UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


GARDNER, BRUCE E

v.

UNITED STATES


99-5089a

D.C. Cir. 2000


*	*	*


Rogers, Circuit Judge: Bruce E. Gardner appearing pro se  appeals the
dismissal of his complaint alleging violations of  federal and state
law by federal and state authorities, primar- ily as a result of the
disclosure of his tax returns and tax  information, under Fed. R. Civ.
P. 12 (b)(1), (2), & (6) and  41(b). For the reasons set forth in a
companion case, Gard- ner v. United States, 2000 WL 562820, No.
99-5065 (D.C. Cir.  May 19, 2000), the dismissal under Rule 41(b)
cannot be  affirmed. However, we conclude that the dismissal was 
proper under Rule 12(b) essentially for the reasons set forth  in the
district court's opinion of January 29, 1999. We need  address only
two of Mr. Gardner's contentions for, as the  district court's opinion
makes clear, his other contentions fail  under well-settled law. We
hold first, that the disclosure of  Mr. Gardner's tax returns and tax
information within the  Internal Revenue Service was permissible under
the tax  administration exception to the nondisclosure requirements of
 26 U.S.C. s 6103 (1994 and Supp. IV 1998), and second, that  Mr.
Gardner's exclusive remedy for the disclosures of his tax  records is
under the Internal Revenue Code, and not the  Privacy Act, 5 U.S.C. s
552a (1994 and Supp. IV 1998).  Accordingly, we affirm.


I.


As noted in the companion case, Mr. Gardner formerly  worked as an
attorney in the Sacramento, California Office of  Chief Counsel to the
Internal Revenue Service ("IRS") at the  Treasury Department. His
employment was terminated for  alleged failures to comply with federal
and state tax laws.  He filed three complaints in the district court,
relating to his  compliance with federal and state tax laws, after
unsuccess-


fully pursuing state and federal administrative remedies. We  summarize
the background to his contentions that the disclo- sure of his tax
returns and tax information violated federal  law and that he is
entitled to relief under the Privacy Act as  well as the Internal
Revenue Code.


Briefly put, Mr. Gardner's supervisors in Sacramento, Cali- fornia,
suspected as early as 1992 that he was not in full  compliance with
federal and state tax laws. When he agreed  in 1994 to provide
relevant information and then failed to do  so, his supervisors
obtained his federal tax returns and tax  audit directly from IRS
offices in Houston, Texas, and Fres- no, California, and his state
returns and tax information from  state agencies in California and
Maryland, where he had lived  while working for the IRS in the
District of Columbia. Upon  concluding that Mr. Gardner had taken
several unsupportable  positions on his federal income tax returns for
1990-92 and  that he had not timely filed his Maryland income tax
returns  for 1988-90, his supervisors offered him a chance to resign. 
When he refused, they commenced disciplinary proceedings  and his
employment was terminated November 26, 1994, for  failure to file
proper federal and state income tax returns.  Thereafter, his
application for unemployment benefits was  denied by the California
Unemployment Insurance Appeals  Board, and his challenge to his
termination was rejected by  the Merit Systems Protection Board. He
then filed a forty- four count complaint in the district court
alleging, among  other things, that the Treasury Department, the IRS,
and  individual IRS employees violated the Internal Revenue Code  and
the Privacy Act through intra-IRS disclosures of his tax  return
information while he was under investigation by the  IRS and during
the state and federal administrative proceed- ings that he commenced
after his employment was terminat- ed. Following the filing of
dispositive motions by the defen- dants, the district court dismissed


The court has concluded in a companion case that the Rule  41(b)
dismissal of Mr. Gardner's complaint must be reversed.  Gardner, 2000
WL 562820, at *1, 3-5. The question remains  whether Mr. Gardner has
demonstrated that the district 


court erred in dismissing his complaint under Rule 12(b).  Most of his
contentions raise issues that are well-settled in  law adversely to
him, and we need not repeat the district  court's opinion.1 There are,
however, two contentions that  require some explication.


II.


First, Mr. Gardner contends that the district court erred in  ruling
that the disclosure of his tax records fell within the  exception to
nondisclosure of s 6103(h)(1) for "tax administra- tion purposes." In
making this contention he relies on our  decision in National Treasury
Employees Union v. Federal  Labor Relations Board ("NTEU"), 791 F.2d
183 (D.C. Cir.  1986), and therein lies the need for clarification.


The Internal Revenue Code generally prohibits the disclo- sure of tax
returns and tax information. Under 26 U.S.C.  s 6103(a), "return and
return information shall be confiden- tial" and "no officer or
employee of the United States ... 




__________

n 1 The district court lacked personal jurisdiction over the individ-
ual IRS employees-appellees, because Mr. Gardner failed to allege  the
requisite contacts between these California and Texas residents  and
the District of Columbia under the Constitution and the Dis- trict's
long-arm statute. See, e.g., International Shoe Co. v. Wash- ington,
326 U.S. 310, 316 (1945); D.C. Code Ann. s 13-423 (1995).  Mr.
Gardner's defamation claim against the United States is barred, 
because suits for libel or slander are prohibited under the Federal 
Tort Claims Act. 28 U.S.C. s 2680(h)(1994). The district court  lacked
subject matter jurisdiction of Mr. Gardner's claims for  alleged
violations of the Family Leave Act and the Whistleblower  Protection
Act, because he failed to allege that he had exhausted his 
administrative remedies, as required under the Civil Service Re- form
Act. Hubbard v. EPA, 809 F.2d 1, 5 (D.C. Cir. 1987);  Carducci v.
Regan, 714 F.2d 171, 174-75 (D.C. Cir. 1983). Mr.  Gardner's claims
against the California state defendants were  barred by the Eleventh
Amendment, which prohibits suit against a  state or a state agency in
federal court absent their consent or clear  congressional abrogation
of immunity, neither of which was present  here. See, e.g., Seminole
Tribe of Florida v. Florida, 517 U.S. 44,  54-55 (1996).


shall disclose any return or return information" unless autho- rized by
statute. As the court observed in NTEU:


This general ban on disclosure provides essential protec- tion for the
taxpayer; it guarantees that the sometimes  sensitive or otherwise
personal information in a return  will be guarded from persons not
directly engaged in  processing or inspecting the return for tax
administra- tion purposes. The assurance of privacy secured by  s 6103
is fundamental to a tax system that relies upon  self-reporting.


Id. at 184. In recognition of competing concerns, however,  the Code
includes a number of exceptions. Two are relevant  here.


Under s 6103(h)(1), "[r]eturns and return information shall,  without
written request, be open to inspection by or disclo- sure to officers
and employees of the Department of the  Treasury whose official duties
require such disclosure for tax  administration purposes." 26 U.S.C. s
6103(h)(1). Another  provision, s 6103(h)(4), authorizes disclosure of
returns and  return information "in a Federal or State judicial or
adminis- trative proceeding pertaining to tax administration ... if
the  taxpayer is a party to the proceeding...."2 If the internal  IRS
investigation of Mr. Gardner's tax history, and the  related state and
federal administrative proceedings com- menced by Mr. Gardner were
"tax administration" matters,  then the disclosures were proper under
s 6103(h)(1) and (4).  We therefore address the scope of the tax
administration 




__________

n 2 In the district court, the federal appellees also relied on  s
6103(l )(4)(B), which authorizes the Secretary of the Treasury to 
disclose returns and return information to Treasury Department 
employees for their use in an "administrative action or proceeding 
affecting the personnel rights" of an employee or former employee, 
see s 6103(l )(4)(B), (A)(i), and argued that, in addition, the chal-
lenged disclosures were made pursuant to a good faith interpreta- tion
of s 6103. The district court granted the motion to dismiss the 
complaint under Rule 12(b) without indicating which provision  applied
to which disclosures. In view of our disposition, we do not  address


exception of s 6103(h)(1) and (4) with respect to these disclo-


The Internal Revenue Code defines "tax administration"  fairly broadly,
to include "the administration, management,  conduct, direction, and
supervision of the execution and appli- cation of the internal revenue
laws or related statutes (or  equivalent laws and statutes of a
State)....," id.  s 6104(b)(4)(A)(i), as well as enforcement and
litigation under  the tax laws. Id. s 6104(b)(4)(B). While the
language of this  exception appears readily applicable to the daily
work that  IRS employees do in auditing and otherwise checking taxpay-
er returns and tax information, it is perhaps not as clearly 
applicable to internal personnel investigations. Taking the  lead from
Congress' broad language, however, courts have  acknowledged that such
investigations, where necessary to  maintain the integrity of the tax
enforcement authorities, are  "tax administration" matters. Thus, in
Rueckert v. IRS, 775  F.2d 208 (7th Cir. 1985), the Seventh Circuit
held that the tax  returns of a state employee responsible for
investigation of  tax fraud were properly disclosed to persons within
the state  tax department who were investigating whether the employee 
had engaged in unauthorized outside employment. Id. at 212.  Relying
on the "tax administration" exception of s 6104(h)(1),  the Seventh
Circuit interpreted "the 'management' and 'su- pervision' of a state's
internal revenue laws [to] include[ ]  ensuring that its employees are
free from conflicts of interest  that could undermine the integrity of
its system of adminis- tering the state tax laws." Id. Similarly, the
Fifth Circuit  recently held the "tax administration" exception of  s
6103(h)(4) applicable to tax information disclosures made  with regard
to an IRS employee's Title VII and Merit Sys- tems Protection Board
challenges to the termination of his  employment for noncompliance
with the tax laws. Hobbs v.  United States, 209 F.3d 408 (5th Cir.
2000). The Hobbs  Court observed that the IRS employee's "own
compliance  with the federal tax laws was something of key concern to
the  IRS; his position required him to examine the accuracy of 
corporate and individual tax returns and, in turn, to have a 


that disclosures made in the context of administrative and  judicial
challenges to his termination "unquestionably encom- passed tax
administration". Cf. United States v. Mangan,  575 F.2d 32, 40 (2d
Cir. 1978). Given this reasonable con- struction of the broad language
of s 6103(h)(1) and (4), it  would seem that the disclosures of which
Mr. Gardner com- plains were proper for purposes of enabling the IRS
to  conduct its internal investigation of his tax history, and to 
explain the basis for the termination of his employment in the 
subsequent administrative proceedings.


Mr. Gardner contends, however, that our decision in NTEU  not only bars
the wholesale disclosures that he alleges oc- curred here, but holds
that the "tax administration" exception  of s 6103(h)(1) is
inapplicable to personnel matters, and thus  to his case. Although
there is some broad language in NTEU  suggesting Mr. Gardner's point,
properly read in context  NTEU does not demonstrate error by the
district court. To  the extent that NTEU concluded that an employee
grievance  unrelated to the employee's tax compliance history could 
entail disclosure only upon proper authorization under  s 6103(l
)(4)(A) and thus implicitly concluded that the griev- ance was not a
"tax administration" matter justifying  s 6103(h)(1) disclosure, NTEU
is not dispositive of whether  the IRS may, as a matter of tax
administration, disclose an  employee's tax records to IRS officials
as part of an internal  investigation of the employee's compliance
with the tax laws,  or in subsequent proceedings relating to a


In NTEU, the court held that disclosures by two IRS  employees of
confidential taxpayer information in the course  of preparing for a
grievance proceeding against the IRS  violated the Internal Revenue
Code's non-disclosure require- ment. 791 F.2d at 184. The employees
had disclosed to each  other and to their union attorneys their
"Revenue Officer  Dailies" while challenging a negative performance
evaluation  of one of the employees. The unredacted dailies showed how
 each revenue officer spent his time and included the name of  each
taxpayer for whose case the officer was responsible, and  a
description of any action taken. Id. at 185. The court, 


recognizing that for a union to fulfill its duty to represent  federal
employees, it must have access to agency records for  bargaining and
grievance resolution purposes, concluded that  s 6103(l )(4)(A)
provided for such access.3 Id. at 184. Pursu- ant to that provision,
IRS had authorized certain upper level  officers to act on the
Treasury Secretary's behalf in approv- ing disclosures.4 The problem
in NTEU was that the em- ployees had not obtained such authorization,
and consequent- ly, the court held, the disclosures violated s 6103.
Id. at 184- 85, 187. The court never addressed the scope of the "tax 
administration" exception under s 6103, although it was im- plicit
that the court did not consider the employee grievance  to involve
"tax administration," given its reliance on the  authorization
procedures of s 6103(l )(4)(A), and its acknowl- edgment that such
procedures would not be necessary for  disclosures made pursuant to
"tax administration" matters  under s 6103(h)(1). Id. at 188. Thus,
while the court stated  broadly that "disclosures for personnel
purposes, whether to  employees or outsiders, are prohibited by


__________

n 3 Section 6103(l )(4) provides:


The Secretary may disclose returns and return informa- tion--


(A) upon written request--


(i) to an employee or former employee of the Department  of the
Treasury, or to the duly authorized legal representa- tive of such
employee or former employee, who is or may be  a party to any
administrative action or proceeding affecting  the personnel rights of
such employee or former employee;  or


(ii) to any person, or to the duly authorized legal represen- tative of
such person, whose rights are or may be affected by  an administrative
action or proceeding under section 330 of  title 31, United States
Code....  26 U.S.C. s 6103(l )(4).


4 In NTEU the court relied on IRS Delegation Order 184-85  (rev. 2,
para. 1(e) (Mar. 21, 1982), which set forth the authorization 
procedure under s 6103(4)(A) and allowed only certain upper level 
officers to act as the Secretary's designees in granting permission 
to disclose tax information. NTEU, 791 F.2d at 184-85.


authorized in the precise manner indicated in  s 6103(l )(4)(A)", id.,
this statement was not made with re- gard to the scope of the "tax
administration exception" under  s 6104(h)(1) or (h)(4), but merely
reiterated the court's con- clusion that the type of disclosures at
issue could not be made  under s 6103(l )(4)(A) absent proper
authorization. Id. at  184-85, 187.


Moreover, the court's implicit holding that the grievance  proceeding
at issue did not constitute "tax administration"  has no bearing on
the instant case. The disclosures in NTEU  occurred in the course of
an employee grievance proceeding  against the IRS relating to the
quality and quantity of the  employee's work performance. As an
adversarial personnel  matter, it did not implicate the IRS' need to
guard the  integrity of its operations. By contrast, the disclosures
that  Mr. Gardner challenges, as in Rueckert and Hobbs, occurred  in
connection with the IRS' legitimate need to protect the  integrity of
its tax enforcement operations by ensuring that  its employees were in
compliance with the tax laws. Because  the disclosures of Mr.
Gardner's tax records were made for  the limited purposes of
determining whether he had failed to  comply with the tax laws and in
justifying the resulting  decision to terminate his employment, they
were integral to  the IRS' need to ensure that its employees' conduct
does not  "undermine the integrity of [the IRS'] system of administer-
ing the ... tax laws," Rueckert, 775 F.2d at 212, and thus the 
disclosures were proper under the "tax administration" ex- ception of
s 6103(h)(1) and (4). Accordingly, the district  court did not err in
dismissing Mr. Gardner's disclosures  claims under Rule 12(b).


III.


Second, Mr. Gardner contends that the district court erred  by
dismissing under Rule 12(b)(6) his claims under the Priva- cy Act, 5
U.S.C. s 552a. In his complaint, Mr. Gardner  raised Privacy Act
claims that fall into three primary catego- ries: disclosure of his
tax information, expungement or  amendment of information in his tax
records, and disclosure 


of non-tax related information. Only the first category merits  more
than summary discussion.5 As to this category, the  district court
ruled that any claims regarding the disclosure  of tax information are
preempted by the Internal Revenue  Code. This is a question of first
impression for this court.


In dismissing Mr. Gardner's disclosure claims, the district  court
relied on Lake v. Rubin, 162 F.2d 113 (D.C. Cir. 1998).  In Lake, the
court held that taxpayers could not rely on the  Privacy Act to obtain
access to their tax records because the  more specific provisions of
the Internal Revenue Code,  s 6103, controlled. Id. at 115-16. While
Lake concerned  access by taxpayers to their own records, the decision
is  instructive on whether s 6103 preempts Privacy Act claims 
regarding disclosure of taxpayer records by third parties.


Following the approach in Cheek v. IRS, 703 F.2d 271, 271- 72 (7th Cir.
1983), the court in Lake noted with approval the  conclusion of the
Seventh Circuit that s 6103 "overrides any  inconsistent provisions of
... the Privacy Act". Lake, 162  F.3d at 116. That conclusion, the
court observed, was sup- ported by the legislative history, in view of
the Senate  Report's statement "that [tax information] should
generally  be treated as confidential ... except in those limited
situa- tions delineated in ... section 6103...." Id. at 116, n.3 
(citing S. Rep. No. 94-938 at 318 (1976)). In addition, the  Lake
court viewed the conclusion of exclusivity to be analo-




__________

n 5 In view of the plain language of the Internal Revenue Code,  the
district court correctly ruled that 26 U.S.C. s 7852(e) stripped  the
court of subject matter jurisdiction over Mr. Gardner's Privacy  Act
claims for expungement or amendment of his tax records. 26  U.S.C. s
7852(e) (1994). See also, e.g., England v. Commissioner,  798 F.2d
350, 351-52 (9th Cir. 1986). Similarly, the district court  correctly
ruled that the alleged disclosures of non-tax information,  including
"defamatory statements" made in state and federal ad- ministrative
proceedings by IRS officials and intra-Treasury/IRS  disclosures of
Mr. Gardner's wage records, constitute "routine uses"  exempt from
Privacy Act protection. See 5 U.S.C. s 552a(b)(3); 57  Fed. Reg.
13900, 14058-59 (1992). Cf. Department of the Air Force  v. Federal
Labor Relations Authority, 104 F.3d 1396, 1401-02 (D.C.  Cir. 1997).


gous to its precedent that the Freedom of Information Act  does not
govern the disclosure of information when another  statute more
specifically addresses the disclosure of that  information through "
'comprehensive, carefully tailored and  detailed' provisions 'designed
to protect both the interest of'  those seeking the information and
the interest in 'confiden- tiality.' " Id. at 116 (citing Ricchio v.
Kline, 773 F.2d 1389,  1395 (D.C. Cir. 1985)). That precedent is even
more directly  analogous to the instant case than it was to Lake,
because it  concerns the preemption of statutory provisions regarding 
disclosure to third parties by other, more specific provisions.


From the analysis in Lake, the district court could properly  conclude
with regard to Mr. Gardner's unauthorized disclo- sure claims that s
6103, with its detailed framework for  access to and disclosure of tax
records, preempts the relative- ly generic provisions of the Privacy
Act. The Fifth Circuit,  citing Lake and Cheek, likewise concluded
that s 6103 trumps  Privacy Act claims for unauthorized disclosures
where the  disclosures fall within s 6103's "tax administration"
exception.  Although declining to opine on whether preemption would 
exist absent a direct conflict between the Internal Revenue  Code and
the Privacy Act, the Fifth Circuit concluded that  such a conflict did
exist, and that the former thus trumped  the latter, where a
disclosure that related to "tax administra- tion" (and thus was exempt
from the Internal Revenue Code's  nondisclosure restriction) was the
basis for a claim under the  Privacy Act.6 The Fifth Circuit also
cited Cheek and Lake for  the broader proposition that the majority of
courts to con- front the issue have concluded that the Internal
Revenue  Code preempts the Privacy Act in "provid[ing] the exclusive 
remedy for disclosures of tax return information." Hobbs,  209 F.3d at
411. Those circuit courts of appeals allowing  Privacy Act claims
based on tax return disclosures neither 




__________

n 6 In Hobbs, the Fifth Circuit cited Sinicki v. United States 
Department of the Treasury, No. 97 Civ. 0901, 1998 WL 80188  (S.D.N.Y.
Feb. 24, 1998), in which the district court had ruled that  "
'[s]ection 6103 should only implicitly repeal the Privacy Act to the 
extent it presents an irreconcilable conflict.' " Hobbs, 209 F.3d at 
412 (quoting Sinicki, 1998 WL 80188, at *5).


addressed s 6103 preemption directly nor faced a situation in  which
the Privacy Act provided a remedy for conduct permis- sible under the
Internal Revenue Code. See Taylor v. Unit- ed States, 106 F.3d 833,
836-37 (8th Cir. 1997); Long v. IRS,  891 F.2d 222, 224 (9th Cir.


Because our analysis in Lake, supported by decisions in the  Fifth and
Seventh Circuits, leads inexorably to the conclusion  that the
Internal Revenue Code preempts the Privacy Act for  remedies for
disclosure of tax information, we hold that  s 6103 is the exclusive
remedy for a taxpayer claiming unlaw- ful disclosure of his or her tax
returns and tax information.  The district court, therefore, did not
err in dismissing under  Rule 12(b)(6) Mr. Gardner's Privacy Act
claims based on IRS  disclosures of his tax returns and tax


Accordingly, we affirm the judgment of the district court.