UNITED STATES INTERNAL REVENUE SERVICE AND BUREAU OF ECONOMIC
ANALYSIS, UNITED STATES DEPARTMENT OF COMMERCE, PETITIONERS V. SUSAN
B. LONG AND PHILIP H. LONG

   No. 87-1621

   In the Supreme Court of the United States

   October Term, 1987

   The Solicitor General, on behalf of the United States Internal
Revenue Service and the Bureau of Economic Analysis, United States
Department of Commerce, petitions for a writ of certiorari to review
the judgment of the United States Court of Appeals for the Ninth
Circuit in this case.

   Petition for a Writ of Certiorari to the United States Court of
Appeals for the Ninth Circuit

            TABLE OF CONTENTS
   Question presented
   Opinions below
   Jurisdiction
   Statutory provision involved
   Statement
   Reasons for granting the petition
   Conclusion

                            OPINIONS BELOW

   The opinion of the court of appeals (App., infra, 1a-12a) is
reported at 825 F.2d 225.  The oral ruling of the district court in
9th Cir. Nos. 86-3678 and 86-3679 (App., infra, 17a-20a) is
unreported.  The opinion of the district court in 9th Cir. No. 84-4117
(App., infra, 21a-29a) is reported at 566 F. Supp. 799, but the
court's findings of fact and conclusions of law (App., infra, 30a-35a)
and its judgment (App., infra, 36a-37a) are unreported.

                             JURISDICTION

   The judgment of the court of appeals (App., infra, 13a-14a) was
entered on August 18, 1987.  Respondents' timely petition for partial
rehearing was denied on December 3, 1987 (App., infra, 15a).  On
February 24, 1988, Justice O'Connor extended the time within which to
file a petition for a writ of certiorari to and including April 1,
1988.  The jurisdiction of this Court is invoked under 28 U.S.C.
1254(1).

                     STATUTORY PROVISION INVOLVED

   Section 6103 of the Internal Revenue Code (26 U.S.C.) is set forth
in pertinent part in a statutory appendix (App., infra, 38a-39a).

                          QUESTION PRESENTED

   Whether, despite the prohibition on disclosure of tax "return
information" in 26 U.S.C. 6103, "check sheets" prepared by the
Internal Revenue Service, which list information taken from particular
taxpayers' tax returns and audits, must be redacted of identifying
information and disclosed to the public in response to a Freedom of
Information Act request.

                               STATEMENT

   1. Respondents filed Freedom of Information Act requests with both
the Internal Revenue Service (IRS) and the Bureau of Economic Analysis
of the Department of Commerce (BEA) seeking certain information
pertaining to the IRS's Taxpayer Compliance Measurement Program
(TCMP).  The TCMP is a statistical investigatory technique devised by
the IRS in 1962 that is designed to measure the level of compliance
with federal tax laws.  It is used by the IRS to develop criteria for
selecting returns for audit examination.  Respondents primarily sought
source documents from the TCMP investigation, including computer data
tapes and related "check sheets" recording tax return and audit data
in manual form.  Because these source documents consisted of
information relating to particular taxpayers that was taken from their
tax returns or audits (see App., infra, 2a), the federal agencies
refused to release them on the ground that disclosure of tax "return
information" is prohibited by Section 6103 of the Internal Revenue
Code (26 U.S.C.).

   Respondents subsequently brought two separate actions in the United
States District Court for the Western District of Washington, seeking
to compel the two federal agencies to disclose the documents.  In the
suit against the IRS, the district court originally ruled against
respondents, holding that Section 6103 protected the TCMP source
documents from disclosure.  The court of appeals vacated and remanded.
 596 F.2d 362 (1979), cert. denied, 446 U.S. 917 (1980) (Long I).  In
that decision, the court of appeals interpreted a portion of Section
6103(b) known as the "Haskell Amendment" as requiring the IRS to
respond to a FOIA request by redacting identifying details from return
information and then disclosing the redacted version.  /1/

   Respondents' suit against the BEA sought TCMP computer tapes that
had been supplied by the IRS to the BEA for its use in analyzing
economic statistics (see 26 U.S.C. 6103(j)(1)).  While the IRS case
was pending in the district court on remand, the court entered summary
judgment for respondents in the BEA case on the basis of the court of
appeals' decision in Long I.  The court of appeals affirmed (646 F.2d
1310 (1981)), but this Court vacated and remanded for reconsideration
in light of intervening legislation that had responded to the decision
in Long I by amending Section 6103 to provide additional protection
for TCMP data (454 U.S. 934 (1981)).  /2/ The court of appeals then
remanded the case to the district court to consider the new statute.
671 F.2d 1229 (1982).

   The district court then consolidated the two suits that were
pending before it on separate remands.  Following the remand in Long
I, the government disclosed some edited computer tapes, but
respondents contended that the disclosure was inadequate, both because
the underlying "check sheets" were not disclosed and because the
editing of the computer tapes -- in particular, the deletion of ZIP
Code information -- was too extensive (see App., infra, 3a, 22a).  /3/
With respect to that controversy, the court, after a bench trial,
ruled for the government (id. at 21a-37a), finding that the agencies
had "fulfilled their responsibilities under the FOIA" (id. at 37a).
Respondents noticed an appeal from that ruling (No. 84-4117 (9th
Cir.)).

   With respect to the remand to consider the effect of the
intervening legislation, the district court found that the documents
sought in that case were exempt from disclosure under the amended
version of Section 6103.  The court found that the requested documents
fell within the purview of the amendment because they included data
used for determining standards for selecting returns for audit, and it
found that the Secretary had determined that disclosure of the
documents would seriously impair enforcement of the tax laws (see
App., infra, 7a).  The court of appeals reversed and remanded, holding
that the district court not rely upon the Secretary's determination
that disclosure would impair enforcement, but rather was required to
conduct a de novo review of the correctness of the Secretary's
determination (742 F.2d 1173 (1984)).  On remand, the district court
reaffirmed its earlier decision that the documents were exempt from
disclosure (App., infra, 17a-20a), finding, after an independent
review, that "disclosure of the TCMP data at issue would pose a
substantial risk of impairing the collection, assessment and
enforcement of the tax laws, and that the commissioner's determination
reaching the same conclusion was plainly correct" (id. at 18a).
Respondents noticed an appeal from this decision (Nos. 86-3678 and
86-3679 (9th Cir.)).

   2. The court of appeals consolidated the two appeals and, on August
18, 1987, it entered its decision affirming in part and reversing in
part (App., infra, 1a-12a).  The court affirmed the district court's
ruling that certain requested documents were protected by the
intervening legislation because their disclosure would impair
government enforcement of the tax laws (id. at 8a-10a), and it also
affirmed the court's refusal to order disclosure of the ZIP Code
identifiers (id. at 5a-6a).  The court, however, reversed the district
court's refusal to order the government to disclose the "check sheets"
associated with the computer tapes of TCMP Phase II source data (id.
at 4a-5a).  The court concluded (id. at 5a):  "The Longs are entitled
under the FOIA and our decision in (Long I) to copies of all existing
check sheets for Phase II of the TCMP.  These check sheets must, of
course, be edited to delete taxpayer identifying information."
Accordingly, the court of appeals remanded the case to the district
court for further proceedings concerning the disclosure of the check
sheets (id. at 11a).

   3. While respondents' petition for partial rehearing in the court
of appeals was pending, this Court entered its decision in Church of
Scientology v. Internal Revenue Service, No. 86-472 (Nov. 10, 1987).
In that case, the Court held that the Haskell Amendment did not
require the government to redact and disclose "return information"
that was otherwise protected from disclosure by Section 6103.  After
this Court's decision in Scientology became final, petitioners filed,
on December 11, 1987, a petition for rehearing in the court of
appeals, urging the court to reconsider in light of the intervening
Scientology decision, which had rejected the legal basis for the court
of appeals' decision ordering disclosure of redacted check sheets.
Because more than 14 days had elapsed since the entry of the court of
appeals' judgment, this petition for rehearing was accompanied by a
motion for leave to file the petition out of time.  On February 1,
1988, the court of appeals denied the motion to file the petition for
rehearing out of time (App., infra, 16a).

                   REASONS FOR GRANTING THE PETITION

   The decision below, ordering the redaction and disclosure of "check
sheets" prepared by the IRS to record source data of its TCMP program,
cannot be reconciled with this Court's decision in Church of
Scientology v. Internal Revenue Service, No. 86-472 (Nov. 10, 1987).
The check sheets at issue contain information identifying a taxpayer
and other information taken from his tax return, along with corrected
financial data arrived at by auditing the return.  There can be no
doubt that the check sheets constitute "return information" as defined
in Section 6103(b).  The only basis asserted by the court of appeals
for ordering disclosure of such documents is its prior decision in
Long I to the effect that the Haskell Amendment requires removal of
identifying details from such documents and renders them disclosable
in redacted form.  But this interpretation of Section 6103 was
unequivocally rejected by this Court in Scientology.  The Court there
held that, "as with a return itself, removal of identification from
return information would not deprive it of protection under Section
6103(b) . . . (and therefore the IRS) has no duty under the FOIA to
undertake such redaction" (slip op. 8-9).  /4/ Thus, the court of
appeals' decision ordering disclosure of the check sheets is devoid of
any legal basis and is inconsistent with the dictates of Section 6103.

   The court of appeals, however, declined to grant the government's
motion to file a petition for rehearing out of time, and thus it has
not considered the effect of this Court's Scientology decision upon
its holding in this case.  If the decision below is permitted to
stand, the government will be required to disclose to respondents tax
return information that indisputably is protected from disclosure
under Section 6103.  That result would impose a substantial
administrative burden on the government.  /5/ More importantly, it
would require public disclosure of taxpayer information that Congress
has determined should be kept confidential in order to protect the
privacy interests of taxpayers.  There is no reason why Congress's
intent -- and the interests of taxpayer privacy -- should not be given
effect here simply because this Court's Scientology decision was
rendered more than 14 days after the entry of the court of appeals'
judgment (but prior to the time permitted for petitioning for a writ
of certiorari).  To avoid this untoward result, we submit that this
Court should vacate the decision below and remand the case to the
court of appeals in order to give that court the opportunity to
conform its decision to the law as recently clarified by this Court in
Scientology.

                              CONCLUSION

   The petition for a writ of certiorari should be granted, the
judgment below vacated, and the case remanded for reconsideration in
light of this Court's decision in Church of Scientology v. Internal
Revenue Service, No. 86-472 (Nov. 10, 1987).

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   MARCH 1988

   /1/ The Haskell Amendment provides that the term "return
information" "does not include data in a form which cannot be
associated with, or otherwise identify, directly or indirectly, a
particular taxpayer."

   /2/ Section 701 of the Economic Recovery Tax Act of 1981 (ERTA),
Pub. L. No. 97-34, 95 Stat. 340, amended Section 6103 by adding to the
end of the Haskell Amendment the following language:  "Nothing in the
preceeding sentence, or in any other provision of law, shall be
construed to require the disclosure of standards used or to be used
for the selection of returns for examination, or data used or to be
used for determining such standards, if the Secretary determines that
such disclosure will seriously impair assessment, collection, or
enforcement under the internal revenue laws" (see App., infra, 39a).

   /3/ The check sheets at issue related to Phase II of the TCMP,
which studies delinquent returns (see App., infra, 22a).  That
particular information is not used to develop audit selection criteria
and thus is not covered by the ERTA amendment.

   /4/ Indeed, the decision in Long I was specifically noted by this
Court in Scientology when it described the conflict in the circuits
that impelled it to grant certiorari (see slip op. 4 n.1).  There is
thus no doubt that Long I has no continuing vitality after this
Court's express rejection in Scientology of its holding.

   /5/ The IRS estimates that there are approximately 250,000 check
sheets at issue in this case.  If the court of appeals' decision
stands, each of these check sheets would have to be redacteed of
identifying information manually before being reproduced and supplied
to respondents.

   APPENDIX