District Court Denies Government Request to Certify 6103 Issue on Republishing Public Information (11/2/21)

In United States v. Zak (Dkt. 1:18-cv-05774 Entry 330 Dated 10/22/21), Cl here and the CL Docket Entries are here, the Court denied the Government’s motion to certify appeal to the 11^th Circuit on an issue that has split the Appellate Courts.  One of the defendants, Clark, asserted a counterclaim against the United States for damages from violating § 6103’s prohibition on disclosure of return information.  See § 7431 (permitting damages)

The alleged disclosure was the republication of return information from the Government’s complaint.  In a motion to dismiss, the Government argued the information was publicly disclosed in the complaint and therefore its republication of already public information did not give rise to damages.  Clark argued that the Government could still be liable if the immediate source for the return information disclosed was the IRS’s files subject to § 6103 rather than from other public information.

In a July 6, 2021 order, the court held for Clark (Slip Op. 3):

In that Order, the Court emphasized that the Eleventh Circuit has never recognized the Ninth Circuit's “implicit exception” to § 6103's confidentiality requirement for “all tax return information that has become a matter of public record,” and that several other Circuits had expressly refused to do so. (Id. at 9, 13.) The Court was more persuaded by the narrower approach taken by the Fourth, Fifth, Seventh, and Tenth Circuits, under which liability under § 6103 depends on the immediate source of the disclosed information rather than its public or non-confidential status. (Id. at 11–12.) The Court also expressed doubts that the Seventh Circuit's rule permitting the subsequent republication of return information contained in a judicial opinion would similarly apply to the republication of return information contained in a complaint that was prepared by the Government's own lawyers. (Id. at 14–15.)

The Government then moved to certify the following issue to the 11^th Circuit (Slip op. 6):

Whether 26 U.S.C. § 6103 prohibits publication by the government of taxpayer information that has already been lawfully and publicly disclosed by the government in a judicial proceeding pertaining to tax administration?

In the Order discussed here dated 10/22/21, the District Court denied (Slip op. 6-11) the request to certify because the Government “failed to establish a genuine doubt as to the correct applicable legal standard here,” so the Government “failed to show the requisite substantial ground for difference of opinion to warrant an interlocutory appeal.”  The Court also held (Slip op. 11-13) that the immediate appeal would  not advance the litigation. 

This Order denying certification means that the case will proceed to trial.  The trial has been set for April 17, 2021 at 9:30 am, see Order Setting Bench Trial Dkt entry 324 CL here.  So, the issue the Government wanted the Eleventh Circuit to consider will not be considered by that Court of Appeals (at least in this case) for some period of time, perhaps permitting some other case to present it in the Eleventh Circuit and other Courts of Appeals to weigh in on the issue.

The principal purpose of this blog entry is to remind readers that this issue is still floating around in the courts and perhaps should be considered in cases where the facts indicate it can be raised.