Defending Against Proposed Suspension Led to Employee’s Removal

An IRS employee ran afoul of the prohibition against unauthorized release of taxpayer info when she put together her defense to a proposed disciplinary suspension.

The case is Vestal v Department of Treasury (CAFC No. 2020-1771, 6/14/2021). As an IRS agent of ten years, Ms. Vestal routinely accessed sensitive tax information of small businesses and self-employed taxpayers. When she received a notice of proposed suspension for discourteous and unprofessional conduct as well as failing to follow directions, she jumped into preparing her defense by assisting her attorney. She sent her attorney information from a taxpayer’s file. There was no dispute that the information was confidential and that her attorney did not have approval to receive the information.

The agency removed Vestal for unauthorized disclosure of confidential taxpayer information. (Opinion pp. 1-2)

Ms. Vestal appealed to the Merit Systems Protection Board (MSPB). A hearing was held, and the judge found that the agency had proved the charge by a preponderance of the evidence, had established a nexus between Vestal’s actions and her position, and held that removal was appropriate. The judge found that the unauthorized disclosure was “very serious,” was intentional, and was to a person over whom the agency had no control to prevent further disclosures. He found that the IRS representative “credibly testified Revenue Agents are trained that taxpayer privacy is ‘sacrosanct’ and any disclosure of taxpayer information outside of work is ‘an absolute no-no.’” (P. 4)

Ms. Vestal took her case to the federal appeals court. 

Citing the “well-established rule of civil service law that the penalty for employee misconduct is left to the sound discretion of the agency,” the appeals court has affirmed the MSPB decision and upheld Vestal’s removal. Before the court, she argued that the penalty was too harsh. The court disagreed. It pointed to the intentional nature of her action, disclosing taxpayer information to an unauthorized person solely for Vestal’s own benefit. She had ample resources and opportunity to consult with agency officials to seek approval for release of the file, but did not do so, and she made no effort to redact sensitive information from the file. Further, she received frequent training about the rules on such disclosures. She knew better. Her argument to the court that the disclosure was not willful, but rather was negligent, simply did not persuade. (Pp. 8-10)

There is also a lengthy discussion in the court’s decision about the difference between “willful” and “intentional,” but the court found that they were one and the same. In the IRS table of penalties—which Vestal tried to heavily rely on to fight the removal penalty—a first offense of “intentional disclosure” could be punished up to removal. The court found that the agency was well within its own table of penalties in the remedy it chose for Vestal’s disclosure. (P. 15)

In short, Ms. Vestal lost her job for violating the “sacrosanct” prohibition against unauthorized disclosure of confidential taxpayer information. She is not the first IRS employee to run into this strict no tolerance policy, and will likely not be the last.

About the Author

Susan McGuire Smith spent most of her federal legal career with NASA, serving as Chief Counsel at Marshall Space Flight Center for 14 years. Her expertise is in government contracts, ethics, and personnel law.