BARRY TED MOSKOWITZ, District Judge.
The United States Internal Revenue Service ("IRS") has filed a motion for summary judgment as to Plaintiff's claims under the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552, et seq. (ECF No. 25.) For the reasons discussed below, the IRS's motion will be granted in part and denied without prejudice in part.
This is one of five actions filed by related entities against the IRS.
Plaintiff Trucept, Inc., fka Smart-Tek Solutions Inc. ("Plaintiff") alleges it sent a written FOIA request to the IRS on May 12, 2014. Compl. (ECF No. 1) ¶ 10. Under 5 U.S.C. § 552(a)(6)(A)(i), an agency has 20 business days following receipt of a FOIA request to determine whether to comply with the request and must "immediately" notify the requester of its determination. 5 U.S.C. § 552(a)(6)(A)(i). On June 26, 2014, the IRS allegedly sent a response to Plaintiff in which it acknowledged receipt of the request but "failed to make any determination about the request." Compl. ¶ 11. On February 27, 2015, having received no further response from the IRS, Plaintiff initiated this action.
On October 7, 2016, the IRS filed the instant motion. It indicates it has now completed its search for records and released 2,319 pages in full, and 617 pages in part, of non-exempt documents responsive to Plaintiff's FOIA request. Mot. Summ. J. at 1:9-15. It seeks summary judgment on the ground that it has fully discharged its obligations under 5 U.S.C. § 552. Plaintiff opposes the motion. (ECF No. 27.)
Summary judgment is appropriate if the evidence, when viewed in the light most favorable to the non-moving party, demonstrates "there is no genuine dispute as to any material fact." Fed. R. Civ. P. 56(a);
District courts are directed to conduct a de novo review of the adequacy of an agency's response to a FOIA request. 5 U.S.C. § 552(a)(4)(B);
First, the district court must determine whether the agency has established that it fully discharged its obligation under FOIA to conduct an adequate search for responsive records.
If the agency satisfies its initial burden, the court proceeds to the second step and considers "`whether the agency has proven that the information that it did not disclose falls within one of nine FOIA exemptions.'"
Finally, "even if the agency satisfies the two-part test, it generally must still disclose any reasonably segregable portions of the withheld documents."
The IRS contends it has conducted an adequate search for records responsive to Plaintiff's FOIA request. To fulfill its obligations under FOIA, "the agency must show that it made a good faith effort to conduct a search for the requested records, using methods which can be reasonably expected to produce the information requested."
The IRS submits the declaration of Delphine Thomas as proof it conducted an adequate search for records responsive to Plaintiff's FOIA request. (ECF No. 25-5.) Thomas is a Senior Disclosure Specialist whose duties include responding to FOIA requests for IRS records, which requires her to "have knowledge of the types of documents created and maintained by the various divisions and functions of the Service and an understanding of the provisions of the FOIA." Thomas Decl. ¶ 1.
Thomas states that the disclosure specialists initially assigned to respond to Plaintiff's FOIA are now retired or in different positions and are thus "unavailable to declare."
She states the IRS received a written FOIA request from Plaintiff on June 20, 2014, seeking "`a complete copy of the administrative file' for Trucept, Inc., `for tax forms 940, 941, 1120 and 1065 for years 2007-2014.'"
From her IDRS search, Rentas "ascertained that Revenue Officer John Black (RO [Black]) was assigned to the collection matter of Smart-Tek Services."
Thomas indicates that another disclosure specialist, Ed Pullman, called Plaintiff's representative "to confirm [the] request was for the administrative file maintained by Collection personnel."
Plaintiff argues Thomas's declaration is insufficient to demonstrate the adequacy of the IRS's search, because it fails to explain what documents the commingled files contained, the methodology used to review the 65 boxes of documents, criteria for selecting responsive documents, and because it does not identify the entities whose records were in the commingled file. Pl.'s Opp. at 6-7.
The Court agrees with Plaintiff in part. To sustain its burden, the IRS must show "[w]hat records were searched, by whom, and through what process."
First, the declaration provides no indication how the IRS interpreted Plaintiff's FOIA request (as initially submitted in writing, or as subsequently clarified), nor does it provide an explanation of the scope or categories of documents it determined were responsive to the request. Thomas states, for example, that "all of plaintiff's tax account information that fell within the scope of plaintiff's FOIA request was discovered through IDRS," Thomas Decl. ¶ 10, but she never indicates what that "information" was. Federal agencies responding to FOIA requests are required to use search methods which can reasonably be expected to yield the information requested.
Second, Thomas's declaration fails to give sufficient information about the IRS's review of the 65 boxes of documents. The IRS spent months reviewing the boxes and removing particular documents, but it has not explained what criteria or search parameters the team used to determine which documents to remove for production. Although an agency need only prove its search was "reasonably calculated to uncover all relevant documents,"
Next, the Court turns to Plaintiff's argument that the IRS cannot establish the reasonableness of its search without identifying the other entities whose records were in the 65-box commingled file. Opp. at 7. The IRS did not address this argument in its reply brief.
Two countervailing principles seem to bear upon Plaintiff's contention. On the one hand, the Court must make a de novo determination of the adequacy IRS's response to Plaintiff's FOIA request,
Setting aside the merits of Plaintiff's argument, as a threshold issue, it seems likely that the alleged alter egos' identities have already been disclosed. "[O]nce tax return information is made a part of the public domain, the taxpayer may no longer claim a right of privacy in that information" and "`§ 6103's directive to keep return information confidential is moot.'"
The fact that any privilege pertaining to the identities of the alter egos may have been dispelled does not necessarily mean the identity of every entity whose files were in the 65 boxes has to be disclosed to establish the reasonableness of the IRS's search. At this stage, the record regarding the search the IRS undertook is not yet complete, and the Court will reserve ruling on the merits of Plaintiff's argument until the record is more fully developed.
Based on the foregoing, the Court finds the IRS has failed to carry its burden to demonstrate the adequacy of its search. Its motion for summary judgment will be denied without prejudice.
The IRS indicates it withheld all or part of responsive documents pursuant to FOIA exemptions.
1.
The IRS withheld responsive information pursuant to FOIA Exemptions 3, 6, and 7(C). Under Exemption 3, matters "specifically exempted by statute" are deemed exempted under FOIA "if that statute—(A)(i) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue; or (ii) establishes particular criteria for withholding or refers to particular types of matters to be withheld. . . ." 5 U.S.C. § 552(b)(3)(A). 26 U.S.C. § 6103 is a provision within the IRS Code and has been determined to be an Exemption 3 statute.
Exemption 6 restricts from disclosure "personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy." 5 U.S.C. § 552(b)(6). Under Exemption 6, the IRS withheld all, or parts, of documents because they contain information relating to "taxpayers," tax preparers, and/or persons other than Plaintiff. Queener Decl. ¶¶ 19, 20.
Exemption 7(C) requires withholding of records or information compiled for law enforcement purposes, but only to the extent the production of such information "could reasonably be expected to constitute an unwarranted invasion of personal privacy." 5 U.S.C. § 552(b)(7)(C). Under Exemption 7(C), the IRS has withheld 17 pages of documents "concerning plaintiff in which personal identifying information for taxpayers other than plaintiff was withheld." Queener Decl. ¶ 23(a).
At this stage, the Court will reserve ruling on the validity of the IRS's withholding of information under Exemptions 3, 6, and 7(C). Plaintiff's essential contention in this case is that the IRS wrongfully failed to produce documents pertaining to alter ego entities whose tax liability was the basis for the lien against Plaintiff. The information withheld on the basis of each of the foregoing exemptions relates to unidentified "taxpayers" other than Plaintiff. Some of these taxpayers may be the alter ego entities whose documents Plaintiff seeks. The IRS disputes whether Plaintiff can obtain tax information relating to Plaintiff's alter egos without an authorization from the alter ego. Plaintiff cannot obtain such an authorization, however, without knowing which entities' records have been withheld. Although the IRS claims even the names of the alter egos are protected from disclosure, if those names have already been published such that any related privacy interest has been lost, there would appear to be no impediment to identifying, in subsequent briefing, any alter ego taxpayers whose records were withheld. If the IRS can disclose those names in subsequent proffers, Plaintiff will have the opportunity to more intelligently advocate for disclosure of the withheld information.
The Court will therefore reserve determining whether the IRS has sufficiently established the validity of its withholding of information under Exemptions 3, 6, and 7(C) until these issues have been more fully developed.
Exemption 5 protects from disclosure "inter-agency or intra-agency memorandums or letters that would not be available by law to a party other than an agency in litigation with the agency. . . ." 5 U.S.C. § 552(b)(5). "This exemption entitles an agency to withhold . . . documents which a private party could not discover in litigation with the agency."
Pursuant to Exemption 5, the IRS withheld parts of four pages of documents (pages 1919-20 and 1929-30) on the grounds the withheld information is protected by the attorney-client privilege. Queener Decl. ¶ 16. "The attorney-client privilege protects confidential disclosures made by a client to an attorney in order to obtain legal advice, . . . as well as an attorney's advice in response to such disclosures."
The IRS submits the declaration of Jacqueline Kay Queener, an attorney in the IRS's Office of Chief Counsel, in support of its decision to withhold responsive information under Exemption 5. Queener Decl. ¶¶ 16-18. She indicates the withheld information consisted of confidential written communications between RO Black and Mindy Meigs, an attorney in the IRS Office of Chief Counsel, in which Black sought, and Meigs provided, legal advice concerning Black's collection of Plaintiff's outstanding tax liabilities, and the alter ego or successor liability status of entities that might be pursued for collection.
The Court finds the information in the Queener declaration sufficiently detailed and non-conclusory to support the conclusion that the withheld information falls within the scope of the attorney-client privilege.
Accordingly, the Court grants the IRS's motion for summary judgment as to its determination that the foregoing information was exempt from disclosure pursuant to Exemption 5.
Exemption 7(A) relates to "records or information compiled for law enforcement purposes" to the extent production of such information "could reasonably be expected to interfere with enforcement proceedings. . . ." 5 U.S.C. § 552(b)(7)(A). To support withholding information or records under Exemption 7(A), an agency "must establish only that they were investigatory records compiled for law enforcement purposes and that production would interfere with pending enforcement proceedings."
The IRS withheld two pages of documents in full, and one page in part, under Exemption 7(A). Queener Decl. ¶ 21; Savala Decl. ¶ 8. The withheld information relates to an email from an attorney to an AUSA regarding possible abusive or criminal tax-related activity by one of his clients, and an email exchange between two IRS special agents and an AUSA regarding the attorney's tip. Savala Decl. ¶ 8(a), (b). Savala indicates the information relates to "ongoing collection of plaintiff's outstanding tax liabilities" and that release of the withheld information stands to forestall or interfere with the IRS's collection activities.
The Court finds the information in the Queener and Savala affidavits sufficient to support the IRS's claim that the withheld information falls within Exemption 7(A), and that it complied with its duty to reasonably segregate and produce non-exempt information.
Exemption 7(D) protects information compiled for law enforcement purposes from disclosure to the extent it
5 U.S.C. § 552(b)(7)(D). Exemption 7(D) "has long been recognized as affording the most comprehensive protection of all of FOIA's law enforcement exemptions."
The IRS withheld 38 pages in full, and two pages in part, under Exemption 7(D). Queener Decl. ¶ 24. The IRS relies on the declaration of Ms. Queener, who attests the documents were withheld or redacted because "they contain either the identity, or sufficient information from which the identity could readily be discerned, of sources of information that furnished information" to the IRS "with the understanding that it would only be divulged to the extent necessary to facilitate ongoing efforts . . . to enforce the Federal tax laws as applied to plaintiff." Queener Decl. ¶¶ 24, 25.
The Court finds the IRS's evidence sufficient to show the withheld information is protected under Exemption 7(D).
Exemption 7(E) protects information compiled for law enforcement purposes from disclosure to the extent it "would disclose techniques and procedures for law enforcement investigations or prosecutions, or would disclose guidelines for law enforcement investigations or prosecutions if such disclosure could reasonably be expected to risk circumvention of the law." 5 U.S.C. § 552(b)(7)(E). To establish this exemption, "the Government must show that the technique that would be disclosed under the FOIA request is a technique unknown to the general public."
The IRS withheld nine pages of documents in part pursuant to Exemption 7(E). Queener Decl. ¶ 26. Ms. Queener avers that the redacted information relates to Plaintiff's "Risk Score," "which reflects the Service's assessment of the priority of having the taxpayer's account assigned to a dedicated collection specialist to actively pursue collection of the taxpayer's outstanding liabilities."
For the reasons discussed above, the IRS's motion for summary judgment is GRANTED IN PART and DENIED WITHOUT PREJUDICE in part.
IT IS SO ORDERED.