## Facts

- Elvis E. Johnson, a senior executive and board member of an insurance company, pleaded guilty in 1981 to federal income tax evasion for underpayment of his 1975 taxes.
- To limit reputational harm, Johnson and his employer sought to avoid public linkage between Johnson and the company; some plea-related paperwork omitted his employment and included misleading address information.
- At the plea hearing, the judge mentioned Johnson’s connection to the company in open court; the hearing was attended only by Johnson, counsel, the prosecutor, the judge, and court personnel.
- An IRS employee prepared and issued an IRS press release describing Johnson’s plea and including identifying details (including age, middle initial, home address, and corporate position).
- After objections from Johnson’s counsel, IRS supervisors authorized a revised press release that again included similar identifying and employment details.
- Information used in the releases was obtained through communications among IRS personnel and the prosecutor, rather than through review of the public court record.
- After the releases, Johnson’s employer requested his resignation from executive and board positions, and he left those roles.
- Johnson sued individual IRS officers for damages under 26 U.S.C. § 6103, alleging wrongful disclosure of confidential “return information” in the press releases.
- Following a jury trial, the district court’s instructions effectively treated the press releases as wrongful disclosures, and the jury awarded Johnson roughly $9 million in damages.

## Issues

1. Whether return information mentioned in open court or reflected in public judicial materials loses confidentiality such that later publication by an IRS employee does not violate 26 U.S.C. § 6103.
2. Whether the district court’s jury instructions incorrectly removed from the jury the item-by-item determination of what content in the press releases remained protected “return information.”
3. Whether the case should be reassigned to a different district judge on remand to preserve the appearance of impartiality.

## Decision

- The Fifth Circuit vacated the judgment and remanded for a new trial.
- The court held that the district court’s instruction treating the press releases, in substance, as wrongful disclosures was erroneous in part and affected the outcome.
- The court required a retrial with proper instructions permitting the jury to determine whether specific disclosed items were protected, confidential “return information” at the time of release.
- The court ordered reassignment to a different district judge on remand to ensure, among other things, the appearance of impartiality.

## Legal Principles

- 26 U.S.C. § 6103 generally bars disclosure of “return information,” including taxpayer identity and other specified data, except under enumerated exceptions.
- In assessing § 6103 liability, the factfinder must evaluate specific items of information; some content may remain confidential return information while other content may be public and outside § 6103’s confidentiality protection.
- An open-court reference or a public record does not automatically and categorically extinguish § 6103 confidentiality for all related information; courts must determine whether the particular data disclosed in a press release was already publicly available and from what source it was obtained.
- Jury instructions that effectively direct a finding of wrongful disclosure, without allowing the jury to distinguish public information from protected return information, constitute reversible error when the error bears on liability and damages.
- An appellate court may order reassignment on remand to maintain the appearance of impartiality, even without a finding of actual bias.

## Conclusion

The Fifth Circuit set aside a substantial jury verdict for alleged IRS wrongful disclosures because the jury was not properly instructed to decide, item by item, whether the press releases revealed still-confidential “return information” under § 6103, and it required a new trial before a different district judge.


Johnson v. Sawyer, 120 F.3d 1307 (5th Cir. 1997)