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Shwarz v. United States

United States Court of Appeals for the Ninth Circuit

October 11, 2000, Argued and Submitted, Pasadena, California ; December 8, 2000, Filed

No. 99-55618


 [*430]  TASHIMA, Circuit Judge:

Plaintiffs-Appellants Joseph and Beth Shwarz, and the corporation they own, American Boiler Works, Inc. (ABW), brought suit against Defendants-Appellees the United States, the Internal Revenue Service (IRS), and two IRS agents, Steve Hadley and Al Bryant, for unauthorized disclosure of tax return information under 5 U.S.C. § 552a and 26 U.S.C. §§ 6103 and 7431, unauthorized tax collection actions under 26 U.S.C. § 7433, [**2]  and violations of Fourth and Fifth Amendment rights under Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 29 L. Ed. 2d 619, 91 S. Ct. 1999 (1971). On Appellees' motion, the district court dismissed all but the § 552a claim, as to which the court subsequently granted Appellees' motion for summary judgment. We have jurisdiction over this timely appeal pursuant to 28 U.S.C. § 1291, and we affirm.


Joseph and Beth Shwarz are the sole shareholders of ABW, which repairs steam boilers for dry cleaners. Steve Hadley and Al Bryant are employees of the IRS. Bryant was at all relevant times Hadley's supervisor.

At some time before September 1994, the IRS assessed a Trust Fund Recovery Penalty of $ 47,011 against Joseph Shwarz (Shwarz) for the period ending December 31, 1991, pursuant to 26 U.S.C. § 6672(a). It also assessed federal employment, unemployment, and withholding taxes of approximately $ 212,548 against ABW, for the years 1989, 1990, and 1991.

In September 1994, ABW submitted an offer in compromise of $ 22,075 for the 1989-1991 taxes owed by it and the trust fund [**3]  penalty owed by Shwarz. The offer called for a one-time payment of $ 2,500, followed by monthly payments of $ 816, until the balance and interest were paid in full. The IRS accepted the offer.

Between November, 1994, and April, 1995, Shwarz caused ABW to pay a total of $ 5,800 to the IRS towards satisfaction of the offer in compromise. Shwarz also believed, based on a letter from his accountant, that the cash value of a life insurance policy that Shwarz owned that the IRS had levied on would be applied to the offer in compromise. At the time, the policy's cash value was approximately $ 19,000.

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234 F.3d 428 *; 2000 U.S. App. LEXIS 31300 **; 2001-1 U.S. Tax Cas. (CCH) P50,111; 86 A.F.T.R.2d (RIA) 2000-7191; 2000 Cal. Daily Op. Service 9745

JOSEPH SHWARZ, husband; BETH SHWARZ, wife; AMERICAN BOILER WORKS, INC., a California corporation, Plaintiffs-Appellants, v. UNITED STATES OF AMERICA; INTERNAL REVENUE SERVICE; UNITED STATES ATTORNEY, for the Central District of California; NORA M. MANELLA; STEVE HADLEY; AL BRYANT, Defendants-Appellees.

Prior History:  [**1]  Appeal from the United States District Court for the Central District of California. D.C. No. CV 97-8706 LGB. Lourdes G. Baird, District Judge, Presiding.

Disposition: AFFIRMED.


district court, declaration, collection, orders, premises, tax collection, regulations, disclosures, violations, seizure, levy, unauthorized disclosure, summary judgment, manual, exclusivity provision, right of action, probable cause, notices

Civil Procedure, Appeals, Standards of Review, De Novo Review, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Dismissal, Involuntary Dismissals, Failure to State Claims, Summary Judgment Review, Standards of Review, Tax Law, Audits & Investigations, IRS Disclosures of Information, Actions for Damages, General Overview, Confidentiality of Returns, Federal Tax Administration & Procedures, Taxpayer Bill of Rights, Governments, Federal Government, Claims By & Against, Employees & Officials, State & Local Taxes, Administration & Procedure, Collection of Taxes, Reviewability of Lower Court Decisions, Preservation for Review, Constitutional Law, Fundamental Rights, Search & Seizure, Scope of Protection, Criminal Law & Procedure, Search Warrants, Warrantless Searches, Consent to Search, Warrants, Administrative Law, Enforcement, Grounds for Civil Action, Labor & Employment Law, Employee Privacy, Privacy Act, Penalties, Governmental Information, Personal Information, Summary Judgment, Entitlement as Matter of Law, Genuine Disputes, Burdens of Proof, Movant Persuasion & Proof, Nonmovant Persuasion & Proof, Judgments, Evidentiary Considerations