The opinion of the court was delivered by: D. LOWELL JENSEN
On May 25, 1994, the Court heard plaintiffs' motions for summary judgment, and defendant's motion for summary judgment. Martin Schainbaum appeared for plaintiff Schachter, and William Sidney Smith of Smith, Wimer, Scalise in Des Moines, Iowa, appeared for plaintiff Karp. Assistant United States Attorney Thomas F. Carlucci appeared for the defendant United States of America. Having considered the papers submitted, the arguments of counsel, the applicable law, and the entire record herein, the Court DENIES plaintiffs' motions for summary judgment and GRANTS defendant's motion for summary judgment, for the following reasons.
Plaintiffs David S. Karp and Martin Schachter each filed a complaint on January 20, 1993. The claims were for money damages based upon 26 U.S.C. § 7431 which prohibits certain unauthorized disclosures of taxpayers' tax return information. Karp and his partner, Schachter, alleged that Thomas Lavin, a special agent of the Internal Revenue Service, improperly disclosed that plaintiffs were under criminal investigation.
Plaintiffs alleged that on or about January 24, 1991 special agent Lavin caused 542 letters to be mailed to customers of a partnership owned by the plaintiffs. Hand typed at the top of the circular letter were the words "Criminal Investigation Division."
On May 30, 1993, plaintiff Karp died. On September 8, 1993 a motion for substitution of decedent's estate as plaintiff was filed and on November 2, 1993 the United States filed a motion to dismiss. Defendants opposed substitution by plaintiff and contended that this action must be dismissed because it could not survive plaintiff's death. On December 10, 1993 the Court filed an order granting plaintiffs' motion for substitution and denying defendants' motion for dismissal.
Each party brought motions seeking summary judgment in the matter.
an internal revenue officer or employee may, in connection with his official duties relating to any audit, collection activity, or civil or criminal tax investigation or any other offense under the internal revenue laws, disclose return information to the extent that such disclosure is necessary in obtaining information, which is not otherwise reasonably available. . . Such disclosures shall be made only in such situations and under such conditions as the Secretary may prescribe by regulation. [Emphasis added].
Finally, it is relevant that 26 U.S.C. § 7431(b) also provides that "no liability shall arise under this section with respect to any disclosure which results from a good faith, but erroneous, interpretation of section 6103."
Accordingly, three basic issues present themselves in this matter. First, whether the letters in question disclosed plaintiffs were under investigation by the Criminal Investigation Division. Second, if there was disclosure whether that disclosure was necessary and so authorized by 26 U.S.C. § 6103, and finally whether special agent Lavin's actions were a good faith but erroneous interpretation of § 6103. The Court considers the questions in turn, initially describing the legal standard for application of summary judgment.
A. Legal Standard for Summary Judgment
Under Rule 56(c) of the Federal Rules of Civil Procedure, a district court may grant summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the ...