Adding to my FTPB Discussion of Civil Suits for Disclosure of Return Information for the Trump "Settlement" (5/26/26; 5/29/26)

Added 5/27/26 7:00pm and 5/28/26 3:30pm: I have added new matters at the end of this blogging. Since the issue is developing, I may update on the developments by additions below or by separate blog.

I have just finished a first draft of the portion of the working draft of my Federal Tax Procedure book 2026 discussing the civil remedy for improper disclosures of tax return information under § 7431. In the 2025 version, I have a paragraph discussing the settlement with Ken Griffin regarding disclosures of prominent (meaning wealthy) taxpayers' return information. I have not changed that paragraph, but have added immediately after it a discussion of the Trump v. IRS § 7431 suit and the settlement of Trump’s suit that has been so much in the news recently. I suspect most, perhaps all, the readers will already know the basics of the settlement that I offer. I link here a pdf with redline of the new discussion with footnotes. I copy and paste below the discussion (text only) with the new material after the Griffin paragraph (which I do not redline here).

           A prominent example of this remedy is a suit brought by a Kenneth Griffin, reputedly a hedge fund billionaire. An employee of a third party contractor to the IRS, Booz Allen Hamilton, Inc., illegally accessed and disclosed the tax return information of Griffin and others to a news organization, ProPublica, which in turn published some of the tax return information. Griffin sued the IRS under (i) § 7431, alleging violation of § 6103, and (ii) the Privacy Act. The employee was prosecuted and pled guilty, receiving a five-year sentence. Griffin and the IRS settled the civil action resulting in a dismissal with prejudice. All of the terms of the settlement are not available, but the IRS agreed to and did issue a public apology. Another reputed billionaire brought related action against the employee’s employer, Booz Allen Hamilton, Inc.

           An even more prominent example arising from the same mass disclosures is a 2026 suit Donald J. Trump filed in his personal (rather than Presidential) capacity for $10 billion damages (asserting both the minimum $1,000 per disclosure with disclosures at $1,000 justifying $10 billion or actual damages of $10 billion) and for punitive damages in an amount not stated. The parties plaintiff also included Trump related persons and entities. The Judge in the case asked the parties to brief whether, given Trump’s control over the Government parties (IRS and DOJ) and personal interest as Plaintiff, the case met the required Article III case or controversy requirement. The Court also appointed distinguished amicus to provide here independent briefing on that issue. Before the parties presented their briefing but after the amicus provided its initial briefing, the Trump parties moved to dismiss requiring the Court to dismiss with prejudice under FRCP Rule 41(a)(1)(A)(i); as required by that Rule, on 5/18/26, the Court dismissed with prejudice, the Court noted:

           Because the Notice does not reference any settlement or include a stipulation of settlement, there is no settlement of record. Additionally, Defendants—federal agencies represented by the Department of Justice, which has an independent obligation to uphold the “public’s strong interest in knowing about the conduct of its Government and expenditure of its resources” and the “fair administration of justice,” 28 C.F.R. §§ 50.9, 50.23—neither submitted any settlement documents nor filed any documents ensuring that settlement was appropriate where there was an outstanding question as to whether an actual case or controversy existed.

In short, the Court smelled a rat but under the Rule was required to dismiss with prejudice.

On Amici Brief in Trump and Related Parties Suit for Damages from Unauthorized Inspections and Disclosures of Return Information by Employee of IRS Contractor (2/6/26)

On 2/20/26 at 12:30am, an update has been added to the bottom of this blog entry to note another Amici Curiae Brief filing by public interest organizations.

I assume that most readers of this blog will already have seen news about Trump’s suit against the IRS for “damages” arising from the disclosure of his tax return information by an employee of an IRS contractor who was subsequently criminally convicted by plea agreement and sentenced to five years’ incarceration. E.g., Trump sues IRS and Treasury for $10 billion over leaked tax information  (NPR 1/30/26), here. The suit is titled Trump v. IRS (S.D. Fla. No. 26-cv-20609), CL Docket sheet here. (Reminder: Access to the Court Listener docket sheet is free and will have links to the documents provided that some CL member has downloaded them from PACER.)

The key documents to date are

• the complaint (CL here) and
• a new Amici Curiae Motion for Leave to File Brief as Amici Curiae by Former Government Officials and Public Interest Organizations, here. The interests of the Amici are (Br 1-2, footnote omitted):

          Amici are four former government officials with combined decades of experience in federal tax law, each of whom joins this brief only in their personal capacity, and two public-interest organizations. They have sought leave to submit this brief to aid the Court in its management of this important case.

          John Koskinen served as the 48th Commissioner of the Internal Revenue Service. He was confirmed to the position by the Senate in 2013, and he served in the position until 2017. Prior to his service as IRS Commissioner, he served in a number of positions in the public and private sector, including as the non-executive chairman of the Federal Home Loan Mortgage Corporation (Freddie Mac) from 2008 to 2012.

          Kathryn Keneally served as the Assistant Attorney General for the U.S. Department of Justice’s Tax Division. She was confirmed to the position by the Senate in 2012, and she served in the position until 2014. Prior to her service in the Department of Justice, she practiced tax law in private practice for thirty years and served as chair of the American Bar Association’s Section of Taxation’s Committees on Civil and Criminal Tax Penalties and Standards of Tax Practice.

          Nina Olson served as the National Taxpayer Advocate from 2001 to 2019. In that role, she led the Taxpayer Advocate Service, an independent organization within the Internal Revenue Service. Prior to serving in that role, she had over two decades of experience representing individual taxpayers at all levels of income.

          Gilbert Rothenberg served as the Chief of the U.S. Department of Justice, Tax Division, Appellate Section. He joined the Department as a line attorney in the Appellate Section in 1975 and served in the Section until his retirement in 2019.

          Common Cause is a nonpartisan, grassroots organization dedicated to upholding the core values of American democracy by working to create open, honest, and accountable government that serves the public interest. Common Cause has over 1.5 million members nationwide and local organizations in 23 states.

          Project On Government Oversight (POGO) is a nonpartisan, independent watchdog that investigates, exposes, and champions reforms on systemic corruption, abuse of power, and waste. [*2] POGO envisions a federal government that is effective and accountable—governed by just laws, operating with integrity, and committed to serving the public. Government ethics and public trust in the federal government are at the heart of POGO’s mission.

I will not write on the merits of the Complaint. I will editorially comment that, in my opinion, this is just another Trump attempt to monetize Trump’s presidency which has already unlocked mega-millions for Trump and his family (not to mention his “friends,” such as pardon attorneys close to him). Rather, I address in this blog the Amici Brief.

The judge on the case is Kathleen M. Williams, an Obama appointee. See Wikipedia here. Pretrial responsibilities have been assigned to Magistrate Judge Enjolique A. Lett. I could find no current information on her in a quick Google search; I did find, for example, that Judge Roy K. Altman assigned her to handle pretrial non-dispositive matters in The Donald J. Trump Revocable Trust v. Capital One, N.A. (S.D. Fla. 1:25-cv-21596), here. (This suit against Capital One asserts a “de-banking” claim that appears to  be another classic Trump case to monetize his presidency; although Trump does not directly control both sides, he can control the levers of power by directing Government action, directly or indirectly, against the defendant; tongue-in-cheek, maybe Trump and the related parties will give up the suit if Capital One names its corporate headquarters the Trump Building or even the name of the organization as Trump Bank.)

Points about the Amici Brief:

IRS Disclosures of Knowingly False Return Information is Subject to Civil Action for Wrongful Disclosure (11/24/12)

In Aloe Vera of America, Inc. v. United States, 699 F.3d 1153 (9th Cir. 2012), here, the Ninth Circuit addressed the application of the two year time limit for filing a suit for wrongful disclosure of return information.  Section 6103, here, titled Confidentiality and disclosure of returns and return information, generally requires that return information -- virtually everything the IRS knows about a taxpayer -- be confidential, with certain specified exceptions.  Section 7431, here, titled Civil damages for unauthorized inspection or disclosure of returns or return information, provides a taxpayer a civil remedy the IRS's disclosures of return information not authorized by Section 6103.  Section 7431(d) provides that the suit must be brought "within 2 years after the date of discovery by the plaintiff of the unauthorized inspection or disclosure."  The question addressed by the Ninth Circuit was when the limitations period begins.

The Court (with Judge Sidney R. Thomas, here, as author of the majority opinion) starts its exegesis with a crisp statement of the issue and the holding:

This appeal presents the question, among others, of what event triggers the running of the statute of limitations for a claim for wrongful disclosure of a tax return pursuant to 26 U.S.C. § 7431(d). We conclude that the statute of limitations begins to run when the plaintiff knows or reasonably should know of the government's allegedly unauthorized disclosures. We also conclude, in the circumstances presented by this case, that the statute of limitations did not begin to run when the plaintiffs became aware of a pending general investigation that would involve disclosures, but only later when they knew or should have known of the specific disclosures at issue. Applying these principles to the facts of this case, we affirm in part and reverse in part.