REGGIE B. WALTON, United States District Judge.
The plaintiffs, forty-one organizations that sought or are still seeking tax-exempt status from the Internal Revenue Service ("IRS"), filed this civil action against the United States of America, the IRS, and several known and unknown IRS officials in both their official and individual capacities,
The plaintiffs assert that they "are all organizations that applied for [26 U.S.C. § 501(c)(3) or 26 U.S.C. § 501(c)(4)] tax-exempt status with the IRS between 2009 and 2012." Am. Compl. ¶ 73. Altogether there are forty-one such organizations. Id. ¶¶ 15-55. At the time the plaintiffs filed their complaint, there were four categories of plaintiffs: (1) four plaintiffs that were awaiting an IRS determination of their Section 501(c)(3) tax-exempt status; (2) ten plaintiffs that were awaiting an IRS determination of their Section 501(c)(4) tax-exempt status; (3) twenty-two plaintiffs that had already received tax-exempt status;
The plaintiffs allege that "[a]s early as February 2010, the IRS began identifying [tax-exempt] applications for additional scrutiny," which "includ[ed] the issuance of letter requests for additional information" from organizations with "conservative-sounding names." Id. ¶ 92 (citing Am. Compl., Exhibit ("Ex.") 1 (May 14, 2013 Report from the Treasury Inspector General for Tax Administration ("the Report")) at 5-6, 30); see also id. ¶¶ 94-95, 280. The plaintiffs further allege that in August 2010, IRS employees distributed a list entitled "Be On The Lookout" — otherwise known as the "BOLO" list. Id. ¶ 124. The BOLO list allegedly contained terms that would identify "organizations with conservative[-]sounding names that had applied for tax-exempt status under [Sections] 501(c)(3) or 501(c)(4)," but "no terms that would identify progressive or liberal groups." Id. The plaintiffs assert that as of July 2011, the BOLO list "continued to focus on organizations associated with ... conservative philosophies." Id. ¶ 170. The BOLO list "remained in place for another eighteen (18) months."
In support of their allegations, the plaintiffs note that on May 10, 2013, one of the named individual defendants "apologized in a speech before the American Bar Association for a pattern of misconduct whereby the IRS intentionally and systematically targeted for additional and unconstitutional scrutiny[,] conservative organizations applying for tax-exemption."
Id. ¶ 275 (citing Ex. 1 (The Report) at 5-20).
Under this alleged "IRS scheme," IRS officials across the country purportedly "pulled applications from conservative organizations, delayed processing those applications for sometimes well over a year, [and] then made harassing, probing, and unconstitutional requests for additional information." Id. ¶ 2; see also id. ¶¶ 288-92. According to the plaintiffs, "[t]he IRS scheme had a dramatic impact on targeted groups, causing many to curtail lawful activities, expend considerable unnecessary funds, lose donor support, and devote countless hours of time to responding to onerous and targeted IRS information requests that were outside the scope of legitimate inquiry." Id. ¶ 3. As a result of the aforementioned allegations, the plaintiffs "seek damages" for the implementation of the alleged IRS scheme, as well as "declaratory and injunctive relief" to "halt IRS targeting" and "strike down all unconstitutional rules, regulations, practices, and procedures that empowered the IRS's unlawful acts." Id. ¶ 5; see also id. ¶¶ 311-16.
The plaintiffs filed suit on May 29, 2013, ECF No. 1, and have since amended their complaint twice, once on June 25, 2013, ECF No. 27, and again on October 18, 2013, Am. Compl. at 81. Counts one through three seek monetary damages against certain defendants in their individual capacities for carrying out the alleged IRS scheme in violation of the First and Fifth Amendments. See Am. Compl. at 61-65. Counts four through seven generally accuse the defendants of violating the APA and seek declaratory and injunctive relief. See id. at 66-75. Count eight seeks declaratory relief under 26 U.S.C. § 7428 for those plaintiffs that are awaiting determination of their Section 501(c)(3) tax-exempt status. See id. at 75-76. And through count nine, the plaintiffs seek monetary damages for violations of 26 U.S.C. § 6103, because the defendants allegedly "obtained, inspected, handled, and disclosed" the plaintiffs' tax return information "illegally." Id. ¶ 419; see also id. at 76-78.
After the plaintiffs instituted this action, the IRS publicly released a memorandum on its website stating that the challenged IRS scheme had been suspended as of June 20, 2013. Daniel Werfel, Charting a Path Forward at the IRS: Initial Assessment and Plan of Action, at 7 (June 24, 2013), www.irs.gov/PUP/newsroom/Initial%20Assessment%20and%20Plan%20of% 20Action.pdf)
("IRS Action Plan") ("We have suspended the use of `be-on-the-lookout,' or BOLO, lists in the application process for tax exempt status."); id. at 14 ("Specifically, the IRS has suspended the use of BOLO lists in the application process for tax[-]exempt status...."); id. at Appendix ("App.") C ("Memo Suspending [U]se of BOLO Lists (June 20, 2013)"); id. ("Effective immediately, the use of watch lists to identify cases or issues requiring
II. STANDARDS OF REVIEW
A. Rule 12(b)(1) Motion to Dismiss
Rule 12(b)(1) allows a party to move to dismiss for "lack of subject-matter jurisdiction." Fed.R.Civ.P. 12(b)(1). When a defendant moves to dismiss under Rule 12(b)(1), "the plaintiff bear[s] the burden of proving by a preponderance of the evidence that the Court has subject[-]matter jurisdiction." Biton v. Palestinian Interim Self-Gov't Auth., 310 F.Supp.2d 172, 176 (D.D.C.2004); see also Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). A court considering a Rule 12(b)(1) motion must "assume the truth of all material factual allegations in the complaint and `construe the complaint liberally, granting [a] plaintiff the benefit of all inferences that can be derived from the facts alleged.'" Am. Nat'l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C.Cir.2011) (quoting Thomas v. Principi, 394 F.3d 970, 972 (D.C.Cir.2005)). But a "court must give [a] plaintiff's factual allegations closer scrutiny when resolving a Rule 12(b)(1) motion than would be required for a Rule 12(b)(6) motion for failure to state a claim." Byrum v. Winter, 783 F.Supp.2d 117, 122 (D.D.C.2011) (citing Macharia v. United States, 334 F.3d 61, 64, 69 (D.C.Cir.2003)). And "[a]lthough `the District Court may in appropriate cases dispose of a motion to dismiss for lack of subject[-]matter jurisdiction under Fed. R.Civ.P. 12(b)(1) on the complaint standing alone,' `where necessary, the court may consider the complaint supplemented by undisputed facts evidenced in the record, or the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.'" Coal. for Underground Expansion v. Mineta, 333 F.3d 193, 198 (D.C.Cir.2003) (quoting Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C.Cir. 1992)). Finally, in determining whether it has jurisdiction, the Court "may consider materials outside of the pleadings." Jerome Stevens Pharm., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C.Cir.2005).
B. Rule 12(b)(6) Motion to Dismiss
A Rule 12(b)(6) motion tests whether the complaint "state[s] a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). "To survive a motion to dismiss [under Rule 12(b)(6) ], a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp.
A. Counts One Through Three of the Plaintiffs' Complaint
The plaintiffs seek a "monetary remedy," also commonly known as a Bivens remedy,
In Kim v. United States, 632 F.3d 713 (D.C.Cir.2011), the Circuit dealt with aggrieved taxpayers who alleged IRS wrongdoing, including unconstitutional conduct by individual IRS employees, and sought Bivens relief as a result of the alleged harm. Id. at 714-15. The Circuit affirmed the district court's dismissal of the "Bivens claims against the [d]efendants in their official capacities" pursuant to Fed. R.Civ.P. 12(b)(1), noting that it is "well established that Bivens remedies do not exist against officials sued in their official capacities." Id. at 715. The Circuit also affirmed the district court's dismissal of the "Bivens claims against the [d]efendants
The plaintiffs attempt to distinguish Kim on the basis that the alleged injuries in Kim "bear no resemblance to the injuries at issue here."
Here, as in Kim, the alleged injuries in the plaintiffs' Bivens claims against the individual IRS defendants are also constitutional violations. See Am. Compl. at 61-65. The plaintiffs have not meaningfully distinguished — by case authority or otherwise — between the "due process violations" in Kim and the First and Fifth Amendment violations alleged in this case.
Moreover, a former member of this Court was confronted with a nearly identical case to the one before the Court here and refrained from fashioning a Bivens remedy as well. In Church By Mail, the plaintiff, a non-profit church seeking tax-exempt status, filed suit against the defendants, the IRS and various individual IRS agents, for the denial of its tax-exempt status application. 1988 WL 8271, at *1. The plaintiff claimed, inter alia, that the defendants violated the Constitution, including
B. Counts Four Through Seven of the Plaintiffs' Complaint
In counts four through seven of the amended complaint, the plaintiffs, either collectively or a subset of them, seek declaratory and injunctive relief for the defendants' violations of the APA. Am. Compl. at 66-75, 79-80. The "[p]laintiffs' statutory and constitutional claims in [c]ounts [four] through [seven] are all based upon the adoption and implementation of the IRS `[t]argeting [s]cheme' or `BOLO [p]olicy.'" Pls.' Resp. at 44 n.18; see also id. at 57 ("Counts [four] through [seven] seek to enjoin the IRS from applying criteria and demanding confidential information...."). But unless an actual, ongoing controversy exists, this Court is without power to decide it. See Clarke v. United States, 915 F.2d 699, 700-01 (D.C.Cir.1990). Even where a case once posed "a live controversy when filed, the [mootness] doctrine requires" the Court "to refrain from deciding it if `events have so transpired that the decision will neither presently affect the parties' rights nor have a more-than-speculative chance of affecting them in the future.'" Id. (quoting Transwestern Pipeline Co. v. FERC, 897 F.2d 570, 575 (D.C.Cir.1990)). If "the [C]ourt can provide no effective remedy because a party has already `obtained all the relief that [it] sought,'" then the case is moot. Schmidt v. United States, 749 F.3d 1064, 1068 (D.C.Cir.2014) (second alteration in original) (quoting Conservation Force, Inc. v. Jewell, 733 F.3d 1200, 1204 (D.C.Cir.2013)); see also Burlington N.R.R. Co. v. Surface Transp. Bd., 75 F.3d 685, 688 (D.C.Cir.1996) (explaining that cases are moot if intervening events "make it impossible to grant the prevailing party with effective relief').
Here, after the plaintiffs commenced this case, the defendants allegedly "admitted" their wrongful conduct. See,
The Court is aware, however, that the "voluntary cessation" of challenged governmental conduct does not necessarily moot a case unless "`(1) there is no reasonable expectation that the conduct will recur and (2) interim relief or events have completely and irrevocably eradicated the effects of the alleged violation.'" Qassim v. Bush, 466 F.3d 1073, 1075 (D.C.Cir. 2006) (quoting Motor & Equip. Mfrs. Ass'n v. Nichols, 142 F.3d 449, 459 (D.C.Cir. 1998)). The defendants bear a heavy burden of showing that these criteria have been met. See Am. Bar Ass'n v. FTC, 636 F.3d 641, 648 (D.C.Cir.2011). And "where the defendant is a government actor — and not a private litigant — there is less concern about the recurrence of objectionable behavior." Citizens for Responsibility & Ethics in Wash. v. SEC, 858 F.Supp.2d 51, 61, 62 (D.D.C.2012); D.C. Prof'l Taxicab Drivers Ass'n v. District of Columbia, 880 F.Supp.2d 67, 75 (D.D.C.2012) (same).
Here, the Court is satisfied that there is no reasonable expectation that the alleged conduct will recur, as the defendants have not only suspended the conduct, but have also taken remedial measures to ensure that the conduct is not repeated. See IRS Action Plan at 7, 14, App. C; IRS Path Forward; see also Initiative & Referendum Inst. v. U.S. Postal Serv., 685 F.3d 1066, 1074 (D.C.Cir.2012), cert. denied, ___ U.S. ___, 133 S.Ct. 1802, 185 L.Ed.2d 811 (2013) ("It is implausible that the [defendant] would have gone through the cumbersome process of amending its regulation ... only to [unconstitutionally] re-amend the regulation after this case is resolved...."); Coal. of Airline Pilots Ass'ns v. FAA, 370 F.3d 1184, 1191 (D.C.Cir.2004) (mooting case
C. Count Nine of the Plaintiffs' Complaint
In count nine of the amended complaint, the plaintiffs seek monetary judgments against the defendants due to their allegedly "illegal obtain[ment], inspect[ion], handl[ing], and disclos[ure] by the IRS [d]efendants" of the plaintiffs' tax return information. Am. Compl. ¶ 419; see also id. ¶¶ 412-18. According to the plaintiffs, "[e]ach inspection and disclosure by any employee or officer of the IRS of the tax return information produced by [the][p]laintiffs in response to the IRS's unconstitutional and discriminatory requests for additional information constitutes a separate violation of [26 U.S.C. §] 6103(h) as such inspections and disclosures were not for `tax administration purposes'" as defined in the statutory provision. Id. ¶ 421 (certain internal quotations omitted). Consequently, the plaintiffs argue that the defendants are liable under 26 U.S.C. § 7431, which provides damages for violations of 26 U.S.C. § 6103. Am. Compl. ¶¶ 423-24; see also Pls.' Resp. at 74-84. In response, the defendants argue that count nine is "based upon the nature and scope of the IRS's [allegedly unconstitutional] request[s]" for information in support of their applications for tax-exempt status, Defs.' Mot. at 13, which is not actionable under 26 U.S.C. § 6103, as this provision only prohibits "unauthorized inspection or disclosure of that tax return information," Defs.' Mot. at 16.
26 U.S.C. § 6103 protects the confidentiality of taxpayers' tax "[r]eturns and [tax] return information." Id. § 6103(a). Tax "return information" is broadly defined to include:
Id. § 6103(b)(2)(A); see also id. § 6103(b)(2)(B)-(D). Section 6103 contains numerous exceptions to the general prohibition against disclosure or inspection of tax returns and tax return information, including that:
Id. § 6103(h)(1). And "[t]he term tax administration":
Id. § 6103(b)(4). In short, Section 6103 addresses "improper disclosure of tax return information." Mann v. United States, 204 F.3d 1012, 1020 (10th Cir.2000); see also Venen v. United States, 38 F.3d 100, 105 (3d Cir.1994) ("The history of [S]ection 6103 indicates that Congress enacted the provision to regulate a discrete sphere of IRS activity — information handling.").
Section 6103 does not provide a means for the plaintiffs to avoid dismissal of count nine of their complaint. As just noted, Section 6103 concerns the disclosure or inspection, i.e., the "handling," of tax return information. Venen, 38 F.3d at 105. To the extent the plaintiffs take issue with the defendants' handling of its tax return information, those allegations, see Pls.' Resp. at 75 n.31 (citing Am. Compl. ¶¶ 296, 419-24), are insufficiently pleaded in their amended complaint,
Supporting the Court's adherence to the dichotomy between the IRS's acquisition of tax return information for assessing tax-exempt status and the IRS's inspection of that information thereafter, is the availability of judicial review and a separate and distinct remedy for an applicant aggrieved during the tax-exempt application process. Cf. Wilkerson, 67 F.3d at 116 ("Congress enacted separate and distinct provisions concerning collection activities and information handling."); Venen, 38 F.3d at 105 ("In a claim such as the present one based on an improper levy, the concern is not improper information handling but rather improper collection activity. Collection activity is a separate sphere of IRS activity governed by a separate body of law."). Under 26 U.S.C. § 7428, an applicant requesting tax-exempt status under 26 U.S.C. § 501(c)(3) may seek a declaratory judgment that it indeed qualifies for tax-exempt status if either the application has been denied by the IRS or the IRS has failed to act on the application in 270 days. 26 U.S.C. §§ 7428(a)-(b). If the application is denied, the applicant may file suit within ninety days after the IRS mails the applicant its rejection letter. Id. § 7428(b)(3). Alternatively, if the IRS fails to act on the application within 270 days, the applicant is "deemed to have exhausted its administrative remedies," provided that it, "in a timely manner, [took] all reasonable steps to secure ... [a] determination" of its tax-exempt status. Id. § 7428(b)(2). In either case, the applicant may file suit in the United States Tax Court, the United States Court of Federal Claims, or the United States District Court for the District of Columbia. Id. §§ 7428(a), (b)(2). In light of the available relief under 26 U.S.C. § 7428 for controversies arising out of the tax-exempt application process,
D. Count Eight of the Plaintiffs' Complaint
Count eight of the amended complaint is brought on behalf of the four plaintiffs that were still awaiting a determination as to whether they qualify as a Section 501(c)(3) tax-exempt organization and seeking a declaratory judgment regarding their Section 501(c)(3) tax-exempt statuses when the complaint was filed. See Am. Compl. ¶¶ 405-11. Since the filing of the complaint, however, two of the four plaintiffs that were awaiting such a determination — Linchpins of Liberty and Abortion Must End Now — have been granted Section 501(c)(3) tax-exempt status. Pls.' Resp. at 67 ("IRS has ... issued [favorable] [d]etermination [l]etters" to Linchpins of Liberty and Abortion Must End Now); see also Defs.' Reply at 5, 6 n.4. Thus, the defendants contend that count eight is moot as it relates to Linchpins of Liberty and Abortion Must End Now. See Defs.' Mot. at 2. The plaintiffs do not contest this point, see Pls.' Resp. at 67, and the Court will accordingly treat it as conceded.
For the foregoing reasons, the Court grants the defendants' motions to dismiss.
Assuming arguendo that the defendants continue to implement the allegedly unlawful IRS policy against other organizations like the plaintiffs in the review of their applications for tax-exempt status, see Pls.' Resp. at 71 ("[T]he IRS may continue to engage in such tactics against ... other applicants with similar viewpoints."), notwithstanding facts to the contrary, the plaintiffs could not challenge the continuing application of the policy as they filed their complaint on the basis of alleged harm to themselves during their application processes for tax-exempt status and not on the behalf of others that may be similarly situated to the plaintiffs, i.e., other organizations subjected to the same alleged conduct during their application processes for tax-exempt status, see Qassim, 466 F.3d at 1076 (explaining that constitutional challenge to a government policy can proceed if seeking "relief for individuals similarly situated").