United States District Court, W.D. Kentucky, Louisville Division
MEMORANDUM OPINION AND ORDER
N. STIVERS, CHIEF JUDGE
matter is before the Court on Plaintiff's Motion to
Dismiss (DN 14), Defendant's Motion for Leave to File
Amended Counterclaim (DN 23), and Defendant's Motion for
Leave to File Amended Response to Plaintiff's Motion to
Dismiss (DN 26). These motions are ripe for adjudication. For
the reasons that follow, Plaintiff's motion is GRANTED
and Defendant's motions are DENIED.
October 22, 2010, a jury found Defendant Curtis Gordon, Jr.
guilty of filing false income tax returns. (Pl.'s Mot.
Dismiss Ex. 2, at 1-2, DN 14-4). In preparation for
Gordon's sentencing phase of trial, his expert witness
prepared two sets of demonstration tax returns to be utilized
in Gordon's defense: one set demonstrating Gordon's
“exaggerated” income amount the government
attributed to Gordon and the other a “more
realistic” income amount he asserted was the correct
amount. (Def.'s Resp. Pl.'s Mot. Dismiss 1-2, DN 15;
Answer & Countercl. ¶ 10, DN 8). Believing that he
would be able to use that demonstrative evidence during his
sentencing phase, Gordon presented the demonstration returns
to the Court and the Assistant United States Attorney
(“AUSA”) prosecuting his case. (Def.'s Resp.
Pl.'s Mot. Dismiss 3; Answer & Countercl. ¶ 12).
The Court ruled the demonstration returns inadmissible and
returned the Court's copies to Gordon. (Def.'s Resp.
Pl.'s Mot. Dismiss 3; Answer & Countercl. ¶ 12).
Gordon claims that the AUSA's Office did not return its
copies. (Def.'s Resp. Pl.'s Mot. Dismiss 3; Answer
& Countercl. ¶ 12).
alleges that the set of demonstration returns prepared by his
expert representing the government's
“exaggerated” income attributed to Gordon somehow
fell into the hands of an unknown third party, perhaps a
government official, who fraudulently filed the demonstration
returns under his name with the IRS. (Def.'s Resp.
Pl.'s Mot. Dismiss 2). Gordon claims the IRS then used
those demonstration returns to levy the tax assessments
against Gordon that are the basis for the IRS's tax
collection claim in this case. (Answer & Countercl.
United States filed this tax collection action against
Gordon. (Compl. 1, DN 1). Gordon has asserted a counterclaim
alleging unauthorized disclosure and inspection of tax return
information under 26 U.S.C. § 7431(a). (Answer &
Countercl. 6-8). The United States moved for dismissal of
that counterclaim on March 26, 2019. (Pl.'s Mot. Dismiss
2, DN 14). Gordon responded to that motion on April 14, to
which the United States replied on April 30. (Def.'s
Resp. Pl.'s Mot. Dismiss 7; Pl.'s Reply Def.'s
Resp. Pl.'s Mot. Dismiss 9, DN 18).
then subsequently moved for leave to file an amended
counterclaim and an amended response to the United
States's motion to dismiss on September 27. (Def.'s
Mot. Leave File Am. Countercl. 1, DN 23; Def.'s Mot.
Leave File Am. Resp. 1, DN 29). The United States responded
on October 18. (Pl.'s Resp. Def.'s Mot. Leave File
Am. Countercl. 1, DN 28; Pl.'s Resp. Def.'s Mot.
Leave File Am. Resp. 1, DN 29). The Court granted Gordon
leave to file a belated reply, and Gordon has since filed
that reply. (Order, DN 30; Pl.'s Reply Mot. Leave File
Am. Countercl., DN 31).
extent this Court possesses jurisdiction over this matter, it
is through federal question jurisdiction pursuant to 28
U.S.C. § 1331.
Plaintiff's Motion to Dismiss
motion to dismiss, the United States proffers two arguments
as to why Gordon's Section 7431(a) claims should be
dismissed. First, the United States asserts that the claims
are time barred by the two-year statute of limitations for
bringing such claims set forth in Section 7431(d). Second,
the United States contends that Section 7431(a) does not
afford Gordon the relief he seeks. The United States also
argues that Gordon's proposed amendments to his
counterclaim and response to its motion to dismiss are futile
and should not be allowed.
U.S.C. § 7431(a)
law prohibits the inspection or disclosure of any
“return or return information” with respect to a
taxpayer by an officer or employee of the United States. 26
U.S.C. § 7431(a). A “return” is “any
tax or information return . . . which is filed with the
Secretary by, on behalf of, or with respect to any person . .
. .” 26 U.S.C. § 6103(b)(1) (emphasis added). The
term “return information” refers to any
information “received by, recorded by, prepared by,
furnished to, or collected by the Secretary with respect to a
return or with respect to the determination of the existence,
or possible existence, of liability.” Id.
§ 6103(b)(2)(A) (emphasis added). The portions of the
statutes emphasized in the prior two sentences form the
“pass through the IRS” rule followed by all
courts who have ruled on this issue. See, e.g., Bankcroft
Glob. Dev. v. United States,330 F.Supp.3d 82, 97-99
(D.D.C. 2018); Stokwitz v. United States, 831 F.2d
893, 897 ...