This brief article is about my new favorite case involving the Internal Revenue Service (“IRS”). So you have some perspective, until now, my favorite case was a Supreme Court decision I studied in law school titled, Commissioner vs. Duberstein
. I am not sure why I liked the case other than I thought the taxpayer had a lot of chutzpah to take time from a busy Supreme Court to litigate a really mundane tax issue involving a few thousand dollars.
The Duberstein case involved two businessmen who had a business relationship. At some point, Mr. Berman gave Mr. Duberstein a new Cadillac after he received some particularly helpful information. Although Mr. Duberstein already had a Cadillac and did not need a new one, he accepted it. While Mr. Berman deducted the value of the Cadillac as a business expense, Mr. Duberstein did not include it in income when he filed his tax return. Mr. Duberstein took the position that the Cadillac was a gift. In the opinion, the Supreme Court inferred that while Mr. Berman may “love him like a son,” the Cadillac was not given to Mr. Duberstein “out of affection, respect, admiration, charity or like impulses” and therefore was taxable.
So now the Duberstein case is being replaced by a recently filed case in the United States District Court for the District of Massachusetts. The case is titled Barrigas vs. United States of America, The Howard Stern Production Company and Howard Stern. Yes, this is the same Howard Stern who is the “king of all media,” and is a co-defendant with our very own United States of America. Since the case is still pending, we do not know the outcome, but the facts and claims have already made this my new favorite case.
As unbelievable as this may sound, Mrs. Barrigas called the IRS Service Center to discuss a tax refund for 2014. At that time, she was connected to IRS Agent Jimmy Forsythe. Mrs. Barrigas spent nearly 45 minutes talking on the phone with Agent Forsythe, discussing various tax return issues and personal information. Unfortunately, unbeknownst to Mrs. Barrigas, Agent Forsythe had called The Howard Stern Show on another phone line as a listener and was put on hold. While Agent Forsythe discussed the personal tax matter with Mrs. Barrigas, Howard Stern and his cast of characters somehow picked up the private call and aired it on satellite radio to more than a million listeners. Eventually, Mrs. Barrigas became aware of this through text messages and other telephone calls she began receiving indicating that her call was being broadcast.
Mrs. Barrigas is now suing Howard Stern, his production company and the United States of America for invasion of privacy and negligence. We do not know how the case will be resolved, but I find it difficult to believe that one or more of the defendants will not have to write substantial checks to Mrs. Barrigas.
With that said, other than the obvious involvement of Howard Stern, is there any relevance to what we do every day as tax practitioners? The short answer is clearly yes. You can never be too careful about protecting confidential client information that we receive. While I doubt any of us are at risk to broadcasting confidential information on a national radio program, there can be many situations we encounter that could be problematic. I will leave it at, “We must be diligent at all times to protect confidential client information.” Beyond that, I’ll watch for the outcome of this case knowing that it’s my new favorite case involving the IRS.