United States Court of Appeals,
Fifth Circuit.
No. 94-40713.
Rhonda K. WILKERSON, d/b/a Forstar Trailers, Plaintiff-Appellee, Cross-Appellant,
v.
UNITED STATES of America, Defendant-Appellant, Cross-Appellee.
Oct. 23, 1995.
Appeals from the United States District Court for the Eastern District of Texas.
Before JOLLY, DAVIS and EMILIO M. GARZA, Circuit Judges.
EMILIO M. GARZA, Circuit Judge:
The government appeals the district court's award of damages
for wrongful levy and wrongful disclosure flowing from tax
collection activities aimed at the assets of Plaintiff Rhonda K.
Wilkerson. The government also appeals the district court's award
of attorney's fees and costs. Wilkerson cross-appeals asserting
that the district court improperly denied her Fifth Amendment
claims. We affirm in part, reverse in part, vacate in part, and
remand for further proceedings. I
This suit grows out of the Internal Revenue Service's efforts
to collect Robert D. Forsyth's delinquent income taxes. Based on
information received from various sources, the IRS began to
investigate Forsyth's relationship with Rhonda Wilkerson.
Wilkerson had just started Forstar Trailers ("Forstar"), a trailer
manufacturing business of the same type that Forsyth had been
1 involved in prior to his relationship with Wilkerson. The IRS
suspected that Wilkerson might be sheltering Forsyth's assets and
income in her name. After further investigation, the IRS found
what it believed to be credible evidence that Wilkerson and Forsyth
were common-law married. Besides sharing a residence, Wilkerson
and Forsyth had represented to family members that they were
married, and Wilkerson had endorsed several checks made out to
"Rhonda Forsyth" by signing that name. Neighbors and acquaintances
confirmed that the two were married, and Wilkerson and Forsyth were
expecting a child. Based on this evidence, the IRS issued one
Notice of Levy on Wilkerson's bank account, and thirty-seven
Notices of Levy to persons believed to be customers and suppliers
of Wilkerson's trailer business.1 Although both Forsyth and
Wilkerson continued to deny that they were married, IRS supervisors
felt that they had sufficient evidence to pursue a portion of
Wilkerson's assets.
After subsequent communication with the IRS, Wilkerson's bank
complied with the Notice of Levy and forwarded $2,469.39 to the IRS
which the IRS applied to Forsyth's tax debt. The IRS collected no other funds from Wilkerson. As a result of the Notices, however,
1 The Notices of Levy identified Robert D. Forsyth as the delinquent taxpayer and asked for payment of $22,033.79. The Notices of Levy also stated:
By virtue of the taxes assessed against Robert D. Forsyth, SSN XXX-XX-2387, this levy covers and attaches to one-half of any funds due and owing to Rhonda McClain Wilkerson, dba Forstar Trailers, SSN XXX-XX- 5712, EIN XX-XXXXXXX, such funds being the community property of Robert Forsyth and Rhonda McClain Wilkerson.
2 Wilkerson's business began to falter. Wilkerson's customers and
suppliers were reluctant to continue dealing with Forstar. After
Forstar went out of business, Wilkerson filed administrative claims
with the IRS. The IRS denied Wilkerson's claims by letter, and
Wilkerson filed suit in the district court.
Wilkerson brought claims against the IRS for wrongful levy
under 26 U.S.C. § 7426 and § 7433 (for reckless or intentionally
wrongful collection activities); wrongful disclosure of her tax
return information under 26 U.S.C. § 7431; violation of the
Privacy Act, 5 U.S.C. § 552(a); violations of the Federal Tort
Claims Act, 28 U.S.C. §§ 1346(b), 2671-2680; violations of the
Administrative Procedure Act, 5 U.S.C. §§ 701-706; and violation
of her Fifth Amendment rights. The district court concluded that
Wilkerson and Forsyth were not common-law married and that the IRS
was negligent in assuming so. Accordingly, the district court
awarded $2,469.39 in damages for the wrongful levies. The district
court also concluded, based on the wrongfulness of the levies, that
the IRS had wrongfully disclosed Wilkerson's tax return information
and awarded her $209,547.19 for the value of Forstar, and $20,000.00 for emotional distress. The district court denied
recovery on all other grounds, but awarded Wilkerson attorney's
fees and costs under 26 U.S.C. § 7430. Neither party appeals the
district court's finding that the levies were wrongful nor the
award of $2,469.39 in damages for the levies. The government
appeals the district court's award of damages for wrongful
disclosure, and the district court's award of attorney's fees and
3 costs. Wilkerson cross-appeals on her Fifth Amendment claims.
II
We review the district court's findings of fact under the
clearly erroneous standard. Barrett v. United States, 51 F.3d 475,
478 (5th Cir.1995) (citing Robicheaux v. Radcliff Material, Inc.,
697 F.2d 662, 666 (5th Cir.1983)). The legal conclusions based
upon those facts, however, we review de novo. Id. Wilkerson's
claim of wrongful disclosure turns on a proper interpretation of
the Internal Revenue Code and as such is a question of law
reviewable de novo. Estate of Moore v. Commissioner, 53 F.3d 712,
714 (5th Cir.1995).
A claim of wrongful disclosure under § 7431 requires (1) that
the IRS disclosed confidential tax return information either
knowingly or negligently, and (2) that this disclosure was not
authorized by § 6103 of the Internal Revenue Code. 26 U.S.C. §§
6103(a), 7431(a)(1).2 Recovery will be denied however, if the IRS
acted on a "good faith but erroneous interpretation" of § 6103. 26
U.S.C. § 7431(b). There is no dispute that the IRS disclosed
2 Section 7431(a)(1) reads:
If any officer or employee of the United States knowingly, or by reason of negligence, discloses any return or return information with respect to a taxpayer in violation of any provision of section 6103, such taxpayer may bring a civil action for damages against the United States in a district court of the United States.
26 U.S.C. § 7431(a)(1).
4 Wilkerson's confidential tax return information.3 The issues before this court are whether § 6103(k)(6) authorized the
disclosures, and whether the government made the disclosures based
on a good faith interpretation of § 6103. Because we find that §
6103(k)(6) authorized the disclosure of Wilkerson's tax return
information, we decline to reach the defense of good faith.
The district court, interpreting § 6103 of the Internal
Revenue Code, concluded that disclosure of Wilkerson's tax return
information was unnecessary to collect Forsyth's delinquent taxes,
because in actuality Wilkerson owed no taxes and was not in fact
liable for Forsyth's tax debt. As the district court reasoned,
because the levies themselves were not authorized by statute, the
corresponding disclosures were unnecessary and unauthorized by §
6103(k)(6). Currently a split exists among the circuits on whether
3 Section 6103 defines "Return Information" to include,
a taxpayer's identity, the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, overassessments, or tax payments ... or any other data, received by, recorded by, prepared by, furnished to, or collected by the Secretary with respect to a return or with respect to the determination of the existence, or possible existence, of liability (or the amount thereof) of any person under this title for any tax, penalty, interest, fine, forfeiture, or other imposition, or offense ...
26 U.S.C. § 6103(b)(2)(A). The IRS disclosed Wilkerson's social security number, employee identification number, business interests, and amount of alleged tax liability. This information was collected by the IRS "with respect to the determination of the existence, or possible existence, of liability" and thus falls within the statutory definition of return information which is to be kept confidential under § 6103(a).
5 the illegality of the underlying collection activity has an effect
on the legality of the disclosures flowing out of such activity.4
The district court followed the Eighth Circuit which has held that
"a disclosure in pursuance of an unlawful levy violates the
confidentiality requirements of section 6103(a) and is not
authorized under section 6103(k)(6)." Rorex v. Traynor, 771 F.2d
383, 386 (8th Cir.1985); see Husby v. United States, 672 F.Supp.
442, 445 (N.D.Cal.1987) (following Rorex ). The Rorex court
determined that allowing the IRS to avoid liability for its
wrongful disclosures by simply including them in a notice of levy
would substantially defeat the confidentiality requirement of §
6103. Rorex, 771 F.2d at 386. Because we feel that this
interpretation misreads the provisions in question, we decline to
follow Rorex.
The plain language of the Internal Revenue Code supports the
government's contention that the validity of the underlying
collection activity is irrelevant in determining whether a
disclosure is wrongful. Section 6103 sets forth the general rule
4 Compare Rorex v. Traynor, 771 F.2d 383 (8th Cir.1985) (holding that disclosures contained in unlawful levy violate § 6103(k)(6)) with Venen v. United States, 38 F.3d 100 (3d Cir.1994) (declining to consider the validity of the underlying levy in determining whether disclosures violated § 6103(k)(6)); Farr v. United States, 990 F.2d 451 (9th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 634, 126 L.Ed.2d 592 (1993) (holding that where disclosures were necessary to the collection procedure, fact that collection procedures may have been defective does not make the disclosures wrongful); Huff v. United States, 10 F.3d 1440 (9th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 2706, 129 L.Ed.2d 834 (1994) (holding that possible procedural lapses in collection process will not render disclosures necessary to collection wrongful).
6 that the government may only disclose tax return information in
certain narrow instances.5 Section 6103(k)(6) provides for
disclosure "in connection with collection activity ... or with
respect to the enforcement of any other provision of this title."
26 U.S.C. § 6103(k)(6).6 Pursuant to this provision, the Secretary
of the Treasury promulgated regulations permitting disclosures in
applying "the provisions of the Code relating to establishment of
liens against [a taxpayer's] assets, or levy on, or seizure, or
sale of, the assets to satisfy any [outstanding tax] liability."
26 C.F.R. § 301.6103(k)(6)-1(b)(6). At no place in the Internal
Revenue Code does Congress make the propriety of those disclosures
conditional upon the ultimate propriety of the levy. The plain
language of these sections authorizes disclosures to the extent
necessary to effectuate a levy. Venen v. United States, 38 F.3d
5 Section 6103(a) provides, "Returns and return information shall be confidential, and except as authorized by this title ... no officer or employee of the United States ... shall disclose any return or return information." 26 U.S.C. § 6103(a). 6 Section 6103(k)(6) reads:
An internal revenue officer or employee may, in connection with his official duties relating to any audit, collection activity or civil or criminal tax investigation or any other offense under the internal revenue laws, disclose return information to the extent that such disclosure is necessary in obtaining information which is not otherwise reasonably available, with respect to the correct determination of tax, liability for tax, or the amount to be collected or with respect to the enforcement of any other provision of this title. Such disclosures shall be made only in such situations and under such conditions as the Secretary may prescribe by regulation.
26 U.S.C. § 6103(k)(6).
7 100, 106 (3d Cir.1994).
The statutory scheme further supports the government's
position. Congress enacted separate and distinct provisions
concerning collection activities and information handling. When
the IRS issues a wrongful levy on a taxpayer's property, § 7426
provides damages which are distinct from those allowed under § 7431
for wrongful disclosures. Section 7426 allows recovery of what the
IRS actually received or "seized" from its wrongful levies. 26
U.S.C. § 7426(b)(2).7 See Three "M" Investments, Inc. v. United
States, 781 F.2d 352, 353 (10th Cir.1986) (noting that section
7426(b)(2) was not meant to be compensatory); Hammond Co. v.
United States, 568 F.Supp. 309, 313 (S.D.Cal.1983) (same). Section
7431 covering wrongful disclosures, however, allows recovery of
compensatory damages. 26 U.S.C. § 7431(c)(1)(B)(I). If Congress
had intended to allow recovery of compensatory damages in the
7 In relevant part § 7426(b)(2) reads:
If the court determines that such property has been wrongfully levied upon, the court may—
(A) order the return of specific property if the United States is in possession of such property;
(B) grant a judgment for the amount of money levied upon; or
(C) if such property was sold, grant a judgment for an amount not exceeding the greater of—
(i) the amount received by the United States from the sale of such property, or
(ii) the fair market value of such property immediately before the levy.
26 U.S.C. § 7426(b)(2).
8 ordinary wrongful levy case, they would have so stated in § 7426.
Holding that disclosures necessary to effectuate a levy
automatically become wrongful upon a finding that the levy was
deficient in some way, would effectively read out of the Internal
Revenue Code the distinct damage remedies that Congress provided.8
The foregoing analysis indicates that Congress intended
collection activities, such as levying, to be distinct from
information handling. We see no reason to conflate them. As the
Third Circuit noted, "[t]hese two bodies of law must remain
distinct." Venen, 38 F.3d at 106. Accordingly, we decline to
follow Rorex, and join the Third and Ninth Circuits in holding that
the validity of the underlying collection activity is not relevant
in determining whether the disclosures of tax return information
were wrongful.9
8 Further support for the government's position comes from the fact that § 7433 does allow a victim of unreasonable collection activities to recover "actual, direct economic damages," but only if the IRS's conduct was reckless or intentionally wrongful. If we were to hold that disclosures necessary to effectuate levies become wrongful when the levies are adjudged deficient, then this section would essentially become a nullity. See Venen, 38 F.3d at 106 (analyzing the interaction between §§ 7431 and 7433). 9 Liability under § 7431(a)(1) requires that the IRS made the disclosures "knowingly, or by reason of negligence." We note that the district court found the disclosures negligent due to the IRS agent's failure to gather sufficient evidence and consult an attorney before concluding that Wilkerson and Forsyth had a common-law marriage. For the reasons stated in this opinion, we believe that the district court misread the requirements of § 7431. The district court's analysis ties the scienter requirement of § 7431 directly to the propriety of the underlying levies. The plain language of the statute states that the disclosures must be done either negligently or knowingly "in violation of any provision of section 6103." 26 U.S.C. § 7431(a)(1). This is an independent inquiry. A finding that the
9 Accordingly, we hold that § 6103(k)(6) authorized the IRS's
disclosure of Wilkerson's tax return information, and thus the
disclosures were not wrongful.10 As was the case in Venen, Wilkerson's claim is based on improper levying procedures, not on
improper information handling. The IRS issued levies to collect
Forsyth's delinquent taxes. Pursuant to § 6103(k)(6) and 26 C.F.R.
§ 301.6103(k)(6)-1(b)(6), the IRS included in the Notices of Levy
Wilkerson's social security number, business interests, employee
identification number, and alleged tax liability—the information
necessary to provide effective notice of the tax liens to persons
dealing with Wilkerson. Absent the disclosures, the Notices of
Levy would have been wholly ineffective in collecting money for
which the IRS believed Wilkerson was responsible. The IRS thus
acted reasonably in determining that disclosure of Wilkerson's tax
return information was necessary to enforce the Internal Revenue
Code and obtain the delinquent taxes.11
underlying collection activity was done negligently does not necessarily mean that the disclosures were also done negligently. Cf. Huckaby v. United States Department of Treasury, 794 F.2d 1041, 1050 (5th Cir.1986), (holding IRS liable under § 7431 when the agent should have known that the disclosures were not authorized by the statute). 10 This opinion should not be construed to hold that every claim of wrongful levy will fail to give rise to a claim of wrongful disclosure. We hold only that proof of wrongful levy, absent more, is legally insufficient to support a claim for wrongful disclosure. 11 We distinguish Wilkerson's case from Barrett v. United States, 51 F.3d 475, 478-79 (5th Cir.1995). In Barrett, we held that where disclosure of tax liability was contained in letters sent solely to obtain information, disclosure was unnecessary if the information sought was "otherwise reasonably available." Unlike the information sought in Barrett, there is no effective
10 III
The district court denied Wilkerson's Fifth Amendment claims
on the grounds that she had failed to show that the IRS acted with
sufficient malice or intent to harass to afford her recovery under
either the due process or takings clause of the Fifth Amendment.
Wilkerson argues that the court erred in requiring malice or intent
to harass before allowing recovery under the Fifth Amendment. See
Rutherford v. United States, 702 F.2d 580, 583-84 (5th Cir.1983)
(holding that a party may be entitled to Bivens recovery under
Fifth Amendment for malicious acts of the IRS which go so far as to
infringe taxpayer's Fifth Amendment liberty interest). We decline
to determine the scope of Rutherford because we find that the
district court lacked jurisdiction to decide Wilkerson's Fifth
Amendment claims.
The United States is immune from suit except as it waives its
sovereign immunity. FDIC v. Meyer, --- U.S. ----, ----, 114 S.Ct.
996, 1000, 127 L.Ed.2d 308 (1994); United States v. Sherwood, 312
U.S. 584, 586-87, 61 S.Ct. 767, 769-70, 85 L.Ed. 1058 (1941).
Congress sets forth the terms of those waivers and courts may not exercise subject matter jurisdiction over a claim against the
federal government except as Congress allows. United States v.
Orleans, 425 U.S. 807, 814, 96 S.Ct. 1971, 1976, 48 L.Ed.2d 390
(1976); Drake v. Panama Canal Comm'n, 907 F.2d 532, 534 (5th
Cir.1990); Ware v. United States, 626 F.2d 1278, 1286 (5th
way to design Notices of Levy without disclosing tax return information.
11 Cir.1980). Waivers of sovereign immunity must be strictly
construed. Sherwood, 312 U.S. at 590, 61 S.Ct. at 771.
The Tucker Act, 28 U.S.C. §§ 1346(a)(2) and 1491(a), vests
concurrent jurisdiction in the United States Court of Federal
Claims ("Court of Claims") and the federal district courts over any
"claim against the United States, not exceeding $10,000 in amount
founded either upon the Constitution, or any Act of Congress, or
any regulation of an executive department, or upon any express or
implied contract with the United States." 28 U.S.C. § 1346(a)(2).
For claims that exceed $10,000, the Tucker Act grants exclusive
jurisdiction to the Court of Claims. 28 U.S.C. § 1491(a); Amoco
Production Co. v. Hodel, 815 F.2d 352, 358 (5th Cir.1987), cert.
denied, 487 U.S. 1234, 108 S.Ct. 2898, 101 L.Ed.2d 932 (1988). We
have consistently refused to allow district courts to adjudicate
issues which belong solely to the Court of Claims, even though some
other statute conferring jurisdiction would otherwise allow the
district court to hear the case. Amoco Production, 815 F.2d at 358
(citing Graham v. Henegar, 640 F.2d 732, 734-35 & n. 6 (5th
Cir.1981)). As we have stated, "The law of this circuit is clear: the Court of Claims has exclusive jurisdiction of a Tucker Act
claim in excess of $10,000." Ware, 626 F.2d at 1287.
Wilkerson claims that either the government engaged in a
taking of her property without just compensation, or deprived her
of her property and liberty interests without due process of law.
Wilkerson seeks $1,146,006.00 as recompense for these alleged
wrongs. Because Wilkerson's claims are against the United States,
12 based on the Constitution, and for money damages in excess of
$10,000, the Tucker act does not allow the district court to hear
this case.12 Indeed, we can find no statute allowing Wilkerson to bring her claims in district court.13 Pursuant to the Tucker Act, Wilkerson should have brought her Fifth Amendment claims in the
Court of Claims. Amoco Production, 815 F.3d at 368; Ware, 626
F.2d at 1287.
12 Wilkerson also argues that 28 U.S.C. § 1346(a)(1) provides the district court with jurisdiction over her Fifth Amendment claims. Section 1346(a)(1), however, only allows the district court to hear suits to recover "any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws." 28 U.S.C. § 1346(a)(1). This language applies only to suits to recover money wrongfully paid to the IRS. Here Wilkerson seeks damages under the Fifth Amendment for the constructive taking of her business, a claim outside the scope of § 1346(a)(1). See United States v. Williams, --- U.S. ----, ----, 115 S.Ct. 1611, 1618, 131 L.Ed.2d 608 (1995) (holding that § 1346(a)(1) allows a person from whom taxes were wrongfully collected to sue for a refund of those taxes). 13 Wilkerson argues in the alternative that 28 U.S.C. § 1367(a) allows the court to hear her Fifth Amendment claims on the basis of supplemental jurisdiction—as part of the same case or controversy as her tax claims. Section 1367(a), however, deals only with the federal courts' power to exercise subject matter jurisdiction over certain claims and does not operate as a waiver of the United States sovereign immunity. Sovereign immunity and subject matter jurisdiction are distinct doctrines. Section 1367(a) essentially codified the common law doctrine of pendant jurisdiction; Baker v. Farmers Elec. Co-Op, Inc., 34 F.3d 274 (5th Cir.1994); which allows litigants in federal court to join state claims with their federal claims where the claims are so related that they "form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C. § 1367(a). As we have previously held, the doctrine of pendant jurisdiction cannot be used to waive the United States' sovereign immunity unless Congress specifically allows it. Ware, 626 F.2d at 1286 (quoting Sanborn v. United States, 453 F.Supp. 651, 655 & n. 5 (E.D.Cal.1977)). Here there is no waiver except to have the claims heard in the Court of Claims.
13 IV
Section 7430 authorizes the award of attorney's fees and
costs to prevailing parties in tax litigation. Section
7430(c)(4)(A) defines "prevailing party" as any party who (1)
establishes that the position of the United States was not
"substantially justified," and (2) "substantially prevails" as to
the amount in controversy or as to the "most significant issue or
set of issues presented." 28 U.S.C. § 7430(c)(4)(A); Heasley v.
Commissioner, 967 F.2d 116, 122 (5th Cir.1992). The district court
found that the IRS's position in this litigation was not
substantially justified and that Wilkerson had prevailed on the
most significant issues in the case—wrongful levy and wrongful
disclosure. We review the district court's grant of attorney's
fees under § 7430 for abuse of discretion. Heasley, 967 F.2d at
120, 123. We can only reverse "if we have a definite and firm
conviction that an error of judgment was committed." Lennox v.
Commissioner, 998 F.2d 244, 248 (5th Cir.1993).
Substantially justified means "justified to a degree that
could satisfy a reasonable person." Id.; Nalle v. Commissioner, 55 F.3d 189, 191 (5th Cir.1995). To meet this standard, the
government's position must have a reasonable basis both in law and
fact. Bouterie v. Commissioner, 36 F.3d 1361, 1367 (5th Cir.1994);
Hanson v. Commissioner, 975 F.2d 1150, 1153 (5th Cir.1992). In
essence, the inquiry focuses on the reasonableness of the
government's position prior to the onset of litigation. Nalle, 55
F.3d at 191-92.
14 The district court concluded that the IRS had based its
assumption of common-law marriage on unreliable information.
Further, the district court found that the IRS agents lacked any
knowledge concerning Texas marriage law, and acted without ever
consulting an attorney on the subject. At the time the IRS made
the levies, the only definite information the agents had consisted
of uncorroborated testimony from witnesses who the IRS knew were
inimical to Forsyth or Wilkerson, or who stood to gain from their
being married, such as Forsyth's ex-wife who shared in Forsyth's
tax liability. In addition, the investigating agent did not
consult an attorney until after issuing the Notices of Levy, and
admitted that he had no knowledge concerning Texas marriage law.
After careful review of the record, we cannot say that we have a
definite and firm conviction that the district court erred in its
finding. Accordingly, we affirm the district court's conclusion
that the IRS's position on the levies was not substantially
justified.14 See Portillo v. Commissioner, 988 F.2d 27, 28-29 (5th
Cir.1993) (holding IRS's position not substantially justified where
they relied solely on unsupported information); Nalle, 55 F.3d at 192 & n. 5 (citing case law which holds that the IRS is not
substantially justified where proper application of state law would
have indicated the incorrectness of the government's position).
The second requirement under § 7430(c)(4)(A) involves whether
14 For the reasons stated in Part II of this opinion, we find that the IRS's position on the disclosure of Wilkerson's tax information was substantially justified, and therefore Wilkerson is not entitled to attorney's fees for that portion of the case.
15 Wilkerson has substantially prevailed as to the amount in
controversy or as to the "most significant issue or set of issues
presented." 28 U.S.C. § 7430(c)(4)(A). To determine if a party
has substantially prevailed, "we look to the final outcome of the
case, whether by judgment or settlement." Heasley, 967 F.2d at
122. A victory on the primary issue will suffice, and neither the
amount of damages received nor number of claims won is
determinative. Id.; see Huckaby v. United States Department of
Treasury, 804 F.2d 297, 299-300 (5th Cir.1986) (holding party a
"prevailing party" despite victory on only one claim out of
several).
Wilkerson has prevailed on her claim of wrongful levy, but
failed on all her other claims, including wrongful disclosure.
Although she sought a greater amount of damages for the
disclosures, that fact alone does not make the disclosure issue
most significant. See Huckaby, 804 F.2d at 299-300 (holding that
a party was a "prevailing party" despite award of only $1,000 out
of possible $28,000 in damages). In order to determine which issue
is most significant, we must determine which issue is primary or most nearly central to the case. See id. at 300 (holding an issue
most significant because it was "the primary issue"). Looking at
the gravamen of Wilkerson's complaint, the primary issue was
whether the levies on Wilkerson's property were wrongful. The bulk
of Wilkerson's claims were in some way derived from the
wrongfulness of the levies. For example, Wilkerson's argues that
she is entitled to recover under the Fifth Amendment because the
16 levies caused her to lose her business without due process or just
compensation. Likewise, Wilkerson based her claim of wrongful
disclosure on a theory that the wrongfulness of the levies made the
disclosures wrongful. Although we reject this position,
Wilkerson's complaint indicates the centrality of the levy issue.
Accordingly, we hold that the wrongful levy issue was the most
nearly central to her case. Having prevailed on the wrongful levy
issue, Wilkerson has prevailed as to the most significant issue in
the case.
Wilkerson is thus entitled to an award of attorney's fees and
costs as a prevailing party under § 7430 of the Internal Revenue
Code. However, since Wilkerson has failed to prevail on any other
issue, she is not entitled to attorney's fees and costs
attributable to those issues. See, e.g., Powers v. Commissioner,
51 F.3d 34, 35 (5th Cir.1995) (apportioning attorney's fees under
§ 7430 based on number of issues won on appeal); Heasley, 967 F.2d
at 123-25 (holding that the burden is on the prevailing party to
establish number of attorney hours expended, and that such hours
were reasonable). Accordingly, we vacate the district court's award of attorney's fees and costs and remand for a determination
of the amount of fees and costs to which she is entitled.
V
For the foregoing reasons we AFFIRM the district court's
finding of wrongful levy. We REVERSE the district court's ruling
on wrongful disclosure and deny Wilkerson recovery based upon that
claim. On Wilkerson's Fifth Amendment claims, we VACATE the
17 district court's denial of recovery, and remand for a determination
of whether "in the interests of justice" they should be transferred
to the Court of Claims under 28 U.S.C. § 1406(a). We VACATE the
district court's award of attorney's fees and costs and remand for
a determination of the amount of fees and costs to which she is
entitled.