Hobbs v. USA, et al

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
m 99-20273
_______________
BOOKER T. HOBBS, JR.,
Plaintiff-Appellant,
VERSUS
UNITED STATES OF AMERICA,
EX REL. SANDRA RUSSELL IN HER OWN RIGHT,
AND
INTERNAL REVENUE SERVICE,
Defendants-Appellees.
_________________________
Appeal from the United States District Court
for the Southern District of Texas
_________________________
April 20, 2000
Before REAVLEY, SMITH, and EMILIO M.
GARZA, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Booker Hobbs, Jr., pro se, appeals the de-
termination that he is not entitled to recover
damages under the Internal Revenue Code
(“I.R.C.”), 26 U.S.C. § 7431, or the Privacy
Act, 5 U.S.C. § 552a, for the disclosure of his
federal income tax returns. Concluding that
the disclosures were authorized under I.R.C.
§ 6103, we affirm.
I.
Hobbs was employed by the Internal
Revenue Service (“I.R.S.”) as an engineer,
examining corporate and individual tax re-
turns. His position required an advanced un-
derstanding of the tax laws. Thus, when it

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came to his supervisor’s attention that Hobbs
might have improperly filed past tax returns,
the supervisor directed an audit. That inves-
tigation revealed evidence of improper filings
and of unsubstantiated deductions, whereupon
Hobbs was discharged.
Hobbs appealed his dismissal to the Merit
Systems Protection Board (“MSPB”). In re-
sponse, the IRS submitted the information it
had found in its investigation, including infor-
mation from Hobbs’s past federal tax returns.
The MSPB upheld the termination and dis-
missed Hobbs’s claim that the IRS had dis-
criminated against him on the basis of race.
Hobbs also filed a complaint against the
IRS in the United States District Court for the
Eastern District of Pennsylvania, alleging that
he had been terminated for discriminatory rea-
sons in violation of title VII of the Civil Rights
Act of 1964, Pub. L. No. 88-352, 78 Stat.
241. The jury rejected Hobbs’s claim, and he
unsuccessfully appealed to the Third Circuit
Court of Appeals.1 The merits of that case are
not at issue in the current appeal.
Next, Hobbs filed this action against the
IRS seeking damages under I.R.C. § 7431 for
unauthorized disclosure of tax return infor-
mation and damages for violation of the Pri-
vacy Act, 5 U.S.C. § 552a. The court dis-
missed all of Hobbs’s claims, and specifically,
the claims he had brought pursuant to § 7431,
because it held that the disclosures were au-
thorized under I.R.C. § 6103(h)(4), which per-
mits the disclosure of “return information in a
Federal or State judicial or administrative pro-
ceeding pertaining to tax administration.” The
court also dismissed Hobbs’s Privacy Act
claims, holding that I.R.C. § 7431 provides the
exclusive remedy for unlawful disclosure of
tax information.
II.
Hobbs argues that the dismissal of his
§ 7431 claims was improper because his ap-
peal to the MSPB and his title VII civil trial
were not “pertaining to tax administration” as
required by the limited exception of § 6103-
(h)(4), but were, instead, personnel matters.
Hobbs also asserts that the IRS made these
disclosures in bad faith. Next, he avers that
the court erred in dismissing his Privacy Act
claims, and he challenges the conclusion that
§ 7431 is the exclusive remedy for unlawful
disclosure of tax information.
A.
Section 6103(a) of the I.R.C. states the
general rule that tax returns and tax return in-
formation are confidential and may not be dis-
closed by any federal or state officer “except
as authorized by this title.” Section 7431
creates a federal cause of action for civil
damages for unauthorized disclosures of re-
turns and return information in violation of
§ 6103. Included in the exceptions to the
general rule of confidentiality in § 6103(a),
however, is an allowance for disclosures for
purposes of tax administration:
(h) Disclosure to certain Federal officers
and employees for purposes of tax
administration, etc.SS . . .
(4) Disclosure in judicial and
administrative tax proceedings.SSA
return or return information may be
disclosed in a Federal or State judicial or
administrative proceeding pertaining to
1 See Hobbs v. Rubin, No. 96-4117 (E.D.
Pa.), aff’d, 156 F.3d 1224 (3d Cir. 1998)
(unpublished).

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tax administration, but onlySS
(A) if the taxpayer is a party to the
proceeding, or the proceeding arose out
of, or in connection with, determining
the taxpayer’s civil or criminal liability,
or the collection of such civil liability, in
respect of any tax imposed under this
title.
26 U.S.C. § 6103(h).
Hobbs challenges the dismissal of his
§ 7431 claims and the determination that the
IRS properly disclosed his tax return
information in accordance with the “tax
administration” exception in § 6103(h)(4). He
asserts that this exception is not applicable,
because neither the MSPB nor the title VII
civil action was “pertaining to tax
administration.”
“Tax administration” is defined as
(i) the administration, management, con-
duct, direction, and supervision of the
execution and application of the internal
revenue laws or related statutes (or
equivalent laws and statutes of a State)
and tax conventions to which the United
States is a party, and
(ii) the development and formulation of
Federal tax policy relating to existing or
proposed internal revenue laws, related
statutes, and tax conventions.
26 U.S.C. § 6103(b)(4)(A). The courts that
have considered whether certain activities
qualify as “tax administration” uniformly have
defined the term broadly.2 And these
interpretations seem correct in light of the
expansive terms employed by Congress: Tax
administration includes “administration,
management, conduct, directi on, and
supervision.” I.R.C. § 6103(b)(4)(A)(i).
In response, the IRS argues that the
disclosures of Hobbs’s tax return documents in
the MSPB and title VII proceedings were “in
a Federal or State judicial or administrative
proceeding pertaining to tax administration.”
See § 6103(h)(4) (emphasis added). The IRS
is correct.
There can be little doubt that, like the
situation in both Rueckert and Mangan,
Hobbs’s own compliance with the federal tax
laws was something of key concern to the IRS;
his position required him to examine the
2 See, e.g., Rueckert v. IRS, 775 F.2d 208,
210-12 (7th Cir. 1985) (holding that ensuring that
a state’s internal revenue service employees are
free from conflicts of interest that could undermine
the integrity of the state’s tax collection system are
“management” and “supervision”
under § 6103(b)(4)(A)(1)); United States v.
Mangan, 575 F.2d 32, 40 (2d Cir. 1978)
(approving the admission of federal tax returns
under the tax administration exception in criminal
proceedings against an IRS agent, even though
such proceedings did not involve the determination
of tax liability). Inexplicably, Hobbs cites
National Treasury Employees Union v. F.L.R.A.,
791 F.2d 183 (D.C. Cir. 1986), for the proposition
that “it is an established settled principle of law
that the term ‘tax administration’ does not include
personnel matters.” National Treasury does not
support this proposition. Instead, that case was
solely about whether the disclosures made pursuant
to § 6103(1)(4)(A) were properly authorized by
IRS personnel. The court never discusses “tax
administration.”

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accuracy of corporate and individual tax
returns and, in turn, to have a sophisticated
understanding of the tax laws. The IRS’s
decision to terminate him for failure accurately
to file his own returns was motivated in large
part by the fact that this failure undermined the
IRS’s confidence in his ability to perform his
essential job functions, which unquestionably
encompassed tax administration.
When Hobbs then challenged the
employment action in subsequent
administrative and judicial proceedings, the
IRS was required to defend its termination by
disclosing the ground for his dismissal.
Naturally, this required the IRS to prove that
it was Hobbs’s improper filing of past tax
returns, and not his race or some other factor,
that motivated its decision. These disclosures,
then, were “pertaining to tax administration.”
As a result, the district court did not err in
concluding that Hobbs could not maintain a
suit under § 7431 for a violation of
§ 6103(a)’s general rule of confidentiality.
The IRS properly disclosed his tax return
information under § 6103(h)(4)(A) in
defending its employment decision in both the
MSPB and title VII civil suits. Accordingly,
because those disclosures were authorized, the
court also did not err in failing to reach the
question whether the disclosures were made
in bad faith.3
B.
Although the majority of the courts that
have considered the interaction of § 6103 with
the Privacy Act, 5 U.S.C. § 552a, have
concluded that § 6103 and § 7431 provide the
exclusive remedy for disclosures of tax return
information,4 Hobbs challenges the district
court’s conclusion that § 7431 is the exclusive
remedy and relies on the minority position
adopted in Sinicki v. United States Dep’t of
Treasury, No. 97 Civ. 0901 (JSM), 1998 U.S.
Dist. LEXIS 2015 (S.D.N.Y. Feb. 24, 1998)
(unpublished). In Sinicki, the court was
unwilling to go as far as other courts and hold
that § 6103 amounts to a repeal of the Privacy
Act in all cases involving unauthorized
disclosures of tax return information. Instead,
the court held that “Section 6103 should only
implicitly repeal the Privacy Act to the extent
it presents an irreconcilable conflict.” Id.
at *13.
3 Because we do not reach the alternate ground
that the IRS argues justifies affirming the summary
judgmentSSi.e, that the disclosures also were au-
thorized under § 6103(l)(4) for use in “personnel or
claimant representative matters” SSwe also need not
reach Hobbs’s assertion that the disclosures
violated provisions of the Internal Revenue Manual
(continued...)
(...continued)
(“IRM”). Those IRM provisions relate only to
disclosures made pursuant to § 6103(l)(4), and not
to disclosures under § 6103(h)(4); consequently,
we have no occasion to consider whether they are
consistent with, or are trumped by, the I.R.C.
4 See, e.g., Lake v. Rubin, 162 F.3d 113,
115-16 (D.C. Cir. 1998) (holding that § 6103,
although not framed as an express exception to the
Privacy Act, provides the exclusive statutory route
for taxpayers to access their tax records), cert.
denied, 119 S. Ct. 1465 (1999); Cheek v. IRS, 703
F.2d 271, 272 (7th Cir. 1983) (per curiam)
(holding that § 6103 is exclusive to both the
Privacy Act and the Freedom of Information Act);
Gardner v. United States, Civ. Ac. No. 96-1467
(EGS), 1999 U.S. Dist. LEXIS 2195, at *16
(D.D.C. Jan. 29, 1999) (opining that Ҥ 6103 is the
exclusive remedy for alleged wrongful disclosures
of returns and return information”).

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Repeals by implication are not favored. See
Jackson v. Stinnett, 102 F.3d 132, 135 (5th
Cir. 1996) (citing cases). “However, courts
long ago established an exception to the re-
peal-by-implication rule: ‘Where provisions in
the two acts are in irreconcilable conflict, the
later act to the extent of the conflict
constitutes an implied repeal of the earlier
one.’” Id. at 136 (quoting Posadas v.
National City Bank, 296 U.S. 497, 503
(1936)).5 This exception apparently was not
implicated in Sinicki, in which the court
concluded that “[t]hus far, Section 6103 has
not been shown to be in irreconcilable conflict
with the Privacy Act,” but the court went on
to recognize the possibility of such conflict in
future cases. See Sinicki, 1998 U.S. Dist.
LEXIS 2015, at *10.
Here, on the other hand, there is a present
conflict. Although the Privacy Act and § 7431
create damages actions for unauthorized dis-
closures, only § 6103 provides for a variety of
tax-return-specific exceptions to the general
confidentiality rule. Thus, if Hobbs were able
to maintain a suit under the Privacy Act even
where his § 7431 damages action was
unsuccessful, this would punish the IRS for
disclosing tax return information it was
authorized to disclose under the express terms
of § 6103. Of course, this conflict becomes
apparent only where the disclosures fall under
one of the § 6103 exceptions, but here the
IRS’s disclosure qualified for the “tax
administration” exception.
Congress could not have intended the od-
dity that the IRS properly could make a
disclosure of tax return information in a
judicial or administrative proceeding
“pertaining to tax administration” in
accordance with § 6103(h)(4), but would be
exposed to liability under the more general
provisions of the Privacy Act. Consequently,
we refuse to subject the IRS to such an absurd
result. To the extent that the Privacy Act
would recognize a cause of action for
unauthorized disclosure of tax return
information even where § 6103 would provide
an exception for the particular disclosure,
§ 6103 trumps the Privacy Act.
We draw further support for this conclusion
by invoking the principle that “a precisely
drawn, detailed statute preempts more general
remedies.” Jett v. Dallas Indep. Sch. Dist.,
491 U.S. 701, 734 (1989) (quoting Brown v.
General Servs. Admin., 425 U.S. 820, 834
(1976)). Section 6103 dedicated entirely to
confidentiality and disclosure issues related to
tax returns and tax return information. It
covers approximately thirty-five pages of the
United States Code. The Privacy Act, by con-
trast, prohibits disclosures at a generic level,
providing that “[n]o agency shall disclose any
record which is contained in a system of
records.” 5 U.S.C. § 552a(b). It is fair to say,
then, that § 6103 is a more detailed statute that
should preempt the more general remedies of
the Privacy Act, at least where, as here, those
remedies are in conflict.6
AFFIRMED.
5 See also United States v. Ardoin, 19 F.3d
177, 180 (5th Cir. 1994) (noting that “the only per-
missible justification for repeal by implication is
when the earlier and later statutes are irrecon-
cilable”).
6 We have no occasion, however, to consider
whether § 6103 operates as an implied repeal of the
Privacy Act to the extent that the two provisions
are not in conflict.

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