489-90 (9th Cir. 1991). Instead, we

held that an IRS agent’s prior “in court” testimony at a hearing to enforce an IRS

summons did not alone justify the agent’s subsequent out of court statement to a third

party regarding an ongoing investigation of the taxpayer. Rodgers, 697 F.2d at 904-06. 

We upheld the jury’s verdict in favor of the taxpayer and its implicit finding that the agent

had not obtained his information from the court hearing–a public proceeding, but rather

had obtained it from internal documents based on the taxpayer’s tax return. Thus, under

both Thomas and Rodgers, whether information about a taxpayer may be classified as

“return information” invoking application of § 6103 turns on the immediate source of the

information.

III.

Rice next argues that genuine issues of material fact regarding the source of the

information contained in the press releases preclude summary judgment in favor of the

government. As movant, the government bears the initial burden under Fed. R. Civ. P. 56

to present evidence showing the absence of a genuine issue of material fact as to the
3

 In addition to dissemination of the press releases, Rice also complains that an

IRS appeals officer phoned one of Rice’s clients in violation of 26 U.S.C. §§ 6103 &

7431, to inform him that Rice could no longer represent the client before the IRS due to

Rice’s tax crime convictions. Like the district court, our review of the record reveals that

the appeals officer gathered his information from the publicity surrounding Rice’s trial

and sentencing, rather than from internal IRS documents containing “return information.”

8

source of the information contained in the press releases. See Celotex Corp. v. Catrett,

477 U.S. 317, 323 (1986). The burden then shifts to Rice to present evidence showing

that a genuine issue of material fact exists as to the source of the information. See Wilson

v. Meeks, 52 F.3d 1547, 1552 (10th Cir. 1995). To carry his burden, Rice must present

more than a scintilla of evidence. He must set forth evidence sufficient for a reasonable

jury to return a verdict in his favor. See Hom v. Squire, 81 F.3d 969, 973-74 (10th Cir.

1996).

Our review of the record reveals that Rice has failed to carry his burden. Rice has

not offered evidence upon which a reasonable jury could conclude that the IRS press

releases contained “return information” exposing the government to liability under

§ 7431. As the district court properly concluded, Rice did not present sufficient evidence

to counter the government’s showing that the information contained in the press releases

was based solely on public documents and proceedings.3

Both in her affidavit and during her deposition, the IRS public affairs officer

assigned to cover Rice’s prosecution stated that she learned about the charges against

Rice either from the criminal investigation division of the IRS or the United States
9

Attorney’s office. She further stated that she procured a copy of the indictment and

attended Rice’s entire trial from February 28 through March 2, 1994. After Rice’s trial,

she researched the possible penalties for Rice’s crimes and attended his sentencing

hearing on June 13, 1994. She repeatedly stated that she attended Rice’s entire trial and

sentencing. During both the trial and sentencing, the public affairs officer took extensive

notes which are a part of the record and reflect the information contained in the releases.

The record simply belies Rice’s claim that the public affairs officer used “return

information” in preparing the press releases. Rice submitted an affidavit stating he did

not believe the public affairs officer attended his entire trial. He also points out that

during the initial stages of discovery, the government, in answering an interrogatory,

indicated that the public affairs officer attended Rice’s trial on February 28 and March 1.

Setting aside for the moment the government’s overwhelming evidence to the contrary,

this evidence may suggest that the public affairs officer did not attend Rice’s entire trial.

But that in itself does not necessarily lead to the conclusion that the officer obtained the

information for the press releases from an impermissible source. To support a jury

verdict, evidence must be based on more than mere speculation, conjecture, or surmise.

See Brown v. Reardon, 770 F.2d 896, 904 (10th Cir. 1985). Moreover, Rice’s affidavit,

which does nothing more than state his belief that the facts set forth in the public affairs

officer’s affidavit and deposition are untrue, is insufficient to create a genuine issue of

material fact regarding the source of the information. See Federal Deposit Ins. Corp. v.
4

 Because the IRS public affairs officer procured the information in the releases

through her review of the indictment, attendance at Rice’s trial and sentencing, and

research into the possible criminal penalties, Rice similarly has no claim against the IRS

under the Federal Privacy Act, which requires that the disclosed information come from a

“system of records.” 5 U.S.C. § 522a(b). Likewise, in the absence of tortious conduct,

Rice has no claim under the Federal Torts Claim Act.

10

Oaklawn Apts., 959 F.2d 170, 175 (10th Cir. 1992).

Rice simply has failed to present more than a scintilla of evidence that the public

affairs officer obtained the information for the IRS press releases from an impermissible

source. Like it or not, a trial is a public event. The IRS press releases in this case did

not publicize Rice’s tax return information; they publicized public proceedings and

documents. While those proceedings and documents may have revealed “return

information,” that revelation was proper under the exception to § 6103 allowing such

disclosure in federal court where the taxpayer is a party to the proceedings. 26 U.S.C.

§ 6103(h)(4)(A).4

The judgment of the district court as to both Rice and JVR Accounting, Inc., is

AFFIRMED.
Attachments not available electronically.