S. Poverty L. Ctr. v. IRS, No. 19-2501, 2022 WL 703934 (D.D.C. Mar. 9, 2022) (Kelly, J.)

S. Poverty L. Ctr. v. IRS, No. 19-2501, 2022 WL 703934 (D.D.C. Mar. 9, 2022) (Kelly, J.)

Re:  Request for records concerning IRS criminal investigation into taxpayer 

Disposition:  Granting defendant's motion for summary judgment

• Exemption 3; Waiver & Discretionary Disclosure:  "[Defendant] cites 26 U.S.C. § 6103(a), which bars the disclosure of tax 'return information' without the written consent of the taxpayer."  "The IRS argues that the requested materials are return information because they are 'other data' collected or prepared in connection with its investigation into potential tax crimes at the Tennessee slaughterhouse."  "The Court agrees."  "The documents Plaintiffs seek in requests one through seven—interview memoranda, law enforcement documents, communications between law enforcement agencies, and investigation photographs and videos—were records 'prepared,' 'furnished,' or 'collected' in connection with the IRS's criminal investigation of the Tennessee slaughterhouse."  "And that investigation was an effort by the IRS to determine the 'existence, or possible existence, of liability . . . under [Title 26]' on the part of a third-party taxpayer."
  
  "Next is whether Plaintiffs can circumvent the bar on disclosure imposed by Exemption 3 and § 6103(a)."  "Plaintiffs first argue that the IRS has 'waived' protections under FOIA and § 6103(a) because the IRS disclosed much of the requested material during discovery in the Bivens suit and 'broadcast' some of the material in connection with a plea agreement in the criminal case that flowed from its investigation."  The court finds that "[p]laintiffs have failed to [show the records are in the public domain]."  "To begin with, the IRS's production of documents to Plaintiffs in the Bivens suit was not a public disclosure of that material, and no case suggests otherwise."  "And Plaintiffs' efforts to turn around and make those documents public does not do so, either."  "Likewise, Plaintiffs have not shown that the IRS placed any of the requested records in the public domain in connection with the plea agreement in the related criminal case."  "Plaintiffs point to public statements made by the Department of Justice, not the IRS, which is insufficient here."  Furthermore, "[t]hat some information about the taxpayer's conduct is publicly available in connection with a plea agreement on the public docket, without more, is not nearly enough to strip § 6103(a) protections from the records at issue here."
  
  "Next, Plaintiffs argue that they may obtain the records through an exception to § 6103(a), which provides that return information, in certain circumstances, 'may be disclosed in a Federal or State judicial or administrative proceeding pertaining to tax administration.'"  The court holds that "the exception does not require the IRS to disclose records here."  "Even putting aside that the exception does not mandate disclosure by the IRS, this FOIA case does not 'pertain[ ] to tax administration.'"  Plaintiffs further contend that "the IRS should be 'judicially estopped' from arguing the exception does not apply because it cited the exception when disclosing documents in the Bivens suit."  The court notes that "the IRS's invocation of § 6103(h)(4) in the Bivens suit is not necessarily inconsistent with its decision not to do so here, given the different nature of the actions."  "But in any case, although the IRS cited § 6103(h)(4) in its response to Plaintiffs' subpoena, it never had to litigate the issue before a court."  "Thus, there is no basis to judicially estop the IRS from taking a different position on its applicability now."
   
• Procedural Requirements, "Agency Records":  "Plaintiffs seek 'FOIA Search Staffing Sheets' related to their request."  "The IRS explains that it does not keep 'staffing sheets' as a matter of course."  "Even if the IRS maintained something comparable to 'FOIA search staffing sheets,' it explains that it would create such a document after a FOIA request is lodged."  "Thus, the IRS need not produce [such] records . . . because it would not be in 'control' of such records at the time of Plaintiffs' request."