Request for records from an examination file related to a recent audit of plaintiff
Granting IRS's motion for summary judgment
- Exemption 3: The court finds that the IRS properly withheld documents under Exemption 3 pursuant to 26 U.S.C. § 6103(a). This provision states "that tax '[r]eturns and return information shall be confidential,' and 'no officer or employee of the United States . . . shall disclose any [tax] return or return information obtained by him in any manner in connection with his service.'" The IRS explained that the four pages withheld under this statute were "'parts of actual returns of taxpayers other than [p]laintiff.'" The court holds that "this information is precisely the type of material prohibited from disclosure by 26 U.S.C. § 6103(a)."
The court also conducts an in camera review of documents withheld pursuant to 26 U.S.C.§ 6103(e)(7), which provides that "'return information with respect to any taxpayer may be open to inspection by or disclosure to any [authorized] person'" if it is determined that "'such disclosure would not seriously impair [f]ederal tax administration.'" The court accepts the IRS's argument that even though this appears to be a permissive statute, it "can be interpreted to ban disclosure of return information that would seriously impair federal tax administration." The court finds that after its review, it "is satisfied that, on the basis of detailed in camera declarations, disclosure of these materials would impair the collection, assessment, or enforcement of the tax laws under Exemption 3." The court notes that "an individual who has delegated authority to make such a determination under 26 U.S.C.§ 6103(e)(7) attests via in camera declaration that releasing the particular pages at issue would seriously impair federal tax administration."
- Exemption 5: The court also concludes that the IRS properly withheld a forty-five page marked-up Form 886A and a seven page memorandum from the Office of Chief Counsel. The court opines that the pages "contain inter-agency material that was generated as part of a continuous process of agency decision-making, namely what determination the IRS should make with regard to plaintiff's tax-exempt status." Segregability: The court rejects plaintiff's arguments that segregable portions should have been released, stating that "the IRS's supporting declarations provide sufficient descriptions of the contents of the withheld documents as well as the specific pages affected by each exemption claim, and make clear that all withheld documents were reviewed line-by-line to identify reasonably segregable material."
- Exemption 7(D): The court also finds that records were properly withheld under Exemption 7(D). "[D]etailed in camera submissions from the IRS confirm that the withheld documents are part of an investigatory record compiled for law enforcement purposes, that sources supplied the information under circumstances which indicate assurances of confidentiality, and that disclosure of any portion of the document would reveal the identity of confidential sources. The court further notes that it is "satisfied that the sources provided information under at least an implied promise of confidentiality, and that the disclosure of this information via the release of these 11 pages, which contain identifying information throughout, could reasonably be expected to disclose their identities."
- In camera review: The court rejects plaintiff's request for in camera review of all the documents. It opines that "[d]istrict courts need not, and should not make in camera inspections, however, where the government has sustained its burden of proof on the claimed FOIA exemption." Here, the court notes, "the IRS has met its burden to prove that the withheld documents are totally exempt."