Government Seeks Dismissal of Counterclaim in Easement Scheme Suit

UNITED STATES OF AMERICA,
Plaintiff,
v.
NANCY ZAK, CLAUD CLARK III, ECOVEST CAPITAL, INC., ALAN N. SOLON, ROBERT M. MCCULLOUGH, and RALPH R. TEAL JR.,
Defendants.

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION

UNITED STATES' MOTION TO DISMISS AMENDED COUNTERCLAIM

Pursuant to Fed. R. Civ. P. 12(b)(6), the United States of America respectfully moves to dismiss Claud Clark, III's amended counterclaim for failure to state a claim upon which relief can be granted. In support of this motion, the United States submits the attached memorandum of law. Dated September 28, 2020.

Respectfully submitted,

RICHARD E. ZUCKERMAN
Principal Deputy Assistant Attorney General

THOMAS K. VANASKIE
D.C. Bar No. 1000405
BEATRIZ T. SAIZ
N.J. Bar No. 024761995
Trial Attorneys, Tax Division
U.S. Department of Justice
P.O. Box 14198
Washington, D.C. 20044
202-305-7921 (v)
202-514-4963 (f)
Thomas.K.Vanaskie@usdoj.gov

Of Counsel:

Byung J. Pak
United States Attorney

Neeli Ben-David
Assistant United States Attorney
Georgia Bar No. 049788
Office of the U.S. Attorney
75 Ted Turner Drive, SW, Suite 600
Atlanta, GA 30303
404-581-6303 (v)
Neeli.Ben-David@usdoj.gov

Counsel for Counterclaim Defendant United States of America

UNITED STATES' MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS AMENDED COUNTERCLAIM

The United States of America respectfully submits this memorandum of law in support of its motion to dismiss Claud Clark, III's amended counterclaim for failure to state a claim. On August 24, 2020, the Court dismissed Clark's original counterclaim for failure to state a claim and granted him leave to file an amended counterclaim. (ECF No. 202.) Clark filed his amended counterclaim on September 14, 2020, seeking damages against the United States under 26 U.S.C. § 7431 for alleged wrongful disclosures of his return information. (ECF No. 206.)

Clark alleges that IRS and DOJ officials wrongfully disclosed his return information in eleven statements (collectively the “statements at issue”), nine of which are from Clark's original counterclaim and two of which are new. The nine original statements consist of the DOJ's Press Release announcing this suit to enjoin Clark and others from promoting a syndicated conservation easement scheme, and general statements by the IRS regarding the Government's efforts to combat such schemes. The new alleged disclosures are a note on a printout from Clark's website exchanged between two IRS employees, and a letter to Senate Finance Committee Chairman Grassley from IRS Commissioner Rettig responding to a formal request for information regarding syndicated conservation easements. Despite adding over 200 allegations, Clark's amended counterclaim fares no better than his original. Just as before, Clark has failed to plausibly allege that either the DOJ or IRS disclosed his (or anyone else's) return information in violation of § 6103 of the Internal Revenue Code. His claim for damages under § 7431 fails.

I. BACKGROUND

On December 24, 2019, Clark filed a counterclaim in this matter alleging that Government officials from the DOJ and IRS made unauthorized disclosures of his return information by issuing a press release publicizing the filing of the Government's complaint in this matter and making general policy statements regarding the Government's efforts to combat such transactions. (ECF No. 123 at 115-27.) The Court dismissed Clark's counterclaim for failure to state a claim on August 24, 2020. (ECF No. 202.) In its order, the Court granted Clark leave to file an amended counterclaim that alleges “specifically, how the statements made by the Government disclose Clark's tax return information or his identity and investigation of him personally linked to his tax return.” (Id. at 15.)

Clark filed an amended counterclaim on September 14, 2020, in which he alleges that the Government made unauthorized disclosures of his return information in the following statements:

• Statement 1: A handwritten note on a printed excerpt of Clark's website exchanged between two IRS employees;

• Statement 2: DOJ Press Release 18-1672 (Dec. 19, 2018);

• Statement 3: A statement by Principal Deputy Assistant Attorney General Richard E. Zuckerman quoted in the DOJ Press Release;

• Statement 4: IRS News Release IR-2019-47 (Mar. 19, 2019);

• Statement 5: IRS News Release IR-2019-182 (Nov. 12, 2019);

• Statement 6: A statement by Charles P. Rettig, Commissioner of the IRS, quoted in IR 2019-182;

• Statement 7: A statement made by an unknown IRS official to Richard Rubin of the Wall Street Journal;

• Statement 8: Remarks by Commissioner Rettig at the American Institute of CPAs (“AICIPA”) National Tax Conference;

• Statement 9: A statement by Douglas O'Donnell, Commissioner of the IRS Large Business and International Division, at AICPA National Tax Conference;

• Statement 10: A comment made by Sunita Lough, Deputy Commissioner of IRS Services and Enforcement, at the AICPA National Tax Conference; and

• Statement 11: A letter dated February 12, 2020 from Commissioner Rettig to Senate Finance Committee Chairman Grassley responding to a request for updated information on syndicated conservation easement transactions. (ECF No. 206 ¶¶ 47-224.)

Clark also alleges that the Government has “made other statements constituting impermissible disclosure of [his] return information.” (Id. ¶ 225.) As an example, he alleges that the Government “improperly identified Mr. Clark and disclosed his return information to the DOJ Office of Public Affairs to prepare the DOJ Press Release.” (Id. ¶ 226.)

Based on those allegations, Clark seeks actual and punitive damages, an injunction prohibiting the Government from making additional statements regarding its efforts to combat abusive syndicated conservation easements, and an award of attorney's fees. (Id. at 65.)

II. STANDARD OF REVIEW

As this Court previously explained, to survive the Government's motion to dismiss under Rule 12(b)(6), Clark's counterclaim “must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'” (ECF No. 202 at 3 (citations omitted).) Although factual allegations must be accepted as true, the Court “is not bound to accept as true a legal conclusion couched as a factual allegation.” (Id.) Accordingly, “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” (Id. at 3-4 (citations omitted).)

III. ARGUMENT

Clark fails to plausibly allege that the Government disclosed his “return information” in violation of § 6103, and therefore cannot recover damages under §7431. See 26 U.S.C. § 7431(a), (c). Indeed, nine of the statements at issue (Statements 3 through 11) “are statement made about conservation easements in general.” (ECF No. 202 at 15.) Those statements convey information in a form that does not identify, directly or indirectly, Clark or any other taxpayer. As such, they do not implicate § 6103's protections. The only statements that identify Clark are the handwritten note on a printout from Clark's website (Statement 1) and the DOJ Press Release (Statement 2). The note is not even a disclosure of return information under § 6013(b)(8). Regardless, the note does not constitute Clark's return information, and even if it did, the exchange of the note was permitted by §6103(h)(1). The DOJ Press Release does not violate § 6103 because all references to Clark in the Press Release are attributable to the publicly filed complaint in this action.

A. Overview of § 6103

Section 6103 of the Internal Revenue Code sets forth the general rule “that 'returns' or 'return information' as defined therein shall be confidential.” Church of Scientology v. I.R.S., 484 U.S. 9, 10 (1987). The definition of return information is “fairly broad, encompassing, inter alia, the taxpayer's identity, or whether the taxpayer's return 'was, is being, or will be examined or subject to other investigation or proceeding.'” (ECF No. 202 at 5 (citation omitted).) See also 26 U.S.C. § 6103(b)(2)(A) (defining “return information”). But the definition “is not unlimited.” (ECF No. 202 at 8.) Data and information “in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer” are excluded from the definition of return information. 26 U.S.C. § 6103(b)(2) (Haskell Amendment); Church of Scientology, 484 U.S. at 10. The statute also contains numerous exceptions to the prohibition against the disclosure of return information. See 26 U.S.C. §§ 6103(c)-(o).

Clark's conclusory allegations that the statements at issue directly or indirectly disclose his protected return information are nothing more than threadbare recitals of the elements of his claim. The statements at issue do not reveal Clark's protected return information. Statement 1 — the note — is not even a disclosure, but if it were, it does not contain Clark's return information. Statement 2 — the DOJ Press Release — only publicizes information from the publicly-filed complaint in this action. Such public information is not protected by § 6103. Statements 3 through 11 — which relate to the Government's efforts to combat abusive syndicated conservation easements — are of such general nature that they do not implicate § 6103. To be sure, the information in those statements is explicitly excluded from the definition of return information by the Haskell Amendment. We now address each statement in turn.

B. The Handwritten Note Does Not Disclose Clark's Protected Return Information

Clark's allegation that a handwritten note (Statement 1) on a printout of his website is an unlawful disclosure of his protected return information is implausible. The note is not a disclosure at all. Section 6103 defines a disclosure as “the making known to any person in any manner whatever a return or return information.” 26 U.S.C. § 6103(b)(8). Taking at face value Clark's allegation that he is a well-known appraiser of conservation easements stemming from his testimony in Kiva Dunes, a note exchanged between IRS agents acknowledging his involvement in that matter made nothing known. See Pflum v. United States, Case No. 99-4170, 2007 WL 1651290, *6 (D. Kan. June 6, 2007); see also Clark v. United States, Case No. 06cv-544, 2011 WL 3157196, *17 (collecting cases that hold a disclosure requires “the imparting of information to a person to whom that information was previously unknown”). Indeed, the note demonstrates that the recipient knew of Clark's identity and his connection to conservation easements.

In any event, the note does not constitute Clark's return information. This is the return information of Clark's client because it was gathered in connection of a liability determination of that taxpayer, not Clark. See 26 U.S.C. § 6103(b)(2). The underlying theme of Clark's amended counterclaim is that any utterance of his name constitutes his return information. But § 6103 looks to the taxpayer for whom the information is gathered. For this reason, “[o]nly a taxpayer whose tax return or return information is claimed to have been improperly disclosed may bring a lawsuit under Section 7431.” Duquette v. Comm'r, 110 F. Supp. 2d 16, 23 (D.D.C. 2000); see also Ryan v. United States, 74 F.3d 1161, 1163 (11th Cir. 1996) (explaining that a person lacks standing to assert a claim for wrongful disclosure of return information of third parties); Brown v. United States, 755 F. Supp. 2d 285, 286-87 (N.D. Cal. 1990) (holding that the plaintiff did not have a cause of action for wrongful disclosure of her former spouse's tax return information). Because the note is not Clark's return information, he acks standing to assert any claim related to this statement.

But even if the note is Clark's return information (as that term is defined in §6013(b)(2)), the exchange between the agents is authorized by statute. Section 6103(h)(1) permits the disclosure of return information between IRS employees for tax administration purposes. Contrary to Clark's characterization, Statement 1 is not “IRS gossip.” It is a known fact shared by one agent of an investigation to another who were assigned to audit a conservation easement that Clark appraised. (See ECF No. 206 ¶¶ 45-46.) Identifying Clark as the appraiser, even if done in an “off handed” way, does not alter the nature of the exchange as one pertaining to tax administration.

C. The DOJ Press Release Does Not Disclose Clark's Protected Return Information

On December 18, 2018, the Government filed suit to enjoin Clark and others from, inter alia, organizing, promoting or selling a “conservation easement syndication scheme.” (ECF No. ¶ 6.a.) The next day, DOJ issued the Press Release (Statement 2) to announce the filing of the complaint and inform the public of its efforts to combat abusive syndicated conservation easements. (ECF No. 206-2.) Notably, the Press Release included a hyperlink to a file-stamped copy of the complaint. (Id.) The Press Release does not disclose any of Clark's protected return information because it publicizes only the allegations of the publicly-filed, file-stamped complaint that was attached to and referenced in the Press Release.

In its August 24, 2020 Order, the Court did not address the Government's arguments that the Press Release does not contain any protected return information. Indeed, the Court noted “a dearth of case law” on § 6103. (ECF No. 206 at 15.) But the Court is not writing on a blank slate. Although the Eleventh Circuit has yet to address whether publication of “return information” in a Government press release relating to public judicial proceedings violates § 6103, several circuits have addressed this issue. And all but one of those circuits have held that publicizing information from the public judicial proceedings does not violate § 6103.¹

1. The DOJ Press Release Is Not an Unauthorized Disclosure of Return Information under the Public Record Exception

In Lampert v. United States, 854 F.2d 335, 338 (9th Cir. 1988), the Ninth Circuit was confronted with identical facts to this case and held that “once return information is lawfully disclosed in a judicial forum, its subsequent disclosure by press release does not violate [§ 6103].” There, the Government filed an action to enjoin certain individuals from promoting and selling abusive tax shelters. Id. at 336. After the complaint was filed, the Government issued press releases announcing the suit and the investigation of the defendants. Id. Like Clark, the taxpayers brought an action under § 7431 alleging that the Government's press releases were unauthorized disclosures of “return information.” Id.

The Ninth Circuit rejected the taxpayers' argument. In doing so, the court explained that “[o]nce tax return information is made a part of the public domain, the taxpayer may no longer claim a right of privacy in that information.” Id. at 338. In other words, return information that had been lawfully placed in the public record is no longer protected by § 6103. Id.; see also Rowley v. United States, 76 F.3d 796 (6th Cir. 1996) (holding that the republication of return information that was lawfully placed in the public record in a notice of federal lien does not violate § 6103); Barnes v. United States, 17 F.3d 1428 (3d Cir.1994) (unpublished table decision) (affirming that a press release issued by the U.S. Attorney's Office announcing an indictment did not disclose “return information” because the indictment was a matter of public record).

Here, the Government lawfully disclosed Clark's return information when it filed the complaint. See 26 U.S.C. § 6103(h)(4). The complaint is a matter of public record. The DOJ Press Release discussing the allegations found in the publicly-filed complaint does not implicate, nor violate, § 6103. Lampert, 854 F.2d at 338.

Clark alleges that § 6103 does not contain an express exception that allows for the republication of information previously placed in the public record. (ECF No. 206 ¶ 75.) This is true, but immaterial. Clark does not have a right to privacy to information that is part of the “public domain.” Lampert, 854 F.2d at 338. Thus, requiring the Government to keep confidential information found in a public court document serves no purpose.

Contrary to Clark's allegations, the DOJ Press Release was issued consistent with its interpretation of § 6103 and its policies. (ECF No. 206 ¶ 78.) DOJ follows Lampert and maintains that “[r]eturn information loses any confidential status if it becomes a matter of public record.” Dep't of Justice, Criminal Tax Manual §42.03[2] (2012); see also Internal Revenue Manual ¶ 11.3.11.12(3) (Mar. 5, 2019) (“The IRS has consistently argued that tax information placed in the public record in connection with tax administration is no longer confidential and cannot be disclosed within the meaning of IRS § 6103(b)(8) if the IRS has already made such information known in public records during tax administration activities.”)² Consistent with its policies, DOJ issued the Press Release to notify the public of this action and its efforts to combat abusive syndicated conservation easements. Because the Press Release recounts only information already placed in the public domain, the Press Release does not disclose any return information in violation of § 6103. Lampert, 854 F.2d at 338.

Clark attempts to avoid application of the public record exception by alleging that the DOJ Press Release “was not based on publicly available information or the public record.” (ECF No. 206 ¶ 71.) This threadbare, conclusory allegation is not presumed true for the purposes of this motion and does not save his counterclaim from dismissal. Iqbal, 556 U.S. at 678. In any event, a comparison of the complaint and DOJ Press Release proves Clark's allegation to be false. (Compare ECF No. 1 with ECF No. 206-2.) The Press Release carefully relates the complaint's allegations using phrases such as “according to the complaint,” “allegedly,” and “alleges.” (ECF No. 206-2.) Clark does not identify any information in the Press Release that is not found in the publicly-available complaint. Instead of confronting this reality, Clark assumes that his threadbare allegations will enable his claim to proceed to discovery. Unfortunately for Clark, the Supreme Court has held otherwise. Iqbal, 556 U.S. at 678-79 (explaining that “the doors of discovery for a plaintiff armed with nothing more than conclusions” remain locked).

2. The DOJ Press Release Is Not an Unauthorized Disclosure of Return Information under the Immediate Source Test

Clark's claim regarding the DOJ Press Release also fails under the immediate source test. The Fifth, Seventh, and Tenth Circuits have taken a narrower approach than Lampert's public record exception. Those Circuits hold that where the immediate source of the information allegedly wrongfully disclosed is in the public domain, the subsequent disclosure of that information does not violate § 6103. See Johnson v. Sawyer, 120 F.3d 1307, 1318-19 (5th Cir. 1997); Thomas v. United States, 890 F.2d 18, 21 (7th Cir. 1989); Rice v. United States, 166 F.3d 1088, 1091 (10th Cir. 1999). As the Seventh Circuit explained, “the government should be allowed to tell its side of the . . . story; but however that may be, we believe that the definition of return information comes into play only when the immediate source of the information is a return, or some internal document based on a return.” Thomas, 890 F.2d at 21 (emphasis added).

Here, the immediate source of the DOJ Press Release is the publicly-filed complaint, not the IRS's files. Indeed, the Press Release has a hyperlink to a file-stamped copy of the complaint. (ECF No. 206-2 at 2.) 

Clark's allegation that the Press Release contains information not based on the complaint is a threadbare, conclusory allegation that cannot save Clark's amended counterclaim from dismissal. That allegation is also patently false. Clark has had ample time to compare the contents of the complaint with the Press Release to allege with specificity the information in the Press Release that was not based on the complaint. But he has not done so — and cannot do so — because the immediate source of the DOJ Press Release is the complaint. (See ECF No. 206-2.)

Moreover, Clark's allegation regarding when the DOJ Press Release was drafted is a red herring. (ECF No. 206 ¶ 72.) The alleged wrongful disclosure occurred when the Press Release was issued, not when it was drafted. The Press Release was issued after the complaint was filed, and each statement in the Press Release is attributed directly — and sourced — to the allegations in the publicly filed complaint.

Clark's allegation that the Press Release was issued before he was sent a Notice of a Lawsuit and Request to Waive Service of the Summons does not change the analysis. The test is whether the immediate source of the Press Release was the publicly-filed complaint, not whether Clark was sent a Notice of Lawsuit before the Press Release was issued. Here, the immediate source of the DOJ Press Release is the publicly-filed complaint. Clark's claim related to the Press Release is simply not plausible. See Thomas, 890 F.2d at 21.

3. The Government Did Not Make an Unauthorized Disclosure of Clark's Protected Return Information to the DOJ Office of Public Affairs

Cognizant that his claim regarding the DOJ Press Release fails under the public record exception and the immediate source test, Clark attempts to save his counterclaim by alleging that his identity and return information were improperly provided to the DOJ Office of Public Affairs (OPA) to prepare the Press Release. (ECF No. 206 ¶ 226.) This Hail Mary effort to save his counterclaim fails.³

Clark's allegation of an alleged improper disclosure of his return information is nothing more than an attempt to distract the Court from the fact that the Press Release does not disclose anything about Clark that is not alleged in the Government's complaint. Regardless, taking this allegation as true, the exchange of information from the DOJ attorneys assigned to this case to OPA was not an unauthorized disclosure of Clark's return information. DOJ attorneys personally and directly engaged in a court proceeding involving a matter of tax administration may disclose return information to other DOJ employees and offices when necessary for that matter. See 26 C.F.R. § 301.6103(h)(2)-1(b)(2). Because this suit is a matter of “tax administration,” see 26 U.S.C. § 6103(b)(4), any disclosure of Clark's return information to OPA to prepare a press release for issuance after the Government filed its complaint was authorized under § 6103 and the regulations thereunder.

D. The Zuckerman Statement Does Not Disclose Any Return Information

The Zuckerman Statement (Statement 3) consists of two parts: a general statement regarding the Government's enforcement efforts to “shut down fraudulent conservation easement shelters;” and a specific statement that the fraudulent conversation easement shelters “in this case were based on willfully false valuations.” (ECF No. 206-2.) Neither part of Statement 3 violates § 6103.

The first part of the Zuckerman Statement is — taking the allegations most favorably to Clark — “full of policy enforcement bravado” that does not implicate §6103's protections. (ECF No. 202 at 9.) The second part of this statement is directly attributed to the publicly-filed complaint. See, e.g., ECF No. 1 ¶ 116 (“Defendant Clark knew or had reason to know how the syndicates were structured and being marketed and sold and that his statements of value and the statements of value he caused others to make were false.”) Accordingly, Clark's claim that the Zuckerman Statement disclosed his protected return information is not plausible.

E. The IRS News Releases Do Not Disclose Any Return Information

The IRS News Releases (Statement 4 and 5) do not disclose any “return information” as defined in § 6103. Like the DOJ Press Release, the IRS News Releases announce the Government's enforcement priorities with respect to the tax law. (ECF Nos. 206-3, 206-4.) In doing so, these statements do not disclose any data or information that identifies, directly or indirectly, Clark or any other taxpayers. They put the public on notice “to steer clear of abusive tax avoidance schemes and the unscrupulous individuals who promote them.” (ECF No. 206-3 at 1.) They also remind taxpayers who participate in these schemes that they “may face prosecution, civil litigation and . . . stiff penalties and interest.” (Id.) It is vital for the Government to convey its view of these transactions (which many taxpayers and advisors want to know) to administer the tax laws.

In Statement 4, the IRS explained that promoters of syndicated conservation easement schemes “obtain an inflated appraisal of the conservation easement based on unreasonable factual assumptions and conclusions about the development potential of the real property.” (Id. at 2.) This general description of the scheme does not disclose Clark's return information. On the contrary, it parrots the description of abusive syndicated conservation easement transactions described IRS Notice 2017-10. See IRS Notice 2017-10, 2016 WL 7422633 (Dec. 23, 2016) (“The promoters obtain an appraisal that purports to be a qualified appraisal as defined in § 170(f)(11)(E)(i) but that greatly inflates the value of the conservation easement based on unreasonable conclusions about the development potential of the real property.”). As this Court noted, “any utterance” about syndicated conservation easements is not a “per se” disclosure of Clark's return information. (ECF No. 202 at 9.) Put simply, this statement does not include any return information as defined in § 6103(b)(2).

Statement 4's references to this suit and the DOJ Press Release do not transform the statement into a disclosure of his return information. (ECF No. 206 ¶ 104.) The IRS may inform the public of the filing of the complaint and the DOJ Press Release because they are in the public record See Lampert, 854 F.2d at 338. Indeed, the IRS may disseminate public documents that are “lawfully prepared by an agency that is separate from the Internal Revenue Service and has lawful access to tax returns.” Thomas, 890 F.2d at 21.

Statement 5 provides that “audits and investigations [related to syndicated conservation easements] cover billions of dollars of potentially inflated deductions as well as hundreds of partnerships and thousands of investors.” (ECF No. 206-4.) This general statement does not identify, directly or indirectly, any specific taxpayer. See 26 U.S.C. § 6103(b)(2) (Haskell Amendment). And the “close proximity” of this statement to a reference to this suit does not make the statement a disclosure of Clark's return information.

F. Commissioner Rettig's Statements Do Not Disclose Any Return Information

Clark's allegations that Commissioner Rettig (the Commissioner) disclosed his return information in Statements 6 and 8 are not plausible.

In Statement 6, the Commissioner states: “We will not stop in our pursuit of everyone involved in the creation, marketing, promotion and wrongful acquisition of artificial, highly inflated deductions based on these aggressive transactions.” (ECF No. 206 ¶ 134.) As this Court explained, “[t]his statement is full of policy enforcement bravado. But it does not appear to disclose any specific individual's return information or identity — but instead, the IRS's stated goal of stopping the use of allegedly fraudulent conservation easements through litigation.” (ECF No. 202 at 9.) Clark's threadbare, conclusory allegations that this statement disclosed his return information do not make this alleged disclosure any more plausible than before. (ECF No. 206 ¶¶ 135-138.)

Similarly, Statement 8 does not contain any return information protected by § 6103. In this statement, the Commissioner stated: “We don't appreciate the activities that have gone on with respect to the syndicated conservation easements; there are some artificial appraisals there, some fatal flaws.” (Id. ¶ 165.) This statement conveys data in a form that does not identify, directly or indirectly, Clark or any other taxpayers. Consequently, it does not contain any return information. See 26 U.S.C. § 6103(b)(2) (Haskell Amendment).

Clark alleges that, based on publicly available information and his small professional community, Statement 8 (and the other statements at issue) can be read only as a disclosure of his return information. (ECF No. 206 ¶ 167.) The “series of factual inferences and conclusions” that one would need to make to reach that conclusion “is too attenuated” to state a claim for wrongful disclosure. (ECF No. 202 at 10.) Clark is just one of many individuals who have provided appraisals for syndicated conservation easements, and the IRS has audited over 100 syndicated conservation easement transactions. (See ECF No. 206-8 at 2, 4.) His claim that Statements 6 and 8 should be read to identify him, and him alone, is nothing more than speculation and should be dismissed as such. See Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (“Factual allegations must be enough to raise a right to relief above the speculative level”).

G. An Unknown IRS Official Did Not Disclose Any Return Information to Richard Rubin of the Wall Street Journal

This Court has stated that “[g]enerally, in a wrongful disclosure action, the plaintiff 'must specifically allege who made the alleged disclosures, to whom they were made, the nature of the disclosures, the circumstances surrounding them, and the dates on which they were made.'” (ECF No. 202 at 11 (citation omitted).) Clark's claim regarding an alleged wrongful disclosure to Richard Rubin of the Wall Street Journal (Statement 7) falls far short of this standard.

Clark not only fails to allege who disclosed his return information to Rubin, he fails to allege facts that plausibly demonstrate the information allegedly disclosed constitutes return information. (See ECF No. 206 ¶ 150.) Nothing in Statement 7 identifies Clark or any other taxpayer, directly or indirectly. Indeed, most of Statement 7 is not — and cannot be — attributed to the IRS. And the article's reference to this suit is not a disclosure because the press can freely report on a publicly-filed complaint. But even if the IRS informed Rubin of the complaint — which there is no plausible allegation that it did — the IRS may divulge the existence of a publicly filed complaint without violating § 6103. See Thomas, 890 F.2d at 21.

H. The O'Donnell and Lough Statements Do Not Disclose Any Return Information

The O'Donnell and Lough Statements (Statements 9 and 10) are “statements made about conservation easements in general,” not “about this case specifically.” (ECF No. 202 at 15.) As such, they do not include any return information of Clark or any other person.

The O'Donnell Statement (a) describes actions that the IRS has taken to determine whether taxpayers satisfied their obligations to disclose their participation in syndicated conservation easement transactions as required by IRS Notice 2017-10; (b) reminds tax practitioners that the IRS can penalize taxpayers who fail to meet their disclosure obligations; and (c) informs attendees that the IRS has received approval to hire additional appraisers to assist in its efforts to combat abusive syndicated conservation easements. (ECF No. 206 ¶ 180.) This statement does not refer or relate to Clark in any manner.

Likewise, Clark's allegation that the Lough Statement disclosed his return information fails. This statement informed tax practitioners of the strategy the IRS would follow when litigating syndicated conservation easement cases and expressed confidence in the IRS's chances of prevailing in those cases. (ECF No. 206 ¶ 195.) The “policy enforcement bravado” of the Lough Statement does not reveal the return information, directly or indirectly, of Clark or any taxpayer. (ECF No. 202 at 9.) The fact that Clark is one of dozens of individuals who submitted appraisals in connection with conservation easements does not make this statement a disclosure of his return information. (See ECF No. 206-8 at 4 (response to question 5).)

I. The Letter to Senator Grassley Does Not Disclose Any Return Information

The Letter from the Commissioner to Senator Grassley, Chairman of the Senate Committee on Finance (Statement 11) is not an unauthorized disclosure of return information of Clark or any other taxpayer for two reasons. (ECF No. 206 ¶ 210.) First, the letter communicates data and information regarding syndicated conservation easements and the IRS's enforcement efforts with respect to such transactions in a form that does not identify, directly or indirectly, Clark or any other taxpayer. See 26 U.S.C. § 6103(b)(2) (Haskell Amendment). Second, the reference to this lawsuit is not a disclosure of Clark's return information because this action is a matter of public record. Accordingly, Clark's claim related to the Commissioner's letter to Senator Grassley fails.

J. Clark Fails to State a Claim that the Government Disclosed his Return Information in Other Unknown Statements

The Court previously found that Clark's catchall allegation on information and belief that the Government has made other statements disclosing his protected tax return information did not suffice to state a plausible claim for relief. (ECF No. 202 at 14.) Clark attempts to revive his catchall claim by providing an example of an alleged additional disclosure, i.e., that the Government improperly disclosed his return information to OPA to prepare the DOJ Press Release. (Id. ¶¶ 225-227.) As discussed in Section III.C.3, above, there was no unlawful disclosure of Clark's return information to OPA. Accordingly, Clark's claim of other impermissible disclosures is “simply too attenuated or bare to plausibly allege a disclosure of Clark's tax return information.” (ECF No. 202 at 14.)

IV. CONCLUSION

Clark's amended counterclaim fails to state a claim for relief under § 7431 because the allegations that the Government disclosed his protected “return information” are not plausible. Accordingly, the counterclaim must be dismissed.

Respectfully submitted,

RICHARD E. ZUCKERMAN
Principal Deputy Assistant Attorney General

THOMAS K. VANASKIE
D.C. Bar No. 1000405
BEATRIZ T. SAIZ
N.J. Bar No. 024761995
Trial Attorneys, Tax Division
U.S. Department of Justice
P.O. Box 14198
Washington, D.C. 20044
202-305-7921 (v)
202-514-4963 (f)
Thomas.K.Vanaskie@usdoj.gov

Of Counsel:

Byung J. Pak
United States Attorney

Neeli Ben-David
Assistant United States Attorney
Georgia Bar No. 049788
Office of the U.S. Attorney
75 Ted Turner Drive, SW, Suite 600
Atlanta, GA 30303
404-581-6303 (v)
Neeli.Ben-David@usdoj.gov

Counsel for Counterclaim Defendant United States of America