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Bowman v. Iddon

United States Court of Appeals, District of Columbia Circuit

February 21, 2017

John J. Bowman, Jr., Appellant
Kimberly Iddon, et al., Appellees

          Argued November 8, 2016

         Appeal from the United States District Court for the District of Columbia (No. 1:14-cv-00520)

          Jennifer J. Clark, appointed by the court, argued the cause as amicus curiae in support of appellant. With her on the briefs was Jeffrey T. Green.

          John J. Bowman Jr., pro se, was on the brief for appellant.

          Jonathan S. Cohen, Attorney, U.S. Department of Justice, argued the cause for appellees. With him on the brief were Gilbert S. Rothenberg and Gretchen M. Wolfinger, Attorneys.

          Before: Tatel and Wilkins, Circuit Judges, and Ginsburg, Senior Circuit Judge.


          Tatel, Circuit Judge

         Appellant John Bowman alleges that five Internal Revenue Service (IRS) employees barred him from representing taxpayers before the Service without due process in violation of the Fifth Amendment. He seeks damages under Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971). The district court dismissed the case, concluding that the Internal Revenue Code's remedial scheme for tax practitioners foreclosed a Bivens action. Without reaching that issue, we affirm on the alternative ground that Bowman has failed to state a claim under Federal Rule of Civil Procedure 12(b)(6) because his complaint contains no allegation that Defendants deprived him of a constitutionally protected interest.


         The Internal Revenue Service recognizes four primary groups of individuals who prepare tax returns: certified public accountants (CPAs), lawyers, enrolled agents, and unenrolled preparers ("tax preparers"). See 31 C.F.R. § 10.8(a); American Institute of Certified Public Accountants v. IRS, 804 F.3d 1193, 1194-95 (D.C. Cir. 2015). CPAs, lawyers, and enrolled agents must be licensed, while tax preparers are "subject to less stringent regulation." American Institute, 804 F.3d at 1195. This case concerns a tax preparer.

         As of 2005, IRS regulations permitted the first three of these groups-all but tax preparers-to "practice before the IRS." See 31 C.F.R. §§ 10.2(d)-(e), 10.3(a)-(c) (2005). The regulation then governing practice before the IRS, Circular 230, defined these groups as "practitioners" and permitted them to act in "all matters connected with a presentation to the [IRS] or any of its officers or employees relating to a taxpayer's rights, privileges, or liabilities, " including through "filing documents, " "corresponding . . . with the IRS, " and "representing a client at conferences." Id. §§ 10.2(d)-(e), 10.3. Tax preparers, by contrast, could obtain only "limited practice" authorization, which allowed them to represent taxpayers before certain line officers of the IRS, excluding "appeals officers, revenue officers, Counsel or similar officers or employees." Id. § 10.7(c)(1)(viii).

         In 2011, "after an IRS review found problems in the tax-preparation industry, " the Service issued a new rule governing tax preparers. Loving v. IRS, 742 F.3d 1013, 1015 (D.C. Cir. 2013) (citing Regulations Governing Practice Before the Internal Revenue Service, 76 Fed. Reg. 32, 286 (June 3, 2011)). That rule created a new category of "registered tax preparers, " who counted as "practitioners" obligated to "register with the IRS by paying a fee and passing a qualifying exam." Id.; see 31 C.F.R. §§ 10.2(a)(5), 10.3(f), 10.4(c), 10.5(b) (2011). Under the rule, and except as otherwise prescribed, only attorneys, CPAs, enrolled agents, and registered tax preparers could "for compensation prepare[] or assist[] with the preparation of all or substantially all of a tax return or claim for refund." 76 Fed. Reg. at 32, 291; see 31 C.F.R. § 10.8(a) (2011); see also 26 C.F.R. § 301.7701-15 (2009) ("A tax return preparer is any person who prepares for compensation, or who employs one or more persons to prepare for compensation, all or a substantial portion of any return of tax or any claim to refund of tax under the Internal Revenue Code."). This court invalidated these regulations in Loving v. IRS, holding that tax-return preparers fall outside the IRS's statutory authority to regulate "'the practice of representatives of persons before the Department of the Treasury.'" 742 F.3d at 1015 (quoting 31 U.S.C. § 330(a)(1)).

         Enter appellant John Bowman. While working as a tax preparer in June 2005, he pleaded guilty to mail fraud, wire fraud, and money laundering, and was sentenced to fifty-seven months' incarceration. He began serving his sentence in August 2005.

         Three months later, while Bowman was still in prison, Defendant Kimberly Iddon, an IRS Revenue Agent, submitted a report of Bowman's suspected misconduct to the IRS Office of Professional Responsibility (OPR). The form on which Iddon submitted the report required her to identify whether Bowman was an attorney, CPA, enrolled agent, or enrolled actuary. Though Bowman had never been an enrolled agent, Iddon erroneously identified him as one, citing "personal knowledge" and attaching newspaper articles on Bowman's prosecution. Bowman Mot. for Summ. J. at 21. ...

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