FOIA OUTLINE
OBTAINING INFORMATION FROM THE IRS UNDER THE THE FREEDOM OF INFORMATION ACT
BY GARY D. BOREK
NOVEMBER 11, 1991
TABLE OF CONTENTS
I. Potential Uses Of Tax Returns And Return Information.
II. Overview - Research References.
III. General Exceptions To Disclosure By The Irs Under The Foia.
VI. Allowable Disclosures Under Irc §6103.
V. Definitions - IRC §6103(b)
VI. Allowable Disclosures Under IRC §6103
VII. Disclosure To Persons Having A Material Interest - IRC §6103(e).
VIII. Procedures - Where To Make The Request.
IX. Procedures - Form Of Foia Requests And Irs Response.
X. Administrative Appeals.
A. Representation of client in matters before the IRS:
1. Audit.
2. Collection.
3. Criminal Investigation.
B. Representation of client in non-IRS matters.
1. State tax matters.
2. Civil proceedings between your client an another government agency.
3. Civil proceedings between your client an a private party.
a. Matrimonial matters.
b. Commercial and business litigation.
c. Damage issues in all litigation.
4. Non-tax related criminal proceedings.
C. Protecting your client's privacy against unauthorized disclosures and recovery of damages for wrongful disclosure.
A. The Freedom of Information Act ("FOIA"), Title 5 U.S.C. § 552.
1. Information required to be published in the Federal Register.
2. Information required to be made available for public inspection and copying or, in the alternative, to be published and offered for sale.
3. Information required to be made available to any member of the public upon specific request.
a. Willamette Industries, Inc. v. United States, 689 F.2d 865, 89-2 USTC ¶ 9625 (9th Cir. 1982), required IRS to disclose information held only in individual audit files, even though editing out taxpayer identification would be expensive.
b. United States Department of Justice v. Tax Analysts, 89-1 USTC ¶ 9386 (Sup. Ct. 1989) held that material in possession of agency must be disclosed by agency even though the material can be obtained by searching public records.
B. The Privacy Act, 5 U.S.C. §552a.
1. Control of collection of information about individuals.
2. Control of dissemination of information about individuals
3. Access to agency records about an individual by an individual.
C. Section 6103 of the Internal Revenue Code.
1. Prohibits disclosure of tax returns and tax return information.
2. Contains exception to prohibition on disclosure.
D. Section 7431 of the Internal Revenue Code.
1. Civil damages for unauthorized disclosure of tax returns and tax return information.
2. Can collect greater of $1000 or actual damages (and punitive damages for willful or gross negligence disclosures) plus cost of action.
3. Chandler v. United States, 687 F.Supp. 1515, 88-2 USTC ¶ 9541 (D.C. Utah 1988), affd 89-2 USTC n 9609 (10th Cir. 1989). (Awarded damages for negligent unlawful disclosure when IRS served levy on employer after tax had been fully paid.)
4. Smith v. United States, 90-1 USTC ¶ 50,122 (D.C. C.D.ILL. 1990). (Awarded damages to state tax employee when the IRS informed his employer that he had not filed federal returns. The plaintiff was the liaison officer between the state and the IRS for the exchange of tax information. IRS held liable because of failure to follow internal policies and procedures for disclosure of information to the state.)
E. Section 7213 of the Internal Revenue Code.
1. Criminal penalties for unauthorized disclosures.
2. Applies to Federal and state employees.
3. Applies to members of the public.
F. Section 7216 of the Internal Revenue Code.
1. Applies to income tax return prepares.
2. Criminal penalties for:
a. Disclosure of information.
b. Use of information for any purpose other than preparation of returns.
G. IRS Handbook on Disclosure (Internal Revenue Manual 1272).
A. Treasury Regulation 601.701(b) contains general exceptions to the required disclosures by the IRS under the FOIA.
B. Material which is specifically authorized under criteria established by an Executive order to be kept secret in the interest of the national defense or foreign policy and is in fact properly classified pursuant to such Executive order.
C. Material related solely to the internal personnel rules and practices of the Internal Revenue Service which communicate to Internal Revenue Service personnel information or instructions relating to:
1. enforcement tolerances and criteria with respect to the allocation of resources,
2. criteria for determining whether or not a case merits further enforcement action,
3. enforcement tactics, including but not limited to investigative techniques, internal security information, protection of identities of confidential sources of information used by the Service, and techniques for evaluating, litigating, and negotiating cases of possible violations of civil or criminal laws, or
4. use of parking facilities, regulation of lunch hours, statements of policy as to sick leave and the like.
D. Material specifically exempted from disclosure by statute (other than 5 U.S.C. §552(b), provided that such statute:
1. requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or
2. establishes particular criteria for withholding or refers to particular types of matters to be withheld (e.g., I.R.C. sections 6103, 6110, and 4424).
E. Trade secrets and commercial or financial information obtained from a person and privileged or confidential.
F. Interagency or intra-agency memorandums or letters which would not routinely be available by law to a party other than an agency in litigation with the agency, including communications (such as internal drafts, memorandums between officials or agencies, opinions and interpretations prepared by agency staff personnel or consultants for the use of the agency, and records of the deliberations of the agency or staff groups)
1. which the Internal Revenue Service has received from another agency,
2. which the Internal Revenue Service generates in the process of issuing an order, decision, ruling or regulation, drafting proposed legislation, or otherwise carrying out its functions and responsibilities, or
3. which is the attorney work product of the Office of the Chief Counsel or is generated by that Office as attorney for the Internal Revenue Service.
G. Personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
H. Investigatory records compiled for law enforcement purposes, including records prepared in connection with civil, criminal or administrative Government litigation and adjudicative proceedings, but only to the extent that the production of such records would:
1. interfere with enforcement proceedings,
2. deprive a person of a right to a fair trial or an impartial adjudication,
3. constitute an unwarranted invasion of personal privacy,
4. disclose the identity of a confidential source and in the case of a record compiled by a criminal investigation, or by an agency conducting a lawful national security intelligence investigation, confidential information furnished only by confidential source,
5. disclose investigative techniques and procedures, or
6. endanger the life or physical safety of law enforcement personnel.
I. Material contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions.
J. Geological and geophysical information and data, including maps, concerning wells.
A. Tax returns and tax return information cannot be disclosed, except as authorized by law.
B. The disclosure prohibition applies to:
1. Officers and employees of the United States.
2. Officers and employees of the state.
3. Any other person who has or had access to tax returns or return information.
A. "Tax return" means -
1. Tax returns.
2. Information returns.
3. Declaration of estimated tax.
4. Claim for refund.
5. Any amendment or supplement of the foregoing.
6. All supporting schedules, attachments, or lists which are supplemental to, or part of, the foregoing.
B. "Return information" means -
1. A taxpayer's identity
2. The nature, source, or amount of a taxpayer's income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, overassessments, or tax payments, whether the taxpayer's return was, is being, or will be examined or subject to other investigation or processing.
3. Any other data, received by, recorded by, prepared by, furnished to, or collected by the IRS with respect to a return or with respect to the determination of the existence, or possible existence, of liability (or the amount thereof) of any person under this title for any tax, penalty, interest, fine, forfeiture, or other imposition, or offense.
4. Any part of any written determination or any background file document relating to such written determination (as defined in § 6110(b)) which is not open to public inspection under §6110.
C. "Return information", however, does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer.
D. "Taxpayer return information" means - "return information" which is filed with, or furnished to, the IRS by or on behalf of the taxpayer to whom such return information relates.
E. "Taxpayer identity" means -
1. The name of a person with respect to whom a return is filed.
2. The mailing address of the taxpayer.
3. The taxpayer identifying number of the taxpayer.
F. "Disclosure" means - the making known to any person in any manner whatever a return or return information.
A. The return, and return information, of a taxpayer may be disclosed to a designee of the taxpayer, pursuant to IRC § 6103(c).
B. Tax returns, and return information (as per §6103(e)(7)), are open to inspection by, or disclosure to, any person "having material interest", as defined by IRC §6103(e), upon a written request.
C. Tax returns and return information can be disclosed to an attorney in fact, duly authorized in writing, of any person having a material interest under IRC §6103(e)(1) through (5). IRC §6103(e)(7).
A. INDIVIDUALS: An individual taxpayer's return, and return information, can be disclosed to:
1. The taxpayer.
2. The trustee or trustees, jointly or separately, if property transferred by the taxpayer to the trust is sold or exchanged in a transaction described in section 644, to the extent necessary to ascertain any amount of tax imposed upon the trust by section 644.
3. The spouse of the taxpayer if the individual and such spouse have signified their consent to consider a gift reported on such return as made one-half by each pursuant to the provisions of section 2513; or
4. The child of the taxpayer (or such child's legal representative) to the extent necessary to comply with the provisions of IRC sections l(i) or 59(j).
5. The spouse of the taxpayer when the taxpayer and the spouse have filed the return jointly.
a. Rev. Rul. 79-64,1979-1 C.B. 390, held that disclosing the tax return and tax return information about a proposed adjustment to the spouse of the taxpayer, during an audit of the purported joint return of the taxpayer and spouse, is not an unauthorized disclosure under section 6103 of the Code, even if the spouse asserts the return was signed under duress and the return is determined not to be a valid joint return. The rationale is that the taxpayer waived the prohibition on disclosure, at least with respect to the spouse, when the return was shown to the spouse for purposes of having her sign it.
b. G.C.M. 37727, October 23,1978, suggested that an alternative rationale be used in Rev. Rul. 79-64, stating that the prohibitions on disclosure were not intended to apply "to documents submitted in the name of the taxpayer, even if they are later determined to be invalid for any reason. This interpretation is the most sensible one, since we do not believe that it can be assumed Congress intended to prevent a taxpayer from having access to a document filed in the taxpayer's name, even if it was not actually filed by the taxpayer..."
B. PARTNERSHIPS: The return of a partnership may be disclosed to any person who was a member of such partnership during any part of the period covered by the return.
C. CORPORATIONS: The return of a corporation or a subsidiary thereof, can be disclosed to:
1. Any person designated by resolution of the corporation's board of directors or other similar governing body.
2. Any officer or employee of the corporation upon written request signed by any principal officer and attested to by the secretary or other officer.
3. Any bona fide shareholder of record owning 1 percent or more of the outstanding stock of the corporation.
4. If the corporation was a foreign personal holding company, as defined by section 552, any person who was a shareholder during any part of a period covered by such return if with respect to that period, or any part thereof, such shareholder was required under section 551 to include in his gross income undistributed foreign personal holding company income of such company.
5. If the corporation was an electing small business corporation under subchapter S of chapter 1, any person who was a shareholder during any part of the period covered by such return during which an election was in effect.
6. If the corporation has been dissolved, any person authorized by applicable state law to act for the corporation or any person who the Secretary finds to have a material interest which will be affected by information contained therein.
D. ESTATES: The return of an estate may be disclosed to:
1. The administrator, executor, or trustee of such estate.
2. Any heir at law, next of kin, or beneficiary under the will, of the decedent, but only if the Secretary finds that such heir at law, next of kin, or beneficiary has a material interest which will be affected by information contained therein.
E. TRUSTS: The return of a trust may be disclosed to:
1. The trustee or trustees, jointly or separately.
2. The beneficiary of such trust, but only if the Secretary finds that such beneficiary has a material interest which will be affected by information contained therein.
F. INCOMPETENTS: The return of an incompetent may be disclosed to the committee, trustee, or guardian of his estate.
G. DECEDENTS: The return of a decedent may be disclosed to:
1. The administrator, executor, or trustee of his estate.
2. Any heir at law, next of kin, or beneficiary under the will, of such decedent, or a donee of property, but only if the Secretary finds that such heir at law, next of kin, beneficiary, or donee has a material interest which will be affected by information contained therein.
A. In General: 31 CFR Part 1, Subpart A, contains general rules for the implementation of the FOIA by the Treasury Department. FOIA request are to be made to the FOIA "component". Under sections 1.1(d), 1.1(d)(1)(vi), 1.1(d)(8), and 1.5(g):
1. The IRS is treated as a separate "component".
2. The legal division for the IRS (Office of Chief Counsel) is not treated as a separate component.
3. The legal division for the IRS (Office of Chief Counsel) is treated as a part of the IRS for FOIA purposes.
4. FOIA determinations for the IRS are to be made under 26 CFR 601.702 et seq.
B. Where to Send FOIA Requests: FOIA requests should be mailed or hand delivered to the office of the Internal Revenue Service official who is responsible for the control of the records requested regardless of where such records are maintained. Reg. § 601.702(c)(3)(iii).
1. The responsible officials and their addresses are listed in Reg. §601.702(g). Note that:
a. Records of a District Counsel's office shall be deemed to be under the jurisdiction of the District Director.
b. If the person making the request does not know the official responsible for the control of the records being requested, the request should be mailed or hand delivered to the office of the director of the Internal Revenue Service district office in the district where the requester resides. Reg. §601.702(c)(3)(iii).
c. Some frequently used address (as they presently appear in Reg. §601.702(g)):
(1) Director, Office of Disclosure, Internal Revenue Service, FOIA Request, P.O. Box 388, c/o Ben Franklin Station, Washington, DC 20044.
(2) Director, IRS Data Center, Attn: Disclosure Officer, Internal Revenue Service, FOIA Request, 1300 John C. Lodge Drive, Detroit, Michigan 48226.
(3) Regional Commissioner, Internal Revenue Service, FOIA Request, Attn: Disclosure Officer, 90 Church Street, New York, New York 10007.
(4) Director, Buffalo District, Internal Revenue Service, FOIA Request, Attn: Disclosure Officer (Leonard Smigelski is the current Disclosure Officer), P.O. Box 1040 Niagara Square Station, Buffalo, New York 14201.
(5) Director, Andover Service Center, Internal Revenue Service, FOIA Request, Attn: Disclosure Officer, P.O. Box 9526, Stop 218, Andover, Massachusetts 01810.
A. See the forms for FOIA request under the Tax Forms Menu
B. Reg. §601.702(c)(3) sets forth the form of requests under the FOIA.
1. The request must be in writing and signed by the person making the request.
2. The request must state that it is made pursuant to the Freedom of Information Act, 5 U.S.C. 552, or regulations thereunder.
3. The request must be addressed to, and mailed or hand delivered to, the office of the Internal Revenue Service official who is responsible for the control of the records requested regardless of where such records are maintained. If, however, the person making the request does not know the official responsible for the control of the records being requested, the request should be addressed to and mailed or hand delivered to the office of the director of the Internal Revenue Service district office in the district where the requester resides.
4. The request must reasonably describe the records as specified by Reg. §601.702(c)(4)(i). Generally, the name, subject matter, location, and years at issue, of the requested records will be sufficient. If the request seeks records pertaining to pending litigation, the request should indicate the title of the case, the court in which the case was filed, and the nature of the case.
5. A request for disclosure which is limited by statute or regulations (as, for example, the Privacy Act (5 U.S.C. 552a), section 6103 of the Internal Revenue Code of 1986, or regulations thereunder), must establish the identity and the right of the person making the request to the disclosure of the records in accordance with Reg. §601.702(c)(4)(ii).
a. Persons requesting access to such records which pertain to themselves may establish their identity by -
(1) for request made in person, the presentation of a single document bearing a photograph (such as a passport or identification badge), or the presentation of two items of identification which do not bear a photograph but do bear both a name and signature (such as a driver's license or credit card).
(2) for request made by mail, the submission of the requester's signature, address, and one other identifier (such as a photocopy of a driver's license) bearing the requester's signature.
(3) The presentation in person or the submission by mail of a notarized statement swearing to or affirming such person's identity can also be used. (the "Popeye" affidavit - "I'yam who I'yam and that's all that I'yam - toot! toot!")
b. Persons requesting records on behalf of or pertaining to another person must provide adequate proof of the legal relationship under which they assert the right to access the requested records.
(1) An attorney-in-fact shall furnish an original of a properly executed power of attorney together with one other identifier bearing the signature of the person executing such power of attorney.
(2) In the case of a corporation, if the requester has the authority to legally bind the corporation under applicable state law, such as its president or chief executive officer, then a written statement of the person making the request on behalf of the corporation, on corporate letterhead, shall be sufficient. If the requester is an officer or an employee of a corporation, then such person shall furnish a certification by one of the corporation's officers (other than the requester) that the person making the request on behalf of the corporation is properly authorized to make such request. If the requester is other than one of the above, then such person shall furnish a resolution by the corporation's board of directors providing that the person making the request on behalf of the corporation is properly authorized to make such a request. A person requesting access to records of a single shareholder corporation or a partnership shall provide a notarized statement that the requester is in fact an officer or official of the corporation or a member of the partnership.
6. The request must set forth the address where the person making the request desires to be notified of the determination as to whether the request will be granted,
7. The request must state whether the requester wishes to inspect the records or desires to have a copy made and furnished without first inspecting them,
8. The request must state that the requester agrees to pay the fees for search and duplication ultimately determined in accordance with Reg. §601.702(f) of this section, or request that such fees be reduced or waived and state the justification for such request.
9. The request must identify the category of the requester and state how the records will be used, as per Reg. §601.702(f)(3).
C. Time for IRS Response:
1. The initial determination will be made and notification thereof mailed within 10 days (excepting Saturdays, Sundays, and legal public holidays) after the date of receipt of the request (as determined by Reg. §601.702(c)(5)), or as the requester has otherwise agreed to an extension of the 10-day time limitation.
2. If the records requested cannot be located and evaluated within the initial 10-day period, or any extension thereof under Reg. §601.702(c)(9), the search for the records or evaluation will continue, but the requesters will be so notified, advised that they may consider such notification a denial of their requests for records, and provided with the address to which an administrative appeal may be delivered. However, the requesters may also be invited, in the alternative, to agree to a voluntary extension of time in which to locate and evaluate the records. Such voluntary extension of time will not constitute a waiver of the requesters' right to appeal any denial of access ultimately made or their right to appeal in the event of failure to comply with the time extension granted.
D. Granting of the Request:
a. Records to be copied - If the IRS determines that the request is to be granted, and if the person making the request desires a copy of the requested records, a statement of fees, if any will be mailed to the requester, requesting such payment prior to release of the records determined to be available. Upon receipt of such fees, the Internal Revenue Service official responsible for the control of the records (or his/her delegate) will promptly mail such copies to the requester, with any explanation of the deletions or withholdings, as applicable. However, if no fees are due, then a copy of the available records will be promptly mailed to the requester.
b. Records to be inspected - In the case of a request for inspection the requester will be notified in writing of the determination, when and where the requested records may be inspected and of the fees involved in complying with the request. Any fees involved in complying with the request for inspection of records shall be submitted before making the records available for inspection.
E. Denial of the Request: If the IRS determines that the request for records should be denied (whether in whole or in part or subject to conditions or exceptions), the person making the request will be so notified by mail. The letter of notification will specify the city or other location where the requested records are situated, contain a brief statement of the grounds for not granting the request in full, set forth the name and title or position of the official responsible for the denial, and advise the person making the request of the right to appeal to the Commissioner under Reg. §601.702(c)(8).
A. See the form letter for FOIA appeals under the Tax Forms Menu.
B. Time within which to Appeal: The requester may submit an administrative appeal to the Commissioner at any time within 35 days after the date of any notification described Reg. § 601.702(c)(7)(iii) or (iv), or after receipt of an adverse determination of the requester's category described in Reg. § 601.702(f)(3), or the date of the letter transmitting the last records released, whichever is later.
C. The letter of appeal shall -
1. Be made in writing and signed by the requester,
2. Be addressed and mailed to the Office of the Commissioner of Internal Revenue: to expedite delivery, requests made by mail should be addressed to Freedom of Information Appeal, Commissioner of Internal Revenue, c/o Ben Franklin Station, P.O. Box 929, Washington, DC 20044, or if hand delivered, delivery should be made to the Office of the Director, Disclosure Litigation Division, Chief Counsel, National Office of the Internal Revenue Service, 1111 Constitution Avenue, Washington, DC 20224.
3. Reasonably describe the records requested to which the appeal pertains in accordance Reg. §601.702(c)(4)(i).
4. Set forth the address where the appellant desires to be notified of the determination on appeal.
5. Specify the date of the request, and the office to which the request was submitted and, where possible, enclose a copy of the initial request and the initial determination being appealed.
6. Petition the Commissioner to grant the request for records and state any arguments in support thereof
D. The Commissioner or his/her delegate will acknowledge receipt of the appeal and advise the requester of the date of receipt and when a response is due.
E. If an appeal fails to satisfy any of such requirements the person making the request will be promptly advised in writing of the additional requirements to be met.
F. Response time: The determination to affirm the initial denial (in whole or in part) or to grant the request for records will be made and notification of the determination mailed within 20 days (exclusive of Saturdays, Sundays, and legal public holidays) after the date of receipt of the appeal unless extended pursuant to Reg. §601.702(c)(9)(i).
G. If it is determined that the appeal from the initial denial is to be denied (in whole or in part), the requester will be notified in writing of the denial, the reasons therefor, of the name and title or position of the official responsible for the denial on appeal, and of the provisions of 5 U.S.C. 552(a)(4) for judicial review of that determination.
H. If a determination cannot be made within the 20-day period (or extension thereof pursuant to Reg. §601.702(c)(9)(i) of this section or by grant of the requester) the requester shall be promptly notified in writing that the determination will be made as soon as practicable but that the requester is nonetheless entitled to commence an action in a district court. However, the requester may also be invited, in the alternative, to agree to a voluntary extension of time in which to decide the appeal. Such voluntary extension shall not constitute a waiver of the right of the requester ultimately to commence an action in a United States district court.
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