Mary Charles McDonald Denver McDonald Richard Maynard Bill McDonald Maynard & McDonald v. United States

The five plaintiffs appeal the summary judgment in favor of the United States on their claims, under 26 U.S.C. § 7431 , alleging that the Internal Revenue Service violated 26 U.S.C. § 6103 in disclosing plaintiffs’ tax return information. The district court concluded that because the IRS agent disclosed the information in good faith there was no liability; accordingly, it did not reach the question whether the disclosures were authorized by statute. See 26 U.S.C. § 7431 (b). We affirm.

I.

We must determine, as a threshold matter, what burdens of pleading each party in an improper tax disclosure case bears. The statute, authorizes taxpayers to bring civil actions against the United States if any of its officers or employees “knowingly, or by reason of negligence, diselose[ ] any return or return information ... in violation of any provision of section 6103.” 26 . U.S.C. § 7431(a)(1). Section 7431(b), however, creates an exemption from liability for tax disclosures that “resultf ] from a good faith, but erroneous, interpretation of section 6103.” 26 U.S.C. § 7431 (b).

Relying on the Sixth Circuit’s ruling in Davidson v. Brady, 732 F.2d 552, 553 (6th Cir.1984), the district court…