Hunter Biden Partially Wins Leaked Tax Returns Case (Correct)

The IRS is liable for damages if its employees illegally leaked Hunter Biden’s confidential tax return information, even if it was the employees’ attorneys who made the allegedly unauthorized disclosure.

The decision is at least a partial win for the son of President Joe Biden, who has faced charges related to tax evasion earlier this year, which a federal court in California declined to toss based on an argument about the special prosecutor’s appointment. He later pleaded guilty to nine tax offenses, with sentencing scheduled for Dec. 16.

Biden sued the IRS last September for damages related to the leaked information.

Judge Rudolph Contreras of the US District Court for the District of Columbia Sept. 27 rejected the IRS’s argument that sovereign immunity bars Biden’s claims because Section 6103 of the Internal Revenue Code only provides that the government is liable for actions of its employees, not its employees’ agents. According to Biden’s complaint, lawyers acting at the behest of IRS employees Joseph Ziegler and Gary Shapley disclosed the information, and the chain of liability flows from the lawyers to the IRS employees, to the government itself, the judge said.

“Congress acted to prevent abusive practices and defend taxpayers’ faith in a system built on voluntary disclosure of sensitive personal information,” Contreras wrote. “Interpreting the statutory scheme to allow for repeated disclosures by an agent working at the direction of a federal employee would tend to defeat that statutory scheme and undermine Congress’s mandate that the federal government take its confidentiality obligations seriously.”

But the court held that Biden’s claim that the IRS didn’t establish proper safeguards under the Privacy Act fails because Biden didn’t establish actual damages.

Shapley and Ziegler sent the allegedly confidential return information to members of Congress on April 19, 2023, and requested the chance to testify before congressional oversight committees, the court said. They and their lawyers also appeared in different media interviews claiming to be whistleblowers raising concerns about political interference in the matter.

They later testified in a closed-door session of the House Committee on Oversight and Accountability, which hadn’t been authorized under Section 6103 to receive confidential tax return information.

The court also denied Ziegler and Shapley’s motions to intervene in the case. Because the federal government is liable for the disclosure, the dispute “will have no direct impact” on the employees’ financial or property interests.

Their intervention would also “add undue complexity to the case” and “will likely implicate lawyers, Congress, and news organizations,” Contreras wrote.

Winston & Strawn LLP represents Biden. The Justice Department represents the IRS. Margulis Gelfand LLC and Nixon Peabody LLP represent Shapley, and John Rowley III of Washington, D.C., represents Ziegler.

The case is Biden v. U.S. Internal Revenue Serv., 2024 BL 341648, D.D.C., No. 1:23-cv-02711, 9/27/24.