Treasury Loses FOIA Case in D.C. District Court
The District Court for the District of Columbia ruled against the government in a recent case involving disclosure of an internal government investigation under the Freedom of Information Act (“FOIA”). In Cause of Action v. Treasury Inspector General for Tax Administration, the nonprofit organization, Cause of Action, brought suit under FOIA requesting, inter alia, all documents pertaining to any investigation by the defendant into the unauthorized disclosure of “return information” (as defined in section 6103) to anyone in the Executive Office of the President. The court found that none of the three exemptions to FOIA that the Treasury Inspector General for Tax Administration (“TIGTA”) argued were applicable applied in this case and remanded the case to the Treasury Department for disclosure.
In 2010, one of President Obama’s advisers, in a conference call with reporters, identified by name a multibillion-dollar company owned by a large donor to the Republican Party and stated that it used a tax structure intended for small businesses. An influential Republican senator complained that the advisor may have been allowed access to the company’s tax return information by the IRS. Section 6103 bars disclosure of tax return information by government officials, except in certain limited circumstances. Various criminal and civil penalties apply to individuals found to violate section 6103. TIGTA responded to the complaining senator by letter stating that he had begun a review to determine whether there had been a violation of the law.
In October 2012 Cause of Action filed a request with the IRS for certain government documents under FOIA. A part of the request related to an investigation by TIGTA into the unauthorized disclosure by the IRS of return information to anyone in the Executive Office of the President. In November 2012, TIGTA responded that it would neither admit nor deny the existence of any responsive records. This response to a FOIA request is known as a “Glomar response.” Cause of Action subsequently filed suit in the District Court for the District of Columbia challenging TIGTA’s refusal to respond to its FOIA request.
Opinion of the court
In court, TIGTA argued that three different exceptions to FOIA permitted it to not respond to the document request. TIGTA’s principal argument was that whether an investigation into the unauthorized disclosure of tax return information exists is itself return information that is protected from disclosure by section 6103. TIGTA asserted that admitting the existence of the investigation would constitute return information because it was “data . . . with respect to the determination of the existence, or possible existence of [the tax] liability . . . of any person.”
The District Court concluded that the mere existence of records of an investigation into whether there has been unlawful disclosure of return information is not itself return information under section 6103. In reaching its decision the court relied on an earlier decision in Tax Analysts v. IRS,  that in order to be protected from disclosure information had to be unique to a particular taxpayer. Non-taxpayer specific information was not entitled to the protections of section 6103.
TIGTA also argued that two other statutory exemptions to FOIA permitted it to not respond to Cause of Action’s requests. One exemption denies disclosure when to do so would reasonably be expected to constitute an unwarranted invasion of personal privacy. Another exemption relied on by TIGTA was an exemption for “personnel and medical files and similar files disclosure which would constitute a clearly unwarranted invasion of personal privacy.” The District Court found that the IRS had waived those exemptions when TIGTA wrote to the senator stating that improper disclosure of tax return information was under investigation.
The opinion is significant because it further defines the type of information that may be disclosed under FOIA. It also provides a limitation on the “Glomar response.”
In the author’s experience, the likelihood that an IRS employee would violate section 6103 and improperly disclose taxpayer return information is quite low. IRS employees are very much aware of section 6103 and its penalties. Moreover, most are part of the U.S. civil service system, they are independent and they are resistant to any political pressure that may come from senior members of the Executive Branch.
 5. U.S.C. § 552 United States District Court for the District of Columbia, No. 1:13-cv-1225 (September 29, 2014). Sections 7231 and 7431. See White House Adviser Goolsbee’s Comment on Koch Taxes Reviewed by Treasury, Bloomberg (October 10, 2010).See, http://bloom.bg/eQbA0Z. Cause of Action describes itself as a non-profit, non-partisan government accountability organization. See www.causeofaction.org. From 1968 to 1974 the CIA built a vessel, the Glomar Explorer, in order to salvage and examine a Soviet submarine, and its three nuclear missiles, which rested on the ocean floor approximately 1500 miles northwest of Hawaii. In response to a FOIA request, the CIA stated that it would neither confirm nor deny the existence of the project. The CIA's position was sustained in the courts. Section 6103(b)(2)(A). 117 F.3d 607 (D.C. Cir. 1997). 5 USC § 552(b)(7)(C). 5 USC § 552(b)(6).KEYWORD: FOIA
Tax Insights Blog