Judicial Watch, Inc. v. Rossotti , 317 F.3d 401 ( 2003 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
JUDICIAL WATCH, INCORPORATED, 
Plaintiff-Appellant,
v.
CHARLES ROSSOTTI; UNITED
STATES OF AMERICA; DONNA DORSEY;  No. 02-1413
M. PETER BRESLAN; WAYNE HAMPEL;
STEVEN T. MILLER;
DEPARTMENT OF THE TREASURY;
INTERNAL REVENUE SERVICE,
Defendants-Appellees.

JUDICIAL WATCH, INCORPORATED, 
Plaintiff-Appellant,
v.
CHARLES ROSSOTTI; UNITED
STATES OF AMERICA; DONNA DORSEY;  No. 02-1462
M. PETER BRESLAN; WAYNE HAMPEL;
STEVEN T. MILLER;
DEPARTMENT OF THE TREASURY;
INTERNAL REVENUE SERVICE,
Defendants-Appellees.

Appeals from the United States District Court
for the District of Maryland, at Baltimore.
William M. Nickerson, Senior District Judge.
(CA-01-2672-WMN)
Argued: December 3, 2002
Decided: January 24, 2003
2 JUDICIAL WATCH, INC. v. ROSSOTTI
Before NIEMEYER, LUTTIG, and MOTZ, Circuit Judges.
Affirmed by published opinion. Judge Motz wrote the opinion, in
which Judge Niemeyer and Judge Luttig joined.
COUNSEL
ARGUED: David Barmak, MINTZ, LEVIN, COHN, FERRIS,
GLOVSKY & POPEO, P.C., Reston, Virginia, for Appellant.
Gretchen M. Wolfinger, Tax Division, UNITED STATES DEPART-
MENT OF JUSTICE, Washington, D.C., for Appellees. ON BRIEF:
Erica Brown, MINTZ, LEVIN, COHN, FERRIS, GLOVSKY &
POPEO, P.C., Washington, D.C., for Appellant. Eileen J. O’Connor,
Assistant Attorney General, Jonathan S. Cohen, Thomas M. DiBiagio,
United States Attorney, Tax Division, UNITED STATES DEPART-
MENT OF JUSTICE, Washington, D.C., for Appellees.
OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
In this interlocutory appeal, Judicial Watch, Incorporated, chal-
lenges the district court’s dismissal of its claims for injunctive relief
and money damages against the Internal Revenue Service (IRS) and
certain IRS employees. Judicial Watch contends that the IRS initiated
a retaliatory tax audit, intended to punish the organization for its polit-
ical speech. Because the Anti-Injunction Act bars the requested
injunctive relief and the law provides no damages remedy for the
wrongs alleged here, we affirm.
I.
Founded in 1994, Judicial Watch describes itself as a "non-partisan
legal ‘watchdog’ organization that relies on the Freedom of Informa-
tion Act ("FOIA"), the civil discovery process, and court litigation,
JUDICIAL WATCH, INC. v. ROSSOTTI 3
among other tools, to protect the American people from, and educate
them about, corruption in government and abuses of power, and to
enforce the principle that ‘no one is above the law’."
Since 1995, Judicial Watch has operated as a tax-exempt,
§ 501(c)(3) organization. See 26 U.S.C.A. § 501(c)(3) (West 2002).
The Internal Revenue Code bars such organizations from lobbying.
See id. (requiring that qualifying organizations refrain from "carrying
on propaganda, or otherwise attempting, to influence legislation . . .
or interven[ing] in (including the publishing or distributing of state-
ments), any political campaign on behalf of (or in opposition to) any
candidate for public office"); see also 26 U.S.C.A. § 504 (West 2002)
(addressing status of organization that fails to qualify for 501(c)(3)
exemption because of substantial lobbying or political activities);
Regan v. Taxation with Representation for Washington, 461 U.S. 540,
551 (1983) (affirming § 501(c)(3) ban on lobbying).
During the late 1990s, Judicial Watch filed a number of lawsuits
against President and Mrs. Clinton. On September 28, 1998, in the
midst of the impeachment proceedings against President Clinton,
Judicial Watch submitted a report entitled "Interim Report: Crimes
and Other Offenses Committed by President Bill Clinton Warranting
His Impeachment and Removal from Elected Office" ("Interim
Report") to members of the House Judiciary Committee. The Interim
Report claimed, inter alia, "that the Clinton Administration had oper-
ated a campaign of retribution and retaliation against its perceived
enemies, using politically inspired retaliatory tax audits as a major
weapon in that campaign." The Interim Report was subsequently
accepted into the Congressional Record and made an official part of
the impeachment proceedings in Congress.
Several days later, Judicial Watch received a letter from the IRS,
signed by Agent Donna Dorsey, stating that it had been selected for
an audit. The letter was accompanied by an IRS Form 4564 Informa-
tion Document Request, which requested information pertaining to
the political affiliations of Judicial Watch directors. After receiving
the audit letter, Judicial Watch resisted IRS efforts to proceed with the
audit by filing FOIA requests, meeting with IRS officials, refusing
IRS document requests, and asserting throughout that the audit consti-
tuted politically motivated retaliation.
4 JUDICIAL WATCH, INC. v. ROSSOTTI
In July 1999, the IRS informed Judicial Watch that the Service was
withdrawing the audit pending an investigation by the Treasury
Inspector General for Tax Administration, the independent internal
monitor of IRS activities. The IRS contends, and Judicial Watch does
not dispute, that the Inspector General then conducted two investiga-
tions into the asserted illegitimacy of the audit and found no evidence
of impropriety by the IRS or any of the IRS employees involved in
the decision to audit Judicial Watch.
Nevertheless, in September 2001, Judicial Watch filed this action
in the United States District Court for the District of Maryland against
former IRS Commissioner Rossotti, four individual IRS agents
(Donna Dorsey, Peter Breslan, Wayne Hampel, and Steven T. Miller),
and the United States. In January 2002, Judicial Watch filed an
amended complaint, withdrawing its claims against the United States,
but adding the Department of the Treasury and the Internal Revenue
Service as defendants.
The amended complaint alleges that the audit is "retaliatory,
politically-motivated, and unconstitutional," violating Judicial
Watch’s First Amendment free speech rights, Fifth Amendment due
process rights, and Fifth Amendment right to be free of selective pros-
ecution. The amended complaint seeks an injunction against all defen-
dants from proceeding with the audit and compensatory and punitive
damages against ex-Commissioner Rossotti and the individual agents.
It also includes claims for relief in connection with Judicial Watch’s
FOIA requests.
In support of its constitutional claims, Judicial Watch alleges that
the timing of the audit letter (four days after the Interim Report was
made an official part of Congress’s impeachment proceedings), the
timing of several subsequent IRS document requests pursuant to the
audit, and the fact that it received final notice of its exempt status at
roughly the same time that it received the audit letter, create a strong
inference of retaliatory motive. Similarly, Judicial Watch cites the
"extraordinary demand" contained in the IRS Form 4564 Information
Document Request that Judicial Watch provide information on the
political affiliations of its directors and the alleged refusal of the IRS
to respond to Judicial Watch’s various FOIA requests as evidence of
bad faith and improper motive.
JUDICIAL WATCH, INC. v. ROSSOTTI 5
Finally, Judicial Watch refers to comments by various IRS agents
that, in its view, suggest a retaliatory motive. These comments
include the statement by Agent Dorsey on November 23, 1998 to
counsel for Judicial Watch that the audit was a "hot potato"; the query
by Agent Breslan to representatives from Judicial Watch at a meeting
on January 12, 1999: "What do you expect when you sue the Presi-
dent?"; the asserted concession by Agent Miller that the audit and
IRS’s failure to respond to Judicial Watch’s FOIA requests "had cre-
ated at least the appearance of a problem"; and statements made dur-
ing March and April 2000 by Agent Hampel that Judicial Watch was
still on the IRS "radar screen."
On January 18, 2002, more than three years after sending the initial
audit letter, the IRS served Judicial Watch with an administrative
summons pursuant to the audit demanding production of documents
within eight business days. Judicial Watch refused to comply with the
summons, but instead filed another action in the district court seeking
to stay or enjoin any attempt to enforce the summons. The court sub-
sequently consolidated the new action with the original action.
After full briefing, the district court denied Judicial Watch’s
motion to stay or enjoin the administrative summons and granted the
defendants’ motion to dismiss all claims. Because the court did not
resolve the FOIA claims, Judicial Watch moved for certification of
the case for immediate appeal. The district court entered the requested
certification order and we, in turn, granted Judicial Watch’s petition
for interlocutory review. See 28 U.S.C.A. § 1292(a)(1) (West 1993).1
1
Subsequent to the issuance of the district court’s opinion, the Govern-
ment filed a summons enforcement action in the District Court for the
District of Columbia. On December 11, 2002, after extensive briefing
and in camera review of "all documents relating to [IRS’s] motivation
and purpose for its proposed audit of Judicial Watch," affidavits from
IRS officials and employees involved in the audit, and the reports of two
investigations of the audit by the Treasury Inspector General for Tax
Administration, the court resolved the action in favor of the United
States, concluding that there was "no evidence of political vindictiveness
or retaliatory motive." See United States v. Judicial Watch, Inc., Misc.
Action No. 02-144 (ESH) (D.D.C. Dec. 11, 2002) slip op. at 3, 9-10.
Judicial Watch indicates that it intends to appeal this ruling.
6 JUDICIAL WATCH, INC. v. ROSSOTTI
II.
The district court denied Judicial Watch’s request for injunctive
relief on the ground that the Anti-Injunction Act (sometimes herein,
"the Act"), 26 U.S.C.A. § 7421 (West 2002), deprived it of jurisdic-
tion to grant such relief. We review that decision de novo. Estate of
Michael v. M.J. Lullo, 173 F.3d 503, 506 (4th Cir. 1999).
The Anti-Injunction Act provides in relevant part that:
no suit for the purpose of restraining the assessment or col-
lection of any tax shall be maintained in any court by any
person, whether or not such person is the person against
whom such tax was assessed.
26 U.S.C.A. § 7421(a) (West 2002).
As the Supreme Court has emphasized, the language of the Act
"could scarcely be more explicit," reflecting its overarching objective
of protecting "the Government’s need to assess and collect taxes as
expeditiously as possible with a minimum of pre-enforcement judicial
interference." Bob Jones University v. Simon, 416 U.S. 725, 736
(1974); see also Sigmon Coal Co. v. Apfel, 226 F.3d 291, 299 (4th
Cir. 2000) ("The Act has two primary objectives: ‘efficient and
expeditious collection of taxes with a minimum of preenforcement
judicial interference, and protection of the collector from litigation
pending a refund suit’." (quoting United States v. American Friends
Serv. Comm., 419 U.S. 7, 12 (1974) (per curiam))), aff’d sub nom.
Barhart v. Sigmon Coal Co., 534 U.S. 438 (2002). The effect of the
Act is simple and obvious: courts lack jurisdiction to issue injunctive
relief in suits seeking to restrain the assessment or collection of taxes.
See, e.g., Estate of Michael, 173 F.3d at 506 ("The Anti-Injunction
Act withdraws all courts’ jurisdiction over suits filed ‘for the purpose
of restraining the assessment or collection of any tax’.").
Judicial Watch maintains that the Act does not apply to its motion
to enjoin the audit (and stay or enjoin enforcement of the administra-
tive summons issued pursuant to the audit) because an audit con-
ducted for unlawful purposes does not constitute "assessment or
JUDICIAL WATCH, INC. v. ROSSOTTI 7
collection" of a tax. Alternatively, it argues that even if the Act does
apply to its request for injunctive relief, the present action falls within
the judicially crafted exceptions to the Act. Both arguments fail.
A.
First, it is clear that the Anti-Injunction Act extends beyond the
mere assessment and collection of taxes to embrace other activities,
such as an audit to determine tax liability, that may culminate in the
assessment or collection of taxes.
In Bob Jones, for example, the Supreme Court refused to enjoin the
IRS from revoking the plaintiff’s § 501(c)(3) status. 416 U.S. at 748-
49. Other courts, including this one, have also held that the Act
applies broadly to include activities that are intended to or may culmi-
nate in the assessment or collection of taxes. See, e.g., Lowrie v.
United States, 824 F.2d 827, 830 (10th Cir. 1987) ("The statute
applies not only to the actual assessment or collection of a tax, but is
equally applicable to activities leading up to, and culminating in, such
assessment and collection."); Dickens v. United States, 671 F.2d 969,
971 (6th Cir. 1982) (stating that the Act "is equally applicable to
activities which are intended to or may culminate in the assessment
or collection of taxes" (internal quotations marks and citations omit-
ted)); White v. Boyle, 538 F.2d 1077, 1080 (4th Cir. 1976) (affirming
dismissal of request for injunctive relief regardless of whether the tax-
payer "sought to restrain the collection of taxes . . . or to restrain an
investigation of his tax liability" (citations omitted)). Clearly, an audit
to determine tax liability fits squarely within the category of activities
that may culminate in the assessment or collection of taxes.
Judicial Watch attempts to distinguish these cases on the ground
that in them the IRS acted on the basis of good faith tax enforcement
purposes, while the audit at issue here was, according to Judicial
Watch, a product of bad faith non-tax related motives. Judicial Watch
further maintains that because these bad faith motives assertedly
drove the decision to initiate the audit, enjoining the audit (and any
judicial enforcement of the administrative summons) would not con-
stitute an interference with the assessment or collection of taxes.
The initial difficulty with this argument is that, although the
amended complaint contains general allegations of retaliatory conduct
8 JUDICIAL WATCH, INC. v. ROSSOTTI
by IRS agents based on the factual chronology outlined above, the
complaint does not allege that the individual IRS agents even knew
that Judicial Watch had filed various lawsuits, much less its Interim
Report, explicitly targeting the Clinton administration. Nor does Judi-
cial Watch dispute that the Inspector General conducted two investi-
gations and twice exonerated the individual IRS employees involved
in the audit decision.
Moreover, the sworn declaration of Agent Dorsey, which the dis-
trict court made part of the record after issuance of its decision in this
case at the request of Judicial Watch and which Judicial Watch urges
us to consider, severely undermines Judicial Watch’s general allega-
tions of retaliation. In her declaration, Dorsey, who signed the initial
audit letter, states that the decision to audit Judicial Watch was made
in December 1997 (more than nine months before the impeachment
proceedings); that when first assigned the Judicial Watch audit in July
1998 she had never heard of the organization; that, except for an ini-
tial instruction to coordinate her work on the audit with IRS District
Counsel in Baltimore, she never received any "instructions, direc-
tions, indications, or suggestions from anyone to treat Judicial Watch,
Inc. differently than any other taxpayers" during the course of her
work on the case; that she never had any contact with then-
Commissioner Rossotti or his office or with the President or the Vice
President, or their offices; and that she did not follow and was not
aware of any role that Judicial Watch played in the impeachment of
President Clinton.2 Judicial Watch does not dispute any of these asser-
2
The district court also permitted Judicial Watch to supplement the
record with numerous complaints by citizens to various elected officials
regarding Judicial Watch’s political activities, and referral of those com-
plaints to the IRS. The citizens assert that based on fundraising materials
received from Judicial Watch, they believe that the organization engaged
in partisan political activity not permitted of a § 501(c)(3) tax-exempt
organization. These materials do not support Judicial Watch’s conten-
tions that the IRS or its agents acted improperly. They simply evidence
constituent service, which our political system accepts and even
applauds. Judicial Watch places particular emphasis on "an August 14,
1998 e-mail" complaint of this sort "from a purported Clinton supporter
to President Clinton" and documents indicating that the Office of the
President forwarded this e-mail to then IRS-Commissioner Rossotti’s
JUDICIAL WATCH, INC. v. ROSSOTTI 9
tions. We also can take judicial notice that in its recent decision grant-
ing the IRS’s summons enforcement request, the district court in the
District of Columbia concluded, on the basis of a "voluminous
record," that there was "no evidence of political vindictiveness or a
retaliatory motive." United States v. Judicial Watch, Inc., Misc.
Action No. 02-144 (ESH) (D.D.C. Dec. 11, 2002), slip op. at 2-3.
Thus, Judicial Watch’s argument that the IRS acted with bad faith
motives unrelated to enforcement of the tax law finds little support in
the record.
More importantly, Judicial Watch misunderstands the impact of
allegations that the IRS acted with bad faith, non-tax related motives.
Such allegations do not render the Anti-Injunction Act inapplicable.
In Bob Jones itself, the taxpayer contended, when seeking to enjoin
the IRS, that "the Service’s threatened action was outside its lawful
authority and would violate petitioner’s rights to the free exercise of
religion, to free association, and to due process and equal protection
of the laws." Bob Jones, 416 U.S. at 736. The Supreme Court recog-
nized this "attribution of non-tax-related motives to the Service," but
concluded that the attribution "ignore[d] the fact that the [taxpayer]
ha[d] not shown that the Service’s action was without an independent
basis in the requirements of the Code." Id. at 740 (emphasis added).
The Court explained that if the IRS action represents "a good-faith
effort to enforce the technical requirements of the tax laws," other
additional motives for its actions do not eliminate the prohibition in
the Anti-Injunction Act. Id. Thus, despite the petitioner’s efforts to
circumvent the restrictions of the Anti-Injunction Act by attributing
a non-tax-related purpose to the IRS’s actions, the Bob Jones Court
concluded that the Act did apply and proceeded to determine if the
request for injunctive relief qualified for an exception to the Act. Id.
at 748-49.
office. Supp. Brief of Appellant at 3-4. However, as noted in text above,
regardless of the lawfulness of this communication by the President or
his office (and Judicial Watch maintains that it violates 26 U.S.C.A.
§ 7217 (West 2002)) nothing in the record indicates it had any effect on
the IRS’s decision to audit Judicial Watch. Indeed, according to Agent
Dorsey’s undisputed sworn statement, the IRS decided to audit Judicial
Watch in December 1997 — eight months before the date of the e-mail.
10 JUDICIAL WATCH, INC. v. ROSSOTTI
Accordingly, unless Judicial Watch qualifies for one of two excep-
tions to the Anti-Injunction Act, the district court properly concluded
that the Act stripped it of jurisdiction necessary to issue the requested
injunctive relief.
B.
The Supreme Court established the first exception to the Act in
Enochs v. Williams Packing & Navigation Co., 370 U.S. 1 (1962),
"the capstone to judicial construction of the Act." Bob Jones, 416
U.S. at 742. In Williams Packing, the taxpayer requested an injunction
to prevent the IRS from collecting past due social security and unem-
ployment taxes. Although the Supreme Court reversed a lower court’s
grant of injunctive relief, the Court held that such actions could pro-
ceed, despite the Anti-Injunction Act, if, but only if, the plaintiff
could show that (1) "under no circumstances could the Government
ultimately prevail," and (2) "equity jurisdiction otherwise exists." Wil-
liams Packing, 370 U.S. at 7. Moreover, the Court directed that in
analyzing the initial factor, a court must determine, "on the basis of
the information available to [the Government] at the time of the suit,"
whether, "under the most liberal view of the law and the facts, the
United States cannot establish its claim." Id.; see also Estate of
Michael, 173 F.3d at 506.
Judicial Watch simply cannot establish that "under no circum-
stances could the Government ultimately prevail." Williams Packing,
370 U.S. at 7. Section 501(c)(3) provides an explicit basis for the IRS
to investigate Judicial Watch’s tax-exempt status and determine if its
"political" activities merit a change in its status. As the district court
concluded, taking the most liberal view of the law and the facts, it is
quite possible (even "plausible") that the IRS initiated and has contin-
ued to pursue the audit because it was "legitimately suspicious" that
Judicial Watch’s "earnest efforts to assist in the impeachment of Pres-
ident Clinton" constituted the sort of "prohibited political activity" not
permitted any organization afforded § 501(c)(3) status. As in Bob
Jones, therefore, regardless of any additional, improper non-tax
related purpose, Judicial Watch has not and cannot demonstrate that
the IRS action does not reflect, at least in part, "a good faith effort to
enforce the technical requirements of the tax laws." Bob Jones, 416
U.S. at 740. Thus, without deciding the merits of Judicial Watch’s
JUDICIAL WATCH, INC. v. ROSSOTTI 11
claims, we must conclude that its contentions "are sufficiently debat-
able to foreclose any notion that under no circumstances could the
Government ultimately prevail." Id. at 749.
Nor can Judicial Watch find refuge in the other exception to the
Anti-Injunction Act, that created in South Carolina v. Regan, 465
U.S. 367, 375 (1984). There, South Carolina sought an injunction
against a tax on the ground that a provision of the Code regarding
state-issued bonds violated the Constitution. The Supreme Court held
that if the Anti-Injunction Act applied, South Carolina would have
had to depend on third parties to raise the State’s constitutional chal-
lenge in their tax refund suits. Id. at 379-80. The Court reasoned that
the Act could not stand as a barrier to injunctive relief in situations
"where . . . Congress has not provided the plaintiff with an alternative
legal way to challenge the validity of the tax." Id. at 373.3
Of course, the basis of the Regan exception is not whether a plain-
tiff has access to a legal remedy for the precise harm that it has alleg-
edly suffered, but whether the plaintiff has any access at all to judicial
review. As the Regan Court explained, "the indicia of congressional
intent — the [Anti-Injunction] Act’s purposes and the circumstances
of its enactment — demonstrate that Congress did not intend the Act
to apply where an aggrieved party would be required to depend on the
mere possibility of persuading a third party to assert his claims." Id.
at 381. The Act does apply, however, whenever Congress has pro-
vided "an alternative avenue for an aggrieved party to litigate its
claims on its own behalf." Id.3
Because of the strong policy animating the Anti-Injunction Act, and
the sympathetic, almost unique, facts in Regan, courts have construed the
Regan exception very narrowly, undermining Judicial Watch’s efforts to
fit its own claims within the confines of this exception. See, e.g., In re
American Bicycle Ass’n, 895 F.2d 1277, 1281 (9th Cir. 1990)
("Promoting the purpose behind the Act requires a strict construction of
any possible exceptions."); Lewes v. IRS, 796 F.2d 1433, 1434 (11th Cir.
1986) (refusing to extend the exception because Regan "involved the
rights of third parties to litigate the tax liability of persons against whom
the tax was assessed"); American Society of Ass’n Executives v. Bentsen,
848 F. Supp. 245, 250 (D.D.C. 1994) (noting that the exception
announced in Regan "is a narrow one tailored to the unique factual pat-
tern in that case").
12 JUDICIAL WATCH, INC. v. ROSSOTTI
This case differs markedly from Regan. Judicial Watch does not
challenge the validity of any provision of the Code, but only seeks to
avoid an audit to determine its tax liability. Judicial Watch need not
depend on third parties to pursue this claim, a fact reflected in its
efforts to resist the audit in the summons enforcement proceedings in
the District of Columbia. See supra n.1. Moreover, the Code also pro-
vides that organizations whose exempt status under 501(c)(3) has
been denied or revoked can seek declaratory relief. See 26 U.S.C.A.
§ 7428 (West 2002). Although Judicial Watch may not like the ave-
nues Congress has provided for challenging an audit, it simply cannot
maintain that it has no avenue for doing so.
In sum, the claims for injunctive relief asserted by Judicial Watch
do not fall within the narrow exceptions carved out in Williams Pack-
ing or Regan. Strong policy reasons support this result. Extending the
recognized exceptions to the Anti-Injunction Act to include requests
for injunctive relief like that of Judicial Watch would threaten a flood
of lawsuits brought against the IRS by those seeking to enjoin an
audit they believed to be wrongful, creating precisely the kind of judi-
cial interference with the assessment and collection of taxes that the
Act was designed to prevent.
III.
Judicial Watch also contends that the district court erred in dismiss-
ing its Bivens action for money damages against the individual defen-
dants. See Bivens v. Six Unknown Named Agents of the Fed. Bureau
of Narcotics, 403 U.S. 388, 396-97 (1971).4
In Bivens, the Supreme Court found that the Fourth Amendment
contained an implied private cause of action for damages against fed-
eral narcotics agents who allegedly conducted an illegal search and
seizure. See Bivens, 403 U.S. at 397. The Court concluded that it
could recognize this new constitutional tort because, although Con-
gress had never provided for such a private right of action, "no
4
The district court concluded that the individual defendants were enti-
tled to qualified immunity on the alleged Bivens claims. Because we find
no Bivens action lies in this case, we do not reach the question of quali-
fied immunity.
JUDICIAL WATCH, INC. v. ROSSOTTI 13
explicit congressional declaration" prohibited it, and "no special fac-
tors counsel[ed] hesitation [by the Court] in the absence of affirmative
action by Congress." Id. at 396-97.
In the more than thirty years since Bivens, the Court has been very
hesitant to imply other private actions for money damages. Indeed,
the Court has only recognized two other such actions — one under
the Due Process Clause of the Fifth Amendment, Davis v. Passman,
442 U.S. 228, 245-49 (1979) (finding Bivens remedy for alleged vio-
lation of due process rights because of gender discrimination by
United States Congressman in terminating petitioner’s employment),
and one under the Cruel and Unusual Punishment Clause of the
Eighth Amendment, Carlson v. Green, 446 U.S. 14, 18-23 (1980)
(finding Bivens remedy for federal prisoner who was allegedly
deprived of potentially life-saving treatment in violation of his Eighth
Amendment rights). Instead, the Court has directed its attention to
cabining the Bivens doctrine. See Correctional Services Corp. v.
Malesko, 122 S. Ct. 515, 520 (2001) ("Since Carlson we have consis-
tently refused to extend Bivens liability to any new context or new
category of defendants.").
The Court’s refusal to extend Bivens has been especially apparent
in cases involving complex statutory schemes in which Congress has
considered and created meaningful avenues for redress. Thus, in Bush
v. Lucas, 462 U.S. 367 (1983), the Court refused to find an implied
Bivens remedy for federal employees alleging that their supervisors
violated their First Amendment rights. Because these claims arose out
of a "relationship . . . governed by comprehensive procedural and sub-
stantive provisions giving meaningful remedies against the United
States," the Court concluded that "it would be inappropriate . . . to
supplement that regulatory scheme with a new judicial remedy." Id.
at 368.
Similarly, in Schweiker v. Chilicky, 487 U.S. 412 (1988), the Court
declined to find a new Bivens remedy for claimants whose Social
Security disability benefits had been improperly terminated. Given
the "elaborate remedial scheme devised by Congress" to deal with the
improper denial or termination of disability benefits, the Court saw no
reason to tread on congressional prerogatives by creating a new judi-
cial remedy for the particular harm suffered by the claimants. Id. at
14 JUDICIAL WATCH, INC. v. ROSSOTTI
414. In reviewing the development of Bivens jurisprudence, the Court
concluded:
the concept of "special factors counseling hesitation in the
absence of affirmative action by Congress" has proved to
include an appropriate judicial deference to indications that
congressional inaction has not been inadvertent. When the
design of a Government program suggests that Congress has
provided what it considers adequate remedial mechanisms
for constitutional violations that may occur in the course of
its administration, we have not created additional Bivens
remedies.
Id. at 423. Thus, in Chilicky, even though "Congress ha[d] failed to
provide for ‘complete relief’" for the disability claimants, the Court
refused to create a Bivens remedy because Congress had provided
some "meaningful safeguards or remedies." Id. at 425 (emphasis
added).
Following these precedents, we too have refused to extend Bivens.
See, e.g., Hall v. Clinton, 235 F.3d 202, 204 (4th Cir. 2000) (declining
to create a Fifth Amendment Bivens remedy for White House
employee because Congress had already established an exclusive stat-
utory remedy); Zimbelman v. Savage, 228 F.3d 367, 371 (4th Cir.
2000) (finding that special factor of federal employment counseled
against creating a Bivens remedy for Air Force personnel alleging
unfair termination of employment based on false accusations). In
adjudicating claims requesting the creation of new Bivens remedies,
we have gleaned from the above Supreme Court precedent a three-
part test:
[i]n order for a Bivens remedy to be available, a court must
determine that (1) Congress has not already provided an
exclusive statutory remedy; (2) there are no "special factors
counseling hesitation in the absence of affirmative action by
Congress"; and (3) there is no "explicit congressional decla-
ration" that money damages not be awarded.
Hall, 235 F.3d at 204 (citations omitted). Moreover, we have noted
that "[t]he ‘special factors’ concept ‘include[s] an appropriate judicial
JUDICIAL WATCH, INC. v. ROSSOTTI 15
deference to indications that congressional inaction has not been inad-
vertent’." Id. (citations omitted). Accordingly, we apply these factors
to this case to determine whether Congress has sufficiently attended
to the rights and remedies available to taxpayers in the context of the
Internal Revenue Code to foreclose judicial creation of additional
remedies.
It would be difficult to conceive of a more comprehensive statutory
scheme, or one that has received more intense scrutiny from Con-
gress, than the Internal Revenue Code. In constructing this vast and
exceedingly complex statutory apparatus, moreover, "Congress has
given taxpayers all sorts of rights against an overzealous official-
dom." Cameron v. Internal Revenue Service, 773 F.2d 126, 129 (7th
Cir. 1985); see also McMillen v. United States, 960 F.2d 187, 190 (1st
Cir. 1991). Thus, the Code provides Judicial Watch with a number of
ways to challenge actions of the IRS as well as those of individual
agents.
As noted above, in response to an audit or other activities involved
in the investigation of its tax liability, Judicial Watch could simply
resist the audit, force the IRS to initiate a summons enforcement pro-
ceeding, and then challenge the validity of the audit in that forum. See
26 U.S.C.A. § 7604(a) (West 2002). (Indeed, Judicial Watch has done
precisely this in the District of Columbia.) In the event that an audit
led to revocation of Judicial Watch’s 501(c)(3) status, the organiza-
tion could seek declaratory relief. See 26 U.S.C.A. § 7428. Further-
more, to the extent that the audit culminated in the determination and
assessment of a tax deficiency, Judicial Watch could pursue an inter-
nal appeal with the Service pursuant to 26 C.F.R. § 601.106 (2002);
pay the tax in full and sue for a refund in a federal district court pur-
suant to 26 U.S.C.A. § 7422 (West 2002); or contest the deficiency
in Tax Court pursuant to 26 U.S.C.A. § 6213(a) (West 2002). Finally,
Judicial Watch could also contest IRS actions during the collection
process by requesting a hearing before the IRS Office of Appeals and
seeking subsequent judicial review of any adverse determination pur-
suant to 26 U.S.C.A. § 6330(b) (West 2002).
With respect to alleged misconduct by individual IRS employees,
Congress has also provided for a variety of "safeguards and reme-
dies." Chilicky, 487 U.S. at 425. Specifically, Congress created the
16 JUDICIAL WATCH, INC. v. ROSSOTTI
Treasury Inspector General for Tax Administration, an entity separate
and distinct from the IRS, with responsibility for investigating allega-
tions of misconduct by IRS employees. See 5 U.S.C.A. App. 3 § 2
(West 1996 and West Supp. 2002). In this case, the Inspector General
conducted not one, but two, investigations — both of which found no
support for Judicial Watch’s allegations that the IRS initiated the
audit for purposes of political retaliation. See United States v. Judicial
Watch, Inc., Misc. Action No. 02-144 (ESH) (D.D.C. Dec. 11, 2002)
slip op. at 22.
Moreover, Congress has also provided a civil damages action for
misconduct by IRS employees in connection with the collection of
taxes. See 26 U.S.C.A. § 7433 (West 2002). Originally enacted in
1988 as part of the "Taxpayer Bill of Rights" (the name itself speaks
volumes about Congress’s explicit consideration of the remedies
available to taxpayers), § 7433 states in pertinent part:
If, in connection with any collection of Federal tax with
respect to a taxpayer, any officer or employee of the Internal
Revenue Service recklessly or intentionally, or by reason of
negligence disregards any provision of this title, or any reg-
ulation promulgated under this title, such taxpayer may
bring a civil action for damages against the United States in
a district court of the United States. Except as provided in
section 7432, such civil action shall be the exclusive remedy
for recovering damages resulting from such actions.
26 U.S.C.A. § 7433 (West 2002).
To be sure, § 7433 provides for a "civil action" only for damages
arising from the "collection" of taxes, not for damages arising from
the investigation and determination of tax liability. That Congress
chose not to create certain remedies as part of the complex statutory
scheme regulating the relationship between taxpayers and the IRS
lends Judicial Watch little support, however. As the Supreme Court
put the matter,
[t]he question is not what remedy the court should provide
for a wrong that would otherwise go unredressed. It is
whether an elaborate remedial system that has been con-
JUDICIAL WATCH, INC. v. ROSSOTTI 17
structed step by step, with careful attention to conflicting
policy considerations, should be augmented by the creation
of a new judicial remedy for the constitutional violation at
issue. That question obviously cannot be answered simply
by noting that existing remedies do not provide complete
relief for the plaintiff.
Bush, 462 U.S. at 388.
The legislative history of § 7433 further suggests that Congress did
not act inadvertently in failing to create an action for damages alleg-
edly arising from the investigation or determination of tax liability.
As originally introduced into the Senate, the draft provision that ulti-
mately became § 7433 contained broader language permitting civil
damages actions "in connection with any determination or collection
of Federal tax" and in violation of "any provision of Federal law." S.
2223, 100th Cong., 2d Sess. § 123 (1988). The Conference Report
regarding § 7433 explained 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 disre-
gard in connection with the determination of a 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, 719. Thus, it appears that Congress has indeed considered,
and rejected, a broader damages remedy that would have covered
wrongful actions by IRS agents in the course of an audit.
Taken together, therefore, Congress’s considerable attention to the
rights and remedies available to taxpayers and the Supreme Court’s
hesitancy in creating Bivens remedies in such circumstances provide
strong support for the conclusion that no Bivens remedy lies in this
case. This conclusion comports with the view of a number of our sis-
ter circuits. See, e.g., Schreiber v. Mastrogiovanni, 214 F.3d 148,
18 JUDICIAL WATCH, INC. v. ROSSOTTI
152-53 (3d Cir. 2000) (declining to extend a Bivens remedy to tax-
payer who allegedly suffered violation of constitutional rights in con-
nection with assessment of tax liability); Dahn v. United States, 127
F.3d 1249, 1254 (10th Cir. 1997) (stating that "in light of the compre-
hensive administrative scheme created by Congress to resolve tax-
related disputes, individual agents of the IRS are also not subject to
Bivens actions"); Fishburn v. Brown, 125 F.3d 979, 982-83 (6th Cir.
1997) (declining to create Bivens action against IRS agents for alleged
due process violations during property seizure); Vennes v. An
Unknown Number of Unidentified Agents of the United States, 26
F.3d 1448, 1454 (8th Cir. 1994) (declining to create Bivens action
against IRS agents for alleged violation of due process rights during
seizure of business and jeopardy assessment).
Judicial Watch, however, correctly notes that none of these cases
address whether a Bivens action is available for damages arising from
an allegedly retaliatory audit, and contends that such an audit presents
a far stronger claim to Bivens relief. In support of this contention,
Judicial Watch cites our decision in White v. Boyle, 538 F.2d 1077(4th Cir. 1976). There, we suggested in dicta that a Bivens remedy
should be available to a taxpayer alleging a retaliatory investigation
of his tax liability. Id. at 1079 ("Clearly, if [the taxpayer] can demon-
strate an injury consequent upon the violation by federal agents of his
constitutionally protected rights, absent official immunity, he is enti-
tled to recovery."). But we decided White more than a decade before
Chilicky, and did not attempt to analyze whether the factors expli-
cated in Bivens and Chilicky counseled recognition of a Bivens action
for damages assertedly arising from a retaliatory audit.
Indeed, no appellate court has ever reached that question. Recently,
the Ninth Circuit specifically declined to do so because limitations
barred the claim in any event. See Western Center for Journalism v.
Cedarquist, 235 F.3d 1153 (9th Cir. 2000). In that case, Judge Rein-
hardt issued a concurring opinion explaining that he believed a Bivens
action did lie for damages resulting from a retaliatory audit. Id. at
1159 (distinguishing Chilicky and Bush because in those cases Con-
gress afforded some, even if not complete, relief for constitutional
violations, while in the case of an assertedly discriminatory audit,
"Congress has created no remedy at all"). This view finds some sup-
port in National Commodity & Barter Ass’n v. Archer, 31 F.3d 1521JUDICIAL WATCH, INC. v. ROSSOTTI 19
(10th Cir. 1994), which allowed a Bivens action on claims that harass-
ment by IRS agents violated the plaintiffs’ First and Fourth Amend-
ment rights. Employing reasoning similar to that of Judge Reinhardt,
the Tenth Circuit concluded that in situations where the Code does
not provide any mechanism for compensation, IRS agents are not
shielded from liability simply because the Code contains remedies for
other, unrelated violations. Id. at 1530-32.
But neither Cedarquist nor Archer contains any discussion of
§ 7433, much less its legislative history evidencing Congress’s con-
sidered decision to forego creating a damages remedy for misconduct
by IRS employees in connection with the determination of taxes.
Moreover, circuit precedent forecloses adoption of the Cedarquist-
Archer view here. We have recently held that even though a federal
statutory scheme (the Civil Service Reform Act) provided the plain-
tiffs with no remedy (because of a statutory exemption), its "compre-
hensiveness" precluded any Bivens claim. See Zimbelman, 228 F.3d
at 370-71.
Our view seems consistent with Supreme Court teaching in this
field. We note that the Court has never required that the remedies
available in the context of a larger statutory scheme be perfect; just
that they be "meaningful." See Chilicky, 487 U.S. at 428 (recognizing
that although "suffering months of delay in receiving the income on
which one has depended for the very necessities of life cannot be fully
remedied by the belated restoration of back benefits" the fact that
Congress had made compromises involved in administering a vast
and complex government program meant that there was no basis for
judicial intervention (internal quotation marks omitted)). Even if
"Congress has provided a less than complete remedy for the wrong,"
any decision to create a new judicial remedy must be "exercised in the
light of relevant policy determinations made by the Congress." Bush,
462 U.S. at 373; see also Malesko, 122 S. Ct. at 520 ("So long as the
plaintiff had an avenue for some redress, bedrock principles of sepa-
ration of powers foreclosed judicial imposition of a new substantive
liability." (citations omitted)). That Judicial Watch considers its exist-
ing remedies insufficient is simply irrelevant. See Zimbelman, 228
F.3d at 371 ("It is not relevant that plaintiffs believe the procedures
governing their employment relationship were insufficient.").
20 JUDICIAL WATCH, INC. v. ROSSOTTI
We conclude, therefore, that in this case "it would be inappropriate
to supplement [the] regulatory scheme with a new judicial remedy"
for alleged retaliatory tax audits. Bush, 462 U.S. at 368. As in Chil-
icky, although "[t]he creation of a Bivens remedy would obviously
offer the prospect of relief for injuries that must now go unredressed,"
the fact that Congress "has not failed to provide meaningful safe-
guards or remedies for the rights of persons" similarly situated coun-
sels against any judicial extension of Bivens liability. Chilicky, 487
U.S. at 425. Indeed, the fact that Congress explicitly considered
allowing damages claims under § 7433 for misconduct in connection
with the determination of taxes but decided to restrict those actions
to the collection of taxes strongly suggests "that congressional inac-
tion has not been inadvertent." Id. at 423. We thus decline "to create
a new substantive legal liability . . . because we are convinced that
Congress is in a better position to decide whether or not the public
interest would be served by creating it." Id. at 426-27 (quoting Bush,
462 U.S. at 390).
IV.
For the reasons set forth within, the judgment of the district court
is
AFFIRMED.