Houser v. Church, No. 16-1142, 2020 WL 5518214 (D.D.C. Sept. 14, 2020) (Walton, J.)

Houser v. Church, No. 16-1142, 2020 WL 5518214 (D.D.C. Sept. 14, 2020) (Walton, J.)

Re:  Request for tax records concerning plaintiff, as well as various other IRS records

Disposition:  Granting in part and denying in part defendant's motion for summary judgment

• Litigation Considerations, Adequacy of Search:  "It is apparent from the Court's review of the Statement of Material Facts and all of the defendant's supporting declarations that the IRS conducted a reasonable search for records responsive to the plaintiff's three-part FOIA request."  "[T]he IRS's searches not only were reasonable under the circumstances, but also extended beyond the scope of what the FOIA demands."  "[Defendant] identified and followed leads regarding where responsive records might be located, and the IRS searched for and released records that otherwise would not have been available to a FOIA requester."
   
• Exemption 3:  The court relates that "[t]he IRS relies on Exemption 3 in conjunction with 26 U.S.C. § 6103(a) . . . which 'provides that returns and return information shall remain confidential, except as authorized by a provision of the [Internal Revenue Code]'. . . ."  "The IRS has redacted, for example, names, employer identification numbers, social security numbers, and descriptions of third-party taxpayers, 'including taxpayers who have cases potentially associated with the criminal referral of the plaintiff, witnesses and their spouses' from Integrated Collection System transcripts."  "The IRS also relies [o]n Exemption 3 in conjunction with 26 U.S.C. § 6103(e)(7)" which provides that "[r]eturn information with respect to any taxpayer may be open to inspection by or disclosure to any person authorized by this subsection to inspect any return of such taxpayer if the Secretary determines that such disclosure would not seriously impair Federal tax administration."  "[T]he IRS withholds 'the names and identities of third-party witnesses and informants who provided assistance to the IRS Criminal Investigation Division in its criminal investigation of [the] plaintiff' . . . ."  "Based on the Court's review of the defendant's submissions, and absent any contrary showing by the plaintiff, the Court concludes that the IRS properly redacted third-party return information from the records . . . ."  "Information of the sort [defendant] has identified properly is considered return information . . . and the plaintiff has neither presented waivers from the third parties whose information is implicated, nor has he demonstrated a material interest in the withheld information."  "And, through [its declarant], the IRS has adequately demonstrated that the potential chilling effect upon disclosure of the identities of witnesses and interviewees justifies reliance on Exemption 3 in conjunction with 26 U.S.C. § 6103(e)(7)."
   
• Exemption 5, Deliberative Process Privilege & Attorney-Client Privilege:  "Based on the Court's review of the defendant's submissions, and absent any contrary showing by the plaintiff, the Court agrees with the government's positions that the information described above falls within the scope of FOIA Exemption 5, either under the deliberative process privilege or attorney-client privilege."  The court relates that "[t]he IRS withheld in full three draft documents, 'including affidavits in support of the application for the search warrant, the fraud referral, and fraud narratives prepared to accompany the fraud referral.'"  "In addition, the IRS withheld in part four email messages."  The court holds that "[t]he final versions of these documents have already been released to the plaintiff."  "Although the IRS's investigation of the plaintiff has concluded, the IRS asserts that 'disclosing pre-decisional communications would potentially result in disclosure of the IRS's pre-decisional selections of groups of facts, reasons, and rationales that were not the ultimate ground for the agency action.'"  Additionally, the court relates that "the IRS withheld portions of 'intra-agency memoranda that reflect the confidential legal communications between [a] IRS Criminal Tax attorney . . . and the IRS Criminal Investigation Division concerning the execution of search warrants with respect to the criminal investigation of [the] plaintiff.'"  "From two memoranda, the IRS redacted confidential legal advice regarding the IRS Office of Chief Counsel's 'evaluation of a proposed affidavit in support of an application for search warrants,' . . . and his 'evaluation of whether items seized during the execution of search warrants were seized within the scope of such search warrants' . . . ."
   
• Exemption 7, Threshold:  The court holds that "[a]lthough the IRS's supporting declarations devote no appreciable attention to the agency's law enforcement functions, it is apparent from the plaintiff's criminal convictions, the language of the plaintiff's FOIA request, and the nature of responsive records sought by the plaintiff that the IRS was engaged in law enforcement activities when it investigated the plaintiff and the Five Corporate Entities."  "It therefore follows that records pertaining to the criminal investigation, . . . and with regard to the agency's tax collection activity, . . . were compiled for law enforcement purposes."
   
• Exemption 7(A):  The court relates that "[t]he IRS contends that it has withheld 'information relevant to [the] plaintiff's criminal investigation, a law enforcement matter,' the release of which 'may reasonably be expected to interfere with pending, ongoing, or future enforcement proceedings[.]'"  "According to the IRS, disclosure of certain information 'would harm the IRS's continuing collection activity and monitoring of [the] plaintiff by making [the] plaintiff privy to collection-related controls that have been placed on [the] plaintiff's or a related third-party taxpayer's tax account, thereby revealing the IRS's collective plan of action[.]'"  "And, the IRS argues that release of other information would 'reveal the nature of meetings between the IRS and other Federal agencies, thereby potentially harming pending, ongoing, or future collateral enforcement proceedings.'"  The court holds that "[t]hese explanations adequately demonstrate that release of the withheld information could reasonably be expected to interfere with the IRS's tax collection efforts or future enforcement proceedings."  "Its reliance on FOIA Exemption 7(A) is therefore proper."
   
• Exemption 7(E):  The court relates that "the IRS redacted 'an exhaustive list of equipment needed by IRS Criminal Investigation Division employees to execute a search warrant, including equipment used for countermeasures or alternative methods of gaining entry to a premise[s].'"  "It also redacted 'a description of the equipment the IRS uses as a countermeasure in the event that attack dogs . . . are encountered during the execution of a search warrant.'"  "According to the IRS, '[t]he list of equipment and specifics of countermeasures are not publicly known,' . . . and therefore release of the list 'could reasonably be expected to risk circumvention of the law by impinging on the IRS's effective use of countermeasures and ability to gain entry to a premise,' . . . ."  "The Court agrees that the IRS has adequately justified its decision to withhold its lists of equipment and information about countermeasures."
   
• Exemption 6 & 7(C):  "Based on the Court's review of the defendant's submissions, it appears that the IRS is withholding more information than is covered by either FOIA Exemption 6, or FOIA Exemption 7(C), or both."  "While redacting the agent's name from a law enforcement record is permissible, . . . the IRS offers no rationale for withholding the information the agent provided.  Similarly, the decision to withhold a witness's name under FOIA Exemptions 6 and 7(C) may be appropriate, . . . but the IRS does not state why it is withholding a description of the assistance the witness provided. . . ."  "Because the defendant has failed to provide adequate explanations as to why some of the withheld information falls within the scope of the claimed exemptions, the Court finds that the IRS has not met its burden with respect to FOIA Exemptions 6 and 7(C)."