Vol. IX, No. 2
FOIA Counselor: Question & Answers
Does the tax information withholding statute, 26 U.S.C. § 6103, require an agency to withhold tax return information obtained other than from the Department of the Treasury?
No. While 26 U.S.C. § 6103 has uniformly been held to be an Exemption 3 statute with respect to tax records held by the IRS, see, e.g., Grasso v. IRS, 785 F.2d 70, 74-75 (3d Cir. 1986) (listing cases), it does not follow that it similarly applies to copies of tax returns or tax return information obtained -- usually from the taxpayer -- by agencies other than the Department of the Treasury (of which the IRS is part).
With respect to such records, the Department of Justice's Office of Legal Counsel, in 3 Op. Off. Legal Counsel 201, 201-02 (1979), has opined that as a threshold matter § 6103 applies only to tax return information submitted to the Secretary of the Treasury as part of the administration of the tax laws. By its own terms, § 6103 limits "tax return" and "return information" to specified items either "filed with" or "collected by the Secretary [of the Treasury]." Consistent with this approach, the Ninth Circuit Court of Appeals has held that no violation of the disclosure prohibitions of § 6103 occurred when tax returns obtained by the Navy through means independent of IRS's administration of the tax laws were disclosed. Stokwitz v. United States, 831 F.2d 893, 896-97 (9th Cir. 1987) ("Section 6103 establishes a comprehensive scheme for controlling the release by the IRS of information received from taxpayers.") (emphasis in original), cert. denied, 108 S. Ct. 1592 (1988). Accordingly, reliance on Exemption 3 in conjunction with 26 U.S.C. § 6103 to withhold tax records obtained other than from the Department of the Treasury would be inappropriate.
Of course, given the highly personal information contained in an individual's tax returns, and consistent with the very confidentiality considerations embodied in § 6103, the privacy protections afforded under FOIA Exemptions 6 and 7(C) should in almost all cases provide a sufficient justification to withhold such records from third-party requesters. Cf. Oklahoma Publishing Co. v. HUD, Civil No. 87-1935, slip op. at 3-4 (W.D. Okla. June 17, 1988) (credit "and other personal financial information" protected under Exemption 6).
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