Unpublished Disposition, 855 F.2d 861 (9th Cir. 1988)

MEMORANDUM^** 

Taxpayer/appellant appeals pro se from the district court's dismissal of his complaint which sought award of general and punitive damages against the United States for "wrongful conversion and appropriation of property" and for violation of privacy and confidentiality.

The appellant's cause of action arose when in the course of a tax audit appellant provided the Internal Revenue Service (IRS) with original bank checks and receipts. When appellant sought return of those records, IRS informed him that the originals had been lost. The IRS furnished appellant with reprographic copies of those records.

The district court construed appellant's less than artfully crafted complaint to be an action under the Federal Tort Claims Act (FTCA), 28 U.S.C. § 2671 et seq. as to the conversion claim and as an action under the Internal Revenue Code, 26 U.S.C. §§ 6103, 7431, as to the privacy/confidentiality claim.

The district court dismissed the appellant's conversion claim for lack of subject matter jurisdiction and dismissed the privacy/confidentiality cause for failure to state a claim upon which relief may be granted. We affirm.

The FTCA vests in the United States Government the potential to be liable for tort claims to the same extent private individuals would be. However, Congress carved out specific exceptions to United States liability including claims concerning postal deliveries and those concerning tax collection. 28 U.S.C. §§ 2680(b), (c).¹ 

To the extent that appellant's claim lays blame for the loss of his records at the United States Postal Service and as he expressly blames the Internal Revenue Service, both exception sections of the FTCA bar appellant's claims. In Capozzoli v. Tracy, 663 F.2d 654 (5th Cir. 1981), the taxpayers alleged that an IRS agent assigned to investigate a casualty loss claim, without prior notice or permission, proceeded to photograph the taxpayers' residence and prowled around the property. The Fifth Circuit held that "28 U.S.C. § 2680(c) reflect(s) the government's strong interest in protecting the administration of its tax system from the burden of constant litigation. This interest would be completely frustrated if we were to read Section 2680(c) as providing an immunity for only certain narrowly defined activities of the IRS." Id. at 657. The court added that "Congress retained the United States' sovereign immunity for any claim in respect of the assessment or collection of taxes. This language is broad enough to encompass any activities of an IRS agent even remotely related to his or her official duties." Id. at 658. If taking a picture of a residence is barred by Section 2680(c), then certainly losing checks and receipts, which are the basis for a tax return audit, is clearly within the immunity afforded by that section.

In Morris v. United States, 521 F.2d 872 (9th Cir. 1975), we also applied the Sec. 2680(c) immunity provision. In Morris, the IRS allegedly harassed and intimidated the taxpayer and his wife on several occasions and unlawfully seized and levied on property belonging to them. We held that " [e]ven assuming arguendo that the Internal Revenue agents' collection activity was beyond the normal scope of authority and amounted to tortious conduct, we find that the claims falls squarely within the exempted group of tort claims arising out of the tax collection efforts." Id. at 874. The Hookers' claims, too, fall squarely within the exempted group of claims arising out of the tax collection process. Absent a waiver of sovereign immunity, the United States cannot be sued. Hutchinson v. United States, 677 F.2d 1322, 1327 (9th Cir. 1982).

Furthermore, 28 U.S.C. § 2675 requires exhaustion of administrative remedies before suit may be filed in district court. Brady v. Smith, 656 F.2d 466, 468 (9th Cir. 1981). The district court properly dismissed appellant's complaint for lack of subject matter jurisdiction.

As to his claim of wrongful disclosure, appellant has failed to contend or show that any of his tax returns or tax return information were disclosed by any Internal Revenue Service officer or employee. Appellant only contends that his tax return information was lost by IRS employees. Nothing in appellant's contentions indicates disclosure beyond that permitted to Treasury Department employees by 26 U.S.C. § 6103(h) or to the taxpayer himself by 26 U.S.C. § 6103(e) (1) (A) (i). Furthermore, were appellant able to show wrongful disclosure, his claim would fail for failure to allege bad faith on the part of the government as required by 26 U.S.C. § 7431(b), see Davidson v. Brady, 732 F.2d 552 (6th Cir. 1984) (interpreting 26 U.S.C. § 7217 which was transferred to Sec. 7431 by the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-248, 96 Stat. 324). The district court properly dismissed appellant's complaint for failure to state a claim upon which relief may be granted.

Finally, since appellant did not raise his constitutional claims (alleged violations of the Fourth, Fifth and Fourteenth Amendments) in the proceedings before the district court we may not address those issues here. Michael-Regan Co. v. Lindell, 527 F.2d 653, 659 (9th Cir. 1975).

The district court properly granted the government's motion to dismiss.

AFFIRMED.

Judge Fletcher concurs in the result.