Highland Capital Mgmt. v. IRS, No. 17-2906, 2019 WL 1227782 (N.D. Tex. Mar. 15, 2019) (Fish, J.)
Highland Capital Mgmt. v. IRS, No. 17-2906, 2019 WL 1227782 (N.D. Tex. Mar. 15, 2019) (Fish, J.)
Re: Request for advice issued to plaintiff in connection with audit of plaintiff's 2008 tax year
Disposition: Granting in part and denying in part defendant's motion for summary judgment
- Litigation Considerations, Adequacy of Search: "Based on the multiple searches described in the IRS's affidavits, the court concludes that the IRS has satisfied its burden of conducting an adequate search." The court also finds that, contrary to plaintiff's assertions, "[t]he fact that the IRS conducted multiple searches indicates that the IRS was complying with its FOIA obligations in good faith." Finally, "[b]ecause '[p]erfection is not the standard by which the reasonableness of a FOIA search is measured[ ]' . . . , the court cannot conclude that the IRS's search was inadequate because it failed to originally comb [one particular email] inbox for responsive records." "Moreover, even though the IRS did not originally search through [this] inbox, by the time the IRS filed its reply brief the IRS had searched through, and recovered from, [this] inbox 11 additional responsive records."
- Procedural Requirements: "After reviewing the parties' arguments, as well as the relevant statutes, the court concludes that summary judgment should be granted in favor of the IRS as to the records withheld pursuant to 26 U.S.C. § 6110. Section 6110(a) [which] provides that '[e]xcept as otherwise provided in this section, the text of any written determination and background file document relating to such written determination shall be open to public inspection at such place as the Secretary may by regulations prescribe.'" "[A]s the IRS correctly pointed out, 26 U.S.C. § 6110(m) establishes this statute as the exclusive remedy by which a party may obtain a [Chief Counsel Advice] determination and related background files." "As such, it is section 6110 – not the FOIA – that exclusively provides [plaintiff] with the means to obtain these records."
- Exemption 3: "Upon reviewing the parties' arguments and the summary judgment record, the court concludes that the IRS has satisfied its summary judgment burden with respect to the records withheld in part under FOIA exemption three." The court relates that "'Section 6103 of the Internal Revenue Code . . . provides that tax returns, as well as return information, are confidential and shall not be disclosed to anyone other than the taxpayer.'" The court finds that "third party information that was collected, received, or generated by the [IRS] with respect to the possible existence of liability of a taxpayer other than [plaintiff].'" Regarding plaintiff's argument concerning the sufficiency of defendant's declarations, the court finds that "it appears logical that emails between Chief Counsel Attorneys, collected with respect to the possible existence of liability for taxpayers other than [plaintiff], would necessarily have third party tax information that should be withheld in part."
- Exemption 5, Attorney-Client Privilege: "[T]he court denies summary judgment in favor of the IRS as to the records withheld in full and in part under FOIA exemption five for attorney client privilege." The court "concludes that the IRS has failed to satisfy its burden on summary judgment for the pages withheld in full and in part under the fifth FOIA exemption for attorney client privilege." The court explains that defendant's "declarations at issue here fail to support summary judgment because they are too vague to allow a court to determine if the attorney client privilege applies." "[Defendant's] declarations in particular do not provide the court with sufficient information to properly evaluate the IRS's claim of privilege because they neither inform the court of the source and recipient of the communications, nor provide the court with a description of the matters discussed in the withheld documents."
- Exemption 5, Deliberative Process Privilege: "[T]he court concludes that the IRS has failed to satisfy its burden on summary judgment as to the records withheld under the deliberative process privilege." "Although the court concludes that summary judgment on this issue is improper, the court finds that the IRS's affidavits establish that the information and material withheld under the deliberative process are predecisional." "Despite this, it is clear to the court that the IRS's 'description of its deliberative process is too vague to justify the agency's claim to exemption five protection.'" "[T]he IRS's declaration does not provide any details about the type of information that the withheld records contain, other than general statements about the basic nature of the documents and conclusory assertions that the documents contain 'thoughts and rationale' or other 'deliberations.'" "In addition, the IRS's declarations fail to explain to the court how the redacted or fully withheld records contributed to the agency's deliberations with regard to the CCA at issue in this case."
- Exemption 7(A): "[T]he court concludes that the IRS has satisfied its burden on summary judgment in respect to the records withheld pursuant to exemption 7(a), and the IRS need not product a Vaughn index for records withheld under this exemption." The court finds that "it is not impossible for the court to determine the types of documents the IRS seeks to withhold under exemption 7(a)." "In fact, [defendant's] declaration makes clear that [certain] pages . . . are 'notes summarizing the deliberations of [the IRS] and Counsel employees' that, if disclosed, would reveal the focus, evidence, scope, strategy, and direction of the IRS’s investigation." "The IRS's generic categorical description of these withheld records therefore demonstrates to the court that these notes are akin to . . . 'internal memoranda concerning the charge' and may thus be withheld pursuant to exemption 7(a)."