Utahns Eric E. and Peggy Chandler have won a $1,000 settlement because the Internal Revenue Service negligently released information about their federal income tax return.
In February 1985, the IRS assessed the couple a $500 penalty for allegedly filing a "frivolous return" because they crossed out part of the form. They filed suit, but the complaint was dismissed.The next day, they mailed a check to the IRS, but they failed to include their taxpayer identification number on the check. The check was sorted, but because there was no number, it was not cashed and they were shown as still being delinquent on IRS records.
Later that year, IRS revenue officer Linda Jernigan mailed a notice of levy to Western Airlines, so money would be withheld from Peggy Chandler's paycheck. The Chandlers said the IRS negligently issued the notice of levy, which amounted to an unlawful disclosure of information. They said Peggy Chandler suffered embarrassment and mental anguish.
U.S. District Judge David Sam said that there was enough information that IRS employees could have located their account on a computer.