Castro v. United States ( 2023 )

Case: 23-10630 Document: 00517010163 Page: 1 Date Filed: 12/21/2023
United States Court of Appeals
for the Fifth Circuit
____________
United States Court of Appeals
Fifth Circuit
No. 23-10630
Summary Calendar FILED
____________ December 21, 2023
Lyle W. Cayce
John Anthony Castro, Clerk
Plaintiff—Appellant,
versus
United States of America,
Defendant—Appellee.
______________________________
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 4:22-CV-16
______________________________
Before Jones, Smith, and Dennis, Circuit Judges.
Per Curiam: *
John Anthony Castro appeals the district court’s entry of summary
judgment in favor of the United States of America on his claim that an Inter-
nal Revenue Service (“IRS”) agent disclosed his confidential tax return in-
formation in violation of 26 U.S. § 6103(a)(3). Because the district court
_____________________
*
This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 23-10630 Document: 00517010163 Page: 2 Date Filed: 12/21/2023
No. 23-10630
properly entered summary judgment in favor of the Government, we AF-
FIRM.
The standard of review on summary judgement is de novo. Davidson
v. Fairchild Controls Corp. 882 F.3d 180, 184. (5th Cir. 2018). The court
should grant summary judgment when “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” FED.
R. CIV. P. 56(a). During an IRS criminal investigation into Castro, criminal
investigative agent Tuan Ma (“Agent Ma”) contacted two potential wit-
nesses to obtain information in furtherance of his investigation. The parties
dispute whether Agent Ma disclosed to the two potential witnesses that Cas-
tro was under criminal investigation but that the investigation did not target
the two potential witnesses. For the purpose of summary judgment, we as-
sume that Agent Ma did in fact disclose such information to the two potential
witnesses. McFaul v. Valenzuela, 684 F.3d 564, 571 (5th Cir. 2012) (“In re-
viewing summary judgment, this court construes all facts and inferences in
the light most favorable to the nonmoving party.”) (internal citation and quo-
tation marks omitted). The two potential witnesses submitted affidavits indi-
cating that they spoke with Agent Ma after he reassured them that they were
not under investigation.
Even accepting as true that Agent Ma made the alleged disclosures in
violation of § 6103 of the Internal Revenue Code, a safe harbor provision
shields the Government from liability if the agent’s disclosure was based on
“a good faith, but erroneous, interpretation of section 6103[.]” 26 U.S.C. §
7431(b)(1) (“No liability shall arise under this section with respect to any in-
spection or disclosure . . . which results from a good faith, but erroneous,
interpretation of section 6103[.]”). This circuit uses an objective standard to
evaluate the applicability of this “good faith” exception to liability under the
Internal Revenue Code. Payne v. United States, 289 F.3d 377, 384 (5th Cir.
2002); see also Huckaby v. United States Dept. of Treasury, I.R.S., 794 F.2d
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No. 23-10630
1041, 1048 (5th Cir.1986) (“A reasonable IRS agent can be expected to know
statutory provisions governing disclosure, as interpreted and reflected in IRS
regulations and manuals.”).
Here, Agent Ma reasonably and in good faith believed that—based on
case law, statutory authority, regulations, and the IRS Manual (“IRM”)—
the disclosures were “necessary in obtaining information, which was not oth-
erwise reasonably available[.]” 26 U.S.C. § 6103(k)(6). Treasury Regulation
§ 301.6103(k)(6)-1 defines “necessary” as “appropriate and helpful” and
clarifies that an agent is not required to first seek information from the tax-
payer as an otherwise reasonably available source. TREAS. REG. §
301.6103(k)(6)-1(c)(1) & (3). The IRM further instructs agents that they may
identify themselves as members of the criminal investigation unit of the IRS
and disclose the criminal nature of investigations when “necessary” because
the witness is “disinclined to cooperate.” I.R.M. 9.4.5.11.3.1.4(1) (Note).
Moreover, this circuit has stated that § 7431’s good faith exception protects
an agent’s disclosure of “the nature of their official duties as a criminal tax
investigation.” Gandy v. United States, 234 F.3d 281, 286–87 (5th Cir. 2000)
(reasonable agents “had a good faith belief that they could disclose the crim-
inal nature of the investigation”). Castro did not present any evidence sug-
gesting that Agent Ma’s interpretation of the relevant authorities was unrea-
sonable under these circumstances. Agent Ma’s disclosure thus fell within §
7431(b)(1)’s “good faith” exception to Government liability.
The judgment of the district court is AFFIRMED.
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