Freedom of Information Act

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7213- Criminal Penalties for Unauthorized Disclosure of Information: Freedom of Information Act

 

 

 

[77-1 USTC ¶9214]Joyce Schottenstein, Plaintiff v. Commissioner of Internal Revenue, Defendant

U. S. District Court, So. Dist. Fla., Case No. 76-1342-CIV-JE, 12/22/76

[Code Secs. 6103(a) and 7213(a)--prior to amendment by '76 Tax Reform Act--and 5 U. S. C. Sec. 552(b)(3)]

Returns: Disclosure: Freedom of Information Act.--A document categorized by the District Court as a tax return was exempt from production under the Freedom of Information Act, because the taxpayer was not a member of any of the classes of persons entitled to disclosure of returns. The government was granted summary judgment.

Male, Bloom, Bodne, Freeman & Kuperstein, 1401 Brickell Ave., Miami, Fla. 33131, for plaintiff. Robert W. Rust, United States Attorney, Patricia Kyle, Assistant United States Attorney, 300 Ainsley Bldg., Miami, Fla. 33132, John J. McCarthy, Donald J. Gavin, Robert L. Gordon, Department of Justice, Washington, D. C. 20530, for defendant.

Order

EATON, District Judge:

THIS CAUSE is before the Court on Defendant's Motion for Summary Judgment.

Upon consideration of the record in the cause, it is ORDERED and ADJUDGED that said Motion is GRANTED. Plaintiff seeks disclosure of a document in the possession of the defendant, as permitted by the Freedom of Information Act, 5 U. S. C. §552. Subsection (b)(3) of that statute provides that an agency shall not be required to produce "matters that are specifically exempted from disclosure by statute," and 26 U. S. C. §6103(a) limits disclosure of income tax returns to certain classes of persons. In addition, 26 U. S. C. §7213(a) states that it is a crime for a Federal employee to make unauthorized disclosure of information contained in income tax returns. After in camera inspection of the requested document, the Court concludes that it is a "tax return," as defined in Treasury Regulation §301.6103(a)-1(a)(3)(b). Since plaintiff is not entitled to disclosure under 26 U. S. C. §6103(a), the document is exempt from production under the Freedom of Information Act.

Accordingly, Summary Judgment is hereby entered for the Defendant.

Summary Judgment

Defendant's Motion for Summary Judgment having been granted, Summary Judgment is entered against the Plaintiff, Joyce Schottenstein, and for the Defendant, Commissioner of Internal Revenue.

 

 

 

[88-1 USTC ¶9112] Joseph D. Vosburgh, Plaintiff v. Internal Revenue Service, Defendant

U.S. District Court, Dist. Kan., Civ. 87-1179, 11/24/87

[Code Sec. 6103 and 5 U.S.C. §552 --Result unchanged by the Tax Reform Act of 1986 ]

Disclosure of information: Freedom of Information Act: Civil and criminal tax investigation: Release of affidavit related to investigation: Disclosure exemption.--An affidavit prepared by a government agent investigating the taxpayer's civil and criminal tax activities was exempt from disclosure under the Freedom of Information Act. The affidavit contained information describing the nature and scope of the investigation being conducted, the tax records the agent had examined, conclusions he drew from his examination, references to potential witnesses and the nature of their testimony, and bases upon which he relied when he referred the case for criminal investigation. A district court in Kansas determined that production of the document could possibly interfere with enforcement proceedings by prematurely disclosing the government's case against the taxpayer and would seriously impair federal tax administration. Consequently, the court ruled that the government met its burden of proving exemption from disclosure.

William J. Wix, Regan & McGannon, 1400 KSB&T Bank Building, 125 North Market, Wichita, Kan. 67202, for plaintiff. Michael G. Christensen, Assistant United States Attorney, 401 N. Market, Wichita , Kan. 67202 , for Joseph D. Vosburgh. Frederic J. Baker, Department of Justice, Washington , D.C. 20530 , for Internal Revenue Service.

OPINION AND ORDER

THEIS, District Judge:

This matter is before the court on the motion of the defendant, Internal Revenue Service (IRS), for summary judgment. Plaintiff filed this action under the Freedom of Information Act (FOIA), 5 U.S.C. §552 . Plaintiff seeks the release of a twelve page affidavit prepared by IRS agent David Stecklein.

The following facts are uncontroverted for the purposes of this motion. Vosburgh is being investigated by the IRS for possible civil and criminal violations of the tax laws. Revenue agent Stecklein was assigned Vosburgh's 1983 federal income tax return for civil examination. Stecklein met with Vosburgh and another person on December 4, 1985 . Stecklein referred the case to the Criminal Investigation Division of the IRS for possible criminal tax investigation on March 20, 1986 .

Special Agent Cheryl Admire was assigned the criminal investigation of Vosburgh. Vosburgh's attorney at that time alleged that agent Stecklein had conducted an illegal search of Vosburgh's tax records while conducting the civil examination. At that point, Admire requested that Stecklein prepare a detailed affidavit of his actions during the examination of Vosburgh's tax returns. Stecklein prepared a twelve page affidavit, which is the subject of this lawsuit. After Special Agent Admire moved to Texas , the criminal investigation of Vosburgh was assigned to Special Agent Booker T. Leeks. Leeks is still investigating Vosburgh.

According to the affidavit of Leeks, the document prepared by Stecklein indicates the nature and scope of the civil examination, contains descriptions of the tax records examined, Stecklein's conclusions from his examination, references to potential witnesses, the nature of their testimony, the bases upon which Stecklein relied when he referred the case for criminal investigation, the scope and direction of the criminal investigation, and refers to potential leads in the criminal investigation.

On September 17, 1986 , Vosburgh filed a FOIA request, seeking release of the twelve page affidavit prepared by agent Stecklein. Clarence M. King, Jr., District Director for the Kansas District of the IRS denied the request on the basis of two statutory exemptions from disclosure, 5 U.S.C. §552(b)(3), (b)(7)(A). Vosburgh filed suit under 5 U.S.C. §552(a)(4)(B) to compel disclosure of the document.

Under the FOIA, all documents are available to the public unless specifically exempted by the act itself. Antonelli v. Drug Enforcement Administration, 739 F.2d 302, 303 (7th Cir. 1984). The FOIA was designed to encourage open disclosure of public information, and all documents held by the government are presumed subject to disclosure. Currie v. Internal Revenue Service [83-1 USTC ¶9340 ], 704 F.2d 523, 530 (11th Cir. 1983). The exemptions from disclosure contained in the FOIA are to be narrowly construed. Church of Scientology of California v. United States Department of the Army, 611 F.2d 738, 742 (9th Cir. 1979).

Upon an agency's denial of access to documents, the district courts have jurisdiction:

to enjoin the agency from withholding agency records and to order the production of any agency records improperly withheld from the complainant. In such a case the court shall determine the matter de novo, and may examine the contents of such agency records in camera to determine whether such records or any part thereof shall be withheld under any of the exemptions set forth in subsection (b) of this section, and the burden is on the agency to sustain its action.

5 U.S.C. §552(a)(4)(B). The district court must have an adequate factual basis for its decision. See Antonelli, 739 F.2d at 303; Church of Scientology , 611 F.2d at 742. To assist the court in making its determination, the agency must provide detailed justification in the form of affidavits to support its claim of exemption. See Antonelli, 739 F.2d at 303.

The agency's affidavits must be reasonably detailed and nonconclusory and must be submitted in good faith. If so, the court has the discretion to forego discovery and grant summary judgment on the basis of the affidavits. Davis v. Central Intelligence Agency, 711 F.2d 858, 860 (8th Cir. 1983); Church of Scientology, 611 F.2d at 742. Thus, the court may accept the credibility of the affidavits, as long as it has no reason to question the good faith of the agency. Barney v. Internal Revenue Service [80-1 USTC ¶9343 ], 618 F.2d 1268, 1272 (8th Cir. 1980).

If the affidavits are not sufficient, the court may order an in camera inspection of the documents. 5 U.S.C. §552(a)(4)(B); Church of Scientology , 611 F.2d at 742. Resort to an in camera inspection is discretionary and the district court's decision in this regard will not be disturbed on appeal absent an abuse of that discretion. Currie v. Internal Revenue Service [83-1 USTC ¶9340 ], 704 F.2d 523, 530 (11th Cir. 1983). In FOIA cases, the in camera inspection should play a limited role. See Barney, 618 F.2d at 1272.

The IRS claims that the document at issue is exempt from disclosure under Exemptions 7(A) and 3 of the FOIA, 5 U.S.C. §552(b)(7)(A), (b)(3). Exemption 7 of the FOIA exempts from disclosure certain law enforcement investigatory records. See 5 U.S.C. §552(b)(7). This exemption requires a two part inquiry. First, the document must be an investigatory record compiled for law enforcement purposes. Second, the agency must show that the release of the document would have one of the six results listed in that section. Federal Bureau of Investigation v. Abramson, 456 U.S. 615 (1982). Exemption 7(A) exempts from disclosure "records or information compiled for law enforcement purposes, but only to the extent that the production of such law enforcement records or information could reasonably be expected to interfere with enforcement proceedings, . . ." 5 U.S.C. §552(b)(7)(A). Exemption 7(A) covers investigative documents, whether civil or criminal in import. White v. Internal Revenue Service [83-1 USTC ¶9382 ], 707 F.2d 897, 901 (6th Cir. 1983).

A number of harms could flow from the disclosure of documents covered by exemption 7(A). Disclosure could prematurely reveal the evidence, the government's reliance on that evidence, the nature and direction of the government's case, and the scope and limits of the investigation. In addition, disclosure could allow plaintiffs to tamper with potential evidence. See Linsteadt v. Internal Revenue Service [84-1 USTC ¶9392 ], 729 F.2d 998, 1004 n.10 (5th Cir. 1984). Disclosure of records prior to the institution of tax enforcement proceedings necessarily interferes with such proceedings by prematurely revealing the government's case. Barney v. Internal Revenue Service [80-1 USTC ¶9343 ], 618 F.2d 1268, 1273 (8th Cir. 1980). Once proceedings are instituted, certain information will be available through the discovery process and the application of the Brady principle. See Brady v. Maryland , 373 U.S. 83 (1963). Once enforcement proceedings are finished or the investigation is abandoned, exemption 7(A) will no longer prevent disclosure. Id. at 1273-74.

Exemption 3 of the FOIA prevents disclosure of matters that are:

specifically exempted from disclosure by statute . . ., provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld; . . .

5 U.S.C. §552(b)(3). Internal Revenue Code section 6103 appears to be such a specific nondisclosure statute. That section provides, in pertinent part, that:

Return 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.

26 U.S.C. §6103(e)(7) . Section 6103(e)(7) appears to meet the requirements of FOIA Exemption 3(B). That section refers to a particular type of matter, i.e., return information, that is exempt from disclosure.

There are two lines of cases dealing with Internal Revenue Code section 6103 . The Sixth and Seventh Circuits have determined that section 6103 operates independently of the FOIA. In other words, section 6103 , and not the FOIA, governs the release of return information. See White v. Internal Revenue Service [83-1 USTC ¶9382 ], 707 F.2d 897 (6th Cir. 1983); King v. Internal Revenue Service [82-2 USTC ¶9578 ], 688 F.2d 488 (7th Cir. 1982).

Other courts have applied the two statutes together, reasoning that section 6103 is a specific exemption statute for the purposes of FOIA Exemption 3. See Grasso v. Internal Revenue Service [86-1 USTC ¶9263 ], 785 F.2d 70 (3d Cir. 1986); Long v. Internal Revenue Service [84-2 USTC ¶9791 ], 742 F.2d 1173 (9th Cir. 1984); Linsteadt v. Internal Revenue Service [84-1 USTC ¶9392 ], 729 F.2d 998 (5th Cir. 1984); Currie v. Internal Revenue Service [83-1 USTC ¶9340 ], 704 F.2d 523 (11th Cir. 1983). It appears that the Tenth Circuit has not yet decided the issue of whether section 6103 operates independently of the FOIA. This court will follow the majority view that the two statutes operate together.

A two part test is necessary to determine whether a document is exempt from disclosure under Exemption 3 of the FOIA in conjunction with section 6103 of the Internal Revenue Code. First, the IRS must establish that the document is return information as defined by 26 U.S.C. §6103(b)(2) . Second, the IRS must show that disclosure of this return information will seriously impair federal tax administration. See Currie v. Internal Revenue Service, 704 F.2d at 531.

Return information is defined as:

a taxpayer's identity, the nature, source, or amount of his 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, or any other data, received by, recorded by, prepared by, furnished to, or collected by the Secretary 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, . . .

26 U.S.C. §6103(b)(2)(A) . Return information includes internal agency memoranda reflecting the direction and scope of the investigation, memoranda of interviews with witnesses, information received from third parties, and IRS agents' notes and work papers concerning the scope and direction of the investigation. Currie, 704 F.2d at 531.

Turning now to the facts of the present case, the court notes that plaintiff has not challenged the good faith of the various IRS agents who have supplied affidavits. The court finds that the affidavits are sufficiently detailed to allow the court to render a decision without in camera review of the document at issue. The court finds that the two exemptions discussed above are met. Thus, the court will grant the defendant's motion for summary judgment.

Exemption 7(A) is met on the facts of this case. See 5 U.S.C. §552(b)(7)(A). Plaintiff does not dispute that the twelve page affidavit prepared by agent Stecklein was compiled for possible law enforcement purposes. The plaintiff is under investigation for possible criminal violation of the tax laws. Stecklein prepared this document outlining all that he remembered of his meeting with the plaintiff at the request of Agent Admire. The document was prepared, in part, to respond to plaintiff's charges that Stecklein conducted an illegal search. Agent Admire wanted Stecklein to write everything down while the facts were still reasonably fresh in Stecklein's memory.

The document contains information regarding Stecklein's civil examination of plaintiff's tax returns and Stecklein's conclusions from the examination. The document contains information regarding the criminal investigation of Vosburgh. The court finds that production of the document could reasonably be expected to interfere with enforcement proceedings by prematurely disclosing the government's case.

In addition, the court finds that Exemption 3 is met on the facts of this case. The document meets the definition of return information, since it contains data prepared by the IRS with respect to the determination of plaintiff's potential liability for civil and criminal offenses. The IRS has determined that the disclosure of this document would seriously impair federal tax administration. The court agrees. Release of the document at this stage of the investigation could seriously impair tax administration by prematurely disclosing the government's case. In the present case Exemption 3 is basically the same as Exemption 7(A). See Grasso v. Internal Revenue Service [86-1 USTC ¶9263 ], 785 F.2d 70, 77 (3d Cir. 1986).

The court finds that the IRS has met its burden of establishing that the withheld document falls within the exemptions of the FOIA. Therefore, summary judgment is appropriate.

IT IS BY THE COURT THEREFORE ORDERED that the Internal Revenue Service's motion for summary judgment is hereby granted.