Unlawful Disclosure Claims Survive In Hunter Biden I.R.S. Suit

The United States District Court for the District of Columbia (Judge Contreras) granted and denied in part motions in a suit filed on behalf of Hunter Biden against the Internal Revenue Service

Plaintiff Robert Hunter Biden sued the United States Internal Revenue Service (“IRS”), alleging that two IRS employees and their private attorneys unlawfully disclosed his confidential tax return information in violation of 26 U.S.C. § 6103. Biden additionally alleges that the IRS failed to establish proper safeguards over that tax return information in violation of the Privacy Act, 5 U.S.C. § 552a. Biden seeks declaratory judgment, compensatory and punitive damages, attorney’s fees, and an order compelling the IRS to produce certain documents and adopt a security plan that satisfies the Privacy Act’s requirements. The IRS moves to dismiss the Privacy Act claim, Biden’s non monetary claims, and any compensatory damages claims arising from disclosures by the employees’ private attorneys rather than the employees themselves. The IRS employees additionally move to intervene in this lawsuit, both permissively and as of right, asserting that their interests will be impaired if Biden prevails in this case.

For the reasons stated below, the Court grants the IRS’s motion to dismiss Biden’s Privacy Act claim and any non monetary claims for relief. The Court concludes, however, that the IRS is liable for its employees’ actions through their non-employee agents and denies the IRS’s motion to dismiss Biden’s unlawful disclosure claims. Finally, the Court denies the employees’ motion to intervene, concluding that they lack a sufficient stake in the outcome of this litigation to support intervention as of right and that permissive intervention would unduly prejudice the parties and add complexity to the litigation.

Allegations

According to the allegations in the Amended Complaint, which the Court accepts as true at this stage of the litigation, two IRS agents—Gary Shapley and Joseph Ziegler—engaged in the “unauthorized public disclosure” of Biden’s “confidential return information during more than 20 nationally televised and non-congressionally sanctioned interviews and numerous public statements” either personally or by directing legal counsel to make those appearances. Am. Compl. ¶ 4, ECF No. 15

The court analysed the history of confidentiality protections provided to tax returns

The Court approaches the case with this background, which indicates that Congress intended taxpayers’ return information to be broadly protected from disclosure to prevent abuse by Executive officers and politicization of the voluntary assessment system. The evolution of these statutes additionally demonstrates that Congress specifically decided that civil liability for federal employees’ unlawful activity should lie against the federal government and not against the employees themselves.

Intervention denied

The Court additionally finds that the IRS agents’ intervention would add undue complexity to the case. See Fed. R. Civ. P. 24(b)(3). The IRS agents make plain that they hope to exercise control over the conduct of discovery—including other parties’ discovery and depositions. See, e.g., Reply in Support of Mot. Intervene at 4. The Court concludes that this would unnecessarily complicate discovery that, at present, already promises to be unusually complex because it will likely implicate lawyers, Congress, and news organizations. For these reasons, the Court denies the IRS agents’ motion to intervene permissively.

(Mike Frisch)