Shreiber v. Mastrogiovanni

• Decision Date: 31 May 2000
• Docket Number: No. 99-5230,99-5230
• Citation: 214 F.3d 148
• Parties: (3rd Cir. 2000) GERALD B. SHREIBER, v. ROBERT A. MASTROGIOVANNI; THE INTERNAL REVENUE SERVICE GERALD B. SHREIBER, Appellant
• Court: U.S. Court of Appeals — Third Circuit

Page 148

214 F.3d 148 (3rd Cir. 2000)

GERALD B. SHREIBER, v. ROBERT A. MASTROGIOVANNI; THE INTERNAL REVENUE SERVICE

GERALD B. SHREIBER, Appellant

No. 99-5230

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued December 9, 1999

Filed May 31, 2000

On Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 98-cv-02515) District Judge: Honorable Joseph E. Irenas

David N. Zeehandelaar, Esq. (ARGUED) Blank, Rome, Comisky & McCauley One Logan Square Philadelphia, PA 19103 Counsel for Appellant

Kenneth Rosenberg, Esq. (ARGUED) David I. Pincus, Esq. U.S. Department of Justice, Tax Division P.O. Box 502 Washington, DC 20044 Counsel for Appellees

Before: NYGAARD, RENDELL, and ROSENN, Circuit Judges

OPINION OF THE COURT

RENDELL, Circuit Judge.

In this appeal we are called upon to decide whether a federal cause of action should be implied to permit a plaintiff to sue an employee of the Internal Revenue Service ("IRS") for damages resulting from a constitutional violation claimed to have occurred in connection with the assessment of a tax liability.¹ We will affirm the order of the District Court dismissing Shreiber's complaint for failure to state a claim. In so doing, we join a number of other courts of appeals holding that a damages remedy should not be inferred against an IRS agent pursuant to Bivens v. Six Unknown Federal Narcotics Agents, 403 U.S. 388 (1971), for alleged constitutional violations, because Congress has created an extensive scheme providing remedies to a plaintiff complaining of the conduct of government officials in connection with tax assessments and collections.

In 1995 and 1996, IRS agent Mastrogiovanni conducted an audit of the federal income tax liabilities of Shreiber and his wife for the 1991, 1992 and 1993 tax years. During the investigation, Shreiber spoke with Mastrogiovanni on several occasions and became familiar with Mastrogiovanni's voice. Shreiber alleges that on August 11, 1995, Mastrogiovanni left a voice mail message at his place of business stating in part: "Hey you Jew bastard piece of shit. This is White Trash, I am going to get you." Thereafter, when the audit was completed, the IRS sent a "30-day letter" to the Shreibers, dated May 31, 1996, proposing large increases in their tax liabilities for the years 1991, 1992 and 1993. The letter was prepared by J. J. Jennings, District Director, on the basis of Mastrogiovanni's recommendation.

Shreiber filed a timely protest of the adjustment with the IRS, and proceeded to contest it through administrative channels. It appears that he reached a tentative settlement with the IRS in June of 1999, in which the IRS agreed to reduce the amount of deductions it would deny and agreed to an adjusted amount due.

On May 29, 1998, while the administrative appeal was pending, Shreiber filed a civil rights action against Mastrogiovanni and the IRS. Shreiber's complaint alleges that he was "denied his constitutional right to a fair hearing due to the religious discrimination of the IRS agent," evidenced by the voice mail message, and "deprived of property without due process of law, in violation of his Fifth Amendment rights." In his appellate briefs, Shreiber extends his complaint to encompass an equal protection violation based on religion and grounded in the Fifth Amendment. He requests damages compensating him for his attorney's fees and mental anguish as well as punitive damages. The government filed a motion for summary judgment, which the District Court actually treated as a motion to dismiss.

The District Court dismissed the complaint on two grounds. First, the District Court determined that Shreiber could not state a claim upon which relief could be granted. The District Court explained that Shreiber had conceded that 26 U.S.C. S 7433 was limited to redressing violations of the Internal Revenue Code and, thus, did not provide him with a cause of action. The Court then considered whether a Bivens remedy should be inferred. Reviewing the Supreme Court's decision in Bivens, and its progeny, including Schweiker v. Chilicky, 487 U.S. 412 (1988), the Court concluded that a cause of action should not be inferred because Congress had enacted 26 U.S.C. S 7433 and had provided a complex structure permitting the challenge of tax assessments through other means. The Court also concluded that even if a cause of action should be inferred, the claim should be dismissed as premature because it would not accrue until it was determined that the assessment had, in fact, been incorrect.²

Shreiber contends that we should infer a cause of action under Bivens precisely because Congress did not provide one when it enacted 26 U.S.C. S 7433, and because, without a federal damages action, he will be without a meaningful remedy in the form of compensatory and punitive damages and unconstitutional behavior will not be deterred. At oral argument, Shreiber emphasized that his case should be distinguished from Schweiker and the other tax cases resolved in the government's favor by other courts because he is contending that his constitutional rights were violated on the basis of religious animus.

An understanding of the applicable statutes and their history is important to understanding this appeal. In 1988, as part of the "Taxpayer Bill of Rights," Congress enacted 26 U.S.C. S 7433, providing for a federal cause of action against an officer or employee of the IRS for actions in violation of the Internal Revenue Code or regulations "in connection with any collection of Federal tax." 26 U.S.C. S 7433(a).³ As enacted, S 7433(a) is the "exclusive remedy for recovering damages resulting from such actions." Id. A proposed draft of the provision contained broader language. The draft permitted civil actions "in connection with any determination or collection of federal tax" and in violation of "any provisions of federal law." S. 2223, 100th Cong., 2d Sess. S 123 (1988) (emphasis added). The Conference Report regarding S 7433 discusses two modifications from the Senate draft that are relevant to the issue before us. The Report explains that the final version was:

limited to reckless or intentional disregard in connection with the collection of tax. An action under this provision may not be based on alleged reckless or intentional disregard in connection with the determination of tax. . . . [T]he provision is limited to reckless or intentional disregard of the Internal Revenue Code and the regulations thereunder. An action may not be brought under this provision based on an alleged violation of a Federal law other than the Internal Revenue Code or a regulation promulgated thereunder.

H.R. Conf. Rep. No. 100-1104, at 229 (1988), reprinted in 1988-3 C.B. 473-479;⁴ see also Miller v. United States, 66 F.3d 220, 222-23 (9th Cir. 1995) (discussing the legislative history of S 7433 and finding that it does not permit actions for the incorrect determinations of tax liability); Shaw v. United States, 20 F.3d 182, 184 (5th Cir. 1994).

Even though S 7433 was narrowed in scope during the drafting process, Congress has provided other methods by which a taxpayer can challenge an assessment. See 26 C.F.R. S 601.103(c) (explaining options available to a taxpayer). A taxpayer may pursue an internal appeal with the IRS, see 26 C.F.R. S 106, sue for a refund in federal court, see 28 U.S.C. S 1346(a)(1), 26 U.S.C. SS 6511, 7422, or appeal the assessment to the Tax Court, see 26 U.S.C. SS 6213, 6214. Attorney's fees may be recovered in certain circumstances when the taxpayer is successful. See 26 U.S.C. S 7430. As noted, Shreiber utilized the administrative appeals process.

In determining whether Shreiber's claim can be asserted against Mastrogiovanni in a civil rights action, we must consult the relevant precedent beginning with the seminal case of Bivens v. Six Unknown Federal Narcotics Agents. In Bivens, the Supreme Court held that an individual complaining of a Fourth Amendment violation by federal officers acting under color of their authority may bring a suit for money damages against the officers in federal court. See Bivens, 403 U.S. at 397. In so holding, the Court noted in dicta that "[t]he present case involves no special factors counseling hesitation in the absence of affirmative action by Congress," and found "no explicit congressional declaration that persons injured by a federal officer's violation of the Fourth Amendment may not recover money damages from the agents, but must instead be remitted to another remedy, equally effective in the view of Congress." Id. at 396-97.

Following Bivens, the Supreme Court has considered the availability of damages remedies under Bivens in a number of factual settings, and addressed the meaning of "special factors counseling hesitation."⁵ The Court's decision in Schweiker is particularly relevant to our discussion here. In Schweiker, the Supreme Court considered whether a damages remedy should be implied under Bivens for alleged due process violations in connection with the denial of Social Security benefits. See Schweiker, 487 U.S. at 420. The plaintiffs in Schweiker were three recipients of Social Security benefits who had been dropped from the rolls after the defendants adopted policies that the plaintiffs alleged violated their due process rights. Each plaintiff had either successfully appealed the determination or applied for reinstatement, and had either received full retroactive benefits or had an application for benefits pending. Each plaintiff, then, sued for additional damages not available through the congressionally provided measures.

The Supreme Court held that no Bivens remedy should be implied. Reviewing the teachings of applicable precedent, the Court reaffirmed that the absence of statutory relief for a constitutional violation does not necessarily mean that courts should create a damages remedy against the officer responsible for the violation. See id. at 421-22. The...