Wilkerson v. United States

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 458-35-

5712, EIN XX-XXX7927, 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.

18