Bookwalter v. Brecklein

Bismarck, North Dakota, imposed a special assessment on certain property owners to pay for parking improvements in its business district. At Bismarck’s request, in May 1958, the Internal Revenue Service (IRS) sent Bismarck a letter stating that the property owners could deduct their special-assessment payments on their income tax returns. The IRS did not publish this letter, but a private tax service published it. In April 1960, the IRS prospectively revoked its Bismarck letter, stating that future special-assessment payments would not be deductible. A partnership that owned the Wirthman Building in Kansas City, Missouri (Wirthman partners), also was subject to a parking-improvement special assessment. The Wirthman partners paid the assessment for 1958. However, the Wirthman partners sought to deduct future payments as business expenses, which the IRS permitted in a June 1959 letter signed by IRS official Edwin Bookwalter (defendant). The Wirthman partners paid their special assessments in 1959 and 1960 and deducted the assessments on their corresponding tax returns. In January 1961, the IRS prospectively revoked its letter to the Wirthman partners. In March 1961, Joseph Brecklein (plaintiff) sued Bookwalter, alleging that Brecklein overpaid his 1957 federal income taxes because he did not deduct a lump-sum benefit-district assessment that he paid in 1957. The district court ruled that Brecklein was due a refund because he was entitled to equal treatment as the Bismarck property owners and the Wirthman partners. Bookwalter appealed.