Denise Lavette Harris-Campbell v. Department of the Treasury

United States Court of Appeals
for the Federal Circuit
______________________
DENISE LAVETTE HARRIS-CAMPBELL,
Petitioner
v.
DEPARTMENT OF THE TREASURY,
Respondent
______________________
2024-1470
______________________
Petition for review of the Merit Systems Protection
Board in No. CH-0752-21-0458-I-1.
______________________
Decided: August 20, 2026
______________________
T ERRI BLANCHARD, Blanchard Law Group, PC, Orland
Park, IL, argued for petitioner.
D ANIEL H OFFMAN, Commercial Litigation Branch, Civil
Division, United States Department of Justice, Washing-
ton, DC, argued for respondent. Also represented by
MARTIN F. HOCKEY , J R., P ATRICIA M. MCCARTHY , BRETT
SHUMATE.
______________________
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HARRIS- CAMPBELL v. TREASURY 2
Before D YK and T ARANTO, Circuit Judges, and MOORE,
District Judge.1
MOORE, District Judge.
Denise Harris-Campbell was an employee of the Inter-
nal Revenue Service (“IRS”), and she also served in her per-
sonal capacity as a trustee of a trust for her beneficiary
goddaughter during her federal service. Various issues
with Ms. Harris-Campbell’s tax returns and health insur-
ance claims were uncovered, leading the IRS to terminate
her employment following an investigation. Ms. Harris-
Campbell appealed her termination to the Merit Systems
Protection Board (“Board”), and Administrative Judge
Daniel R. Fine issued an initial decision reversing the ter-
mination. The IRS timely petitioned for review of that re-
versal, and the Board then entered a final order reversing
the initial decision and sustaining Ms. Harris-Campbell’s
removal. Ms. Harris-Campbell seeks to reverse that final
decision. We now affirm.
BACKGROUND
Ms. Harris-Campbell worked as a Taxpayer Accounts
Manager and a Revenue Officer for the IRS before eventu-
ally rising to the position of Supervisory Revenue Officer.
She began serving as a trustee for her goddaughter’s trust
in 2011, following her goddaughter’s mother’s death in
2010, but her goddaughter had lived with her in some ca-
pacity since 2006. By early 2015, Ms. Harris-Campbell’s
relationship with her goddaughter had broken down, and
her goddaughter followed through on threats to report her
to the IRS for accepting compensation or gifts in exchange
for preparing tax returns for others, which is undisputedly
1 Honorable K. Michael Moore, District Judge,
United States District Court for the Southern District of
Florida, sitting by designation.
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HARRIS- CAMPBELL v. TREASURY 3
prohibited. 5 C.F.R. §§ 3101.106(b), (b)(5). Her goddaugh-
ter reported that Ms. Harris-Campbell “prepared tax re-
turns in exchange for compensation/gifts several times in
the past few years,” starting “as a family thing, but then
spread[ing] to other acquaintances” such that she was pre-
paring “approximately five to six returns for other people
each year.” Appx. 170.2 The IRS takes the position that
its own employees are held to a higher expectation of tax
compliance as they are responsible for enforcing federal tax
law, and this was also true for Ms. Harris-Campbell specif-
ically “as a manager who is expected to report and enforce
consequences of misconduct by [her] employees.” Appx.
128. Ms. Harris-Campbell disclosed her goddaughter’s
threats and reports to her manager, who advised her to
preemptively reach out to the Treasury Inspector General
for Tax Administration (“TIGTA”).
This reporting triggered a TIGTA investigation, which
resulted in the IRS finding, in pertinent part, Ms. Harris-
Campbell improperly claimed dependency exemptions for:
(1) her goddaughter as a dependent in tax years 2008 to
2014 despite not paying enough of her goddaughter’s ex-
penses to warrant that categorization; (2) her goddaughter
as her child in tax years 2008, 2009, and 2010; (3) her god-
daughter as her stepchild in 2011; and (4) her goddaugh-
ter’s son as a dependent in tax year 2014 even though the
majority of his expenses were paid by the goddaughter.
Appx. 362–63. Notably, Ms. Harris-Campbell acknowl-
edged to investigators that “she knew that her actions were
technically illegal.” Appx. 62, 362. This same investigation
also revealed that Ms. Harris-Campbell improperly placed
her goddaughter and her goddaughter’s son on her Federal
Employee Program health insurance plan.
2 Citations to “Appx.” refer to the Appendix to the
Brief of Petitioner submitted by Ms. Harris-Campbell, Dkt.
No. 53.
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HARRIS- CAMPBELL v. TREASURY 4
The TIGTA investigation in turn triggered an IRS au-
dit, wherein the IRS determined that Ms. Harris-Camp-
bell’s goddaughter and goddaughter’s son were indeed
listed as dependents on her 2013 and 2014 tax returns and
put on her health insurance plan, and that she owed a tax
liability, including interest and penalties, as well as a sep-
arate amount for the health insurance fraud. Appx. 60,
164, 460–77, 657–70. Ms. Harris-Campbell challenged this
determination in U.S. Tax Court, which corroborated the
outstanding amounts she owed, and the case was resolved
upon a Stipulation of Settled Issues (“Stipulation”) be-
tween her and the IRS for approximately half of the liabil-
ity for which she was initially assessed. Appx. 155–57. The
Decision from the Tax Court (“Tax Court Decision”), which
is signed by the parties, imposed the amounts owed and
applicable penalties, “[p]ursuant to the agreement of the
parties in this case,” without further discussion.
Appx. 134–35.
The Stipulation, which was entered on the docket in
the Tax Court case, stated in pertinent part that Ms. Har-
ris-Campbell was: (1) as to tax year 2013, “not entitled to
claimed dependency exemptions” for her goddaughter and
was “liable for the accuracy related penalty under [Internal
Revenue Code (‘I.R.C.’)] § 6662(a) . . . to the extent it still
applies after adjusting computations” as stated therein;
and (2) as to tax year 2014, “not entitled to claimed depend-
ency exemptions” for her mother, goddaughter, and god-
daughter’s child, was “not entitled” to $6,300.00 claimed as
non-cash contributions, $1,125.00 claimed as cash contri-
butions, $20,342.00 claimed as medical and dental ex-
penses, or the Child Tax Credit, and was “liable for the
accuracy related penalty under I.R.C. § 6662(a) . . . to the
extent it still applies after adjusting computations” as
stated therein. Appx. 156–57. The last paragraph states
that the Stipulation is intended to “resolve all of the issues
in the case and to be a binding settlement,” and that
Ms. Harris-Campell’s “tax liability [was to] be computed by
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[the IRS] based on the Stipulation . . . and pursuant to the
Internal Revenue Code.” Appx. 157. The Stipulation is un-
signed by any party.
The Tax Court case concluded in 2020. In the mean-
time, several separate instances of purported financial mis-
conduct had surfaced. First, in October 2017, Ms. Harris-
Campbell failed to settle a disputed charge on her govern-
ment travel card balance within 30 days following a charge
for a hotel that she did not end up staying at, at which point
she notified her manager as required, and received alter-
native discipline. Second, in October 2018, Ms. Harris-
Campbell was suspended for 7 days due to travel card mis-
use where she attempted to pay the balance of her IRS
travel credit card from an account that twice had insuffi-
cient funds, which she maintained was not misuse but nev-
ertheless stated she understood that two bounced checks in
a 12-month period would result in suspension of the card.
Appx. 821–22.
On March 17, 2021, the IRS proposed removing
Ms. Harris-Campbell based on three Reasons: understat-
ing her tax liability; failing to correctly pay the tax liability
she owed; and improperly claiming dependent entitlements
and benefits on her health insurance which she received
through her employment. Appx. 125–31. On August 25,
2021, the IRS sustained each Reason along with its sup-
porting Specification in deciding to remove her, noting that
the various instances of misconduct “each separately
demonstrate a severe lack of integrity, which is an essen-
tial element of your position in keeping the trust of the tax-
payers you are entrusted to provide service for.” Appx. 51;
see Appx. 49–54. The purported misconduct related to
Ms. Harris-Campbell’s travel credit card was also taken
into account as prior discipline. Ms. Harris-Campbell was
removed from Federal service effective August 27, 2021.
Ms. Harris-Campbell timely appealed her removal to
the Board, resulting in Administrative Judge Fine’s initial
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decision reversing her removal. The full Board reversed
the initial decision upon the IRS’s petition for review, sus-
taining Ms. Harris-Campbell’s removal on the totality of
the evidence, including the Stipulation and Tax Court De-
cision, which had not been afforded evidentiary weight in
the initial decision. The Board concluded that the IRS had
proven its first Reason for removal by a preponderance of
the evidence, merged the second Reason with the first, and
did not reach the third. The Board highlighted that as to
the Tax Court materials, documentary evidence including
the original IRS audit and investigatory hearing materials,
and hearing testimony, Administrative Judge Fine “erred
in discounting or failing to recognize these and other pieces
of evidence as he analyzed the agency’s allegations.”
Appx. 10; see Appx. 8. Ms. Harris-Campbell appeared pro
se throughout these proceedings prior to the instant peti-
tion to this court.
Following the Board’s final decision, Ms. Harris-Camp-
bell timely petitioned for review. We have jurisdiction un-
der 28 U.S.C. § 1295(a)(9) and 5 U.S.C. § 7703(b)(1).
D ISCUSSION
We undertake a narrow review of the Board’s decisions
pursuant to 5 U.S.C. § 7703(c). We review the underlying
record and will only set aside a decision if it is: “(1) arbi-
trary, capricious, an abuse of discretion, or otherwise not
in accordance with law; (2) obtained without procedures re-
quired by law, rule, or regulation having been followed; or
(3) unsupported by substantial evidence.” 5 U.S.C.
§ 7703(c); see also Potter v. Dep’t of Veterans Affs., 949 F.3d
1376, 1380 (Fed. Cir. 2020). It is the petitioner’s burden to
establish reversible error in the Board’s final decision. See
Sistek v. Dep’t of Veterans Affs., 955 F.3d 948, 953
(Fed. Cir. 2020). We review the Board’s legal findings de
novo and factual findings under a substantial evidence
standard. McIntosh v. Dep’t of Def., 53 F.4th 630, 638
(Fed. Cir. 2022) (citation omitted).
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HARRIS- CAMPBELL v. TREASURY 7
An abuse of discretion occurs when an agency reaches
a decision “based on an erroneous interpretation of the law,
on factual findings that are not supported by substantial
evidence, or [that] represents an unreasonable judgment in
weighing relevant factors.” Beck v. Dep’t of Navy, 997 F.3d
1171, 1182 (Fed. Cir. 2021) (quoting Star Fruits S.N.C.
v. United States, 393 F.3d 1277, 1281 (Fed. Cir. 2005)).
Substantial evidence means “such relevant evidence as a
reasonable mind might accept as adequate to support a
conclusion.” Simpson v. Off. of Pers. Mgmt., 347 F.3d 1361,
1364 (Fed. Cir. 2003) (quotation omitted).
Among other grounds, Ms. Harris-Campbell contends
that the Board committed reversible error in its treatment
of documentary and testimonial evidence, including its con-
sideration of her alleged settlement agreement with the
IRS to establish the amount of her disputed tax claim in its
evaluation of whether she should be removed. According
to Ms. Harris-Campbell, because “[e]vidence of settlement
is not admissible when it is offered to prove liability or
damages” under Federal Rule of Evidence 408, the Board
improperly considered the Tax Court Decision, which was
rendered pursuant to the Stipulation and “is the product of
a settlement between the IRS and the appellant as a tax-
payer,” as relevant and material, relying in part on Ta-
wadrous v. Department of the Treasury, 110 M.S.P.R. 475
(2009). Petitioner’s Br. at 9–14. We disagree.
It is well-settled that “evidentiary issues fall within the
sound discretion of the board and its officials.” Curtin
v. Off. of Pers. Mgmt., 846 F.2d 1373, 1378 (Fed. Cir. 1988).
We will therefore only overturn as to evidentiary rulings if
there is an abuse of discretion that is “clear and harmful,”
which means that a petitioner must “prove that the error
caused substantial harm or prejudice to his rights which
could have affected the outcome of the case.” Id. at 1378–
79 (first citing Spezzaferro v. FAA, 807 F.2d 169, 173
(Fed. Cir. 1986), then citing Cornelius v. Nutt, 472 U.S.
648, 657–59 (1985)).
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Rule 408, entitled “Compromise Offers and Negotia-
tions,” provides as follows:
(a) Prohibited Uses. Evidence of the following is
not admissible—on behalf of any party—either to
prove or disprove the validity or amount of a dis-
puted claim or to impeach by a prior inconsistent
statement or a contradiction:
(1) furnishing, promising, or offering—or
accepting, promising to accept, or offering
to accept—a valuable consideration in com-
promising or attempting to compromise the
claim; and
(2) conduct or a statement made during
compromise negotiations about the claim—
except when offered in a criminal case and
when the negotiations related to a claim by
a public office in the exercise of its regula-
tory, investigative, or enforcement author-
ity.
(b) Exceptions. The court may admit this evidence
for another purpose, such as proving a witness’s
bias or prejudice, negating a contention of undue
delay, or proving an effort to obstruct a criminal in-
vestigation or prosecution.
Fed. R. Evid. 408. “Although the Federal Rules of Evidence
do not apply to Board hearings, they are a helpful guide to
proper hearing practices.” Yanopoulos v. Dep’t of Navy,
796 F.2d 468, 471 (Fed. Cir. 1986) (internal citation omit-
ted).
Even if Rule 408 applied, Ms. Harris-Campbell has not
shown that it was violated here. The fact of the admitted
tax liability to which Ms. Harris-Campbell undisputedly
agreed, even if, as she contends, such settlement was not
based on a written agreement, is not a “settlement commu-
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HARRIS- CAMPBELL v. TREASURY 9
nication” or otherwise a material prepared for “use in ne-
gotiations.” See Lyondell Chem. Co. v. Occidental Chem.
Corp., 608 F.3d 284, 294–300 (5th Cir. 2010). Therefore,
where the Board relied on the Tax Court documents to es-
tablish the fact of a liability that was a product of a settle-
ment, this is not the same circumstance as was
contemplated in this court’s previous holdings that an “un-
accepted offer of settlement” may not be considered be-
cause admitting “an admission of liability in the amount of
the offer would seriously discourage parties from discuss-
ing settlement or making settlement offers.” Cheyenne
River Sioux Tribe v. United States, 806 F.2d 1046, 1050
(Fed. Cir. 1986).
Notably, Ms. Harris-Campbell does not contend that
the Tax Court Decision, which specifically was entered
“[p]ursuant to the agreement of the parties in this case,”
was the result of fraud or misrepresented the agreement
reached. Appx. 134–35. In its final decision, the Board
specifically noted that Ms. Harris-Campbell included the
unsigned Stipulation in her own bankruptcy filings, “the
totals contemplated by the settlement agreement are con-
sistent with the totals identified in the Tax Court [D]eci-
sion, which does explicitly state that the decision is the
product of settlement,” and that it “found no instance of
[her] substantively disputing the authenticity of the settle-
ment agreement during the adjudication of this appeal.”
Appx. 9.
Ms. Harris-Campbell now argues that she in fact did
dispute the authenticity of the settlement agreement, but
this appears to be a semantic dispute where she repeatedly,
even in briefing to this court, states her tax liability in an
amount consistent with the Stipulation and the Tax Court
Decision. Petitioner’s Br. at 4 (“The appellant petitioned
the U.S. Tax Court for relief and, in December 2020, she
resolved her appeal with the IRS for roughly half of what
the IRS said she owed.”). The Board used Ms. Harris-
Campbell’s Tax Court documents to establish the amount
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of her liability as an underlying, non-dispositive fact giving
rise to her removal, those documents did not reflect any ad-
ditional adjudication of the merits of her Tax Court claim,
and the Board cited to Tawadrous where Tax Court mate-
rials were used in a similar manner.
We thus do not see any abuse of discretion in the
Board’s consideration of the Stipulation and Tax Court doc-
uments, and even if there had been an abuse of discretion,
Ms. Harris-Campbell has not made a showing of harm or
prejudice where there is no substantive dispute as to the
fact that she settled with the IRS for a sum consistent with
what is reflected in the Tax Court documents and Stipula-
tion.
CONCLUSION
We have considered Ms. Harris-Campbell’s remaining
arguments and find them unpersuasive. For the foregoing
reasons, we affirm the final decision of the Board.
The parties shall bear their own costs.
AFFIRMED
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