T. Keith Fogg v. Internal Revenue Service

Background

Plaintiffs Nicholas Xanthopoulos and T. Keith Fogg jointly submitted a Freedom of Information Act (FOIA) request seeking, among other things, an unredacted version of section 21.1.3.3 of the Internal Revenue Manual. That section describes how IRS employees authenticate third-party representatives who contact the IRS on a taxpayer’s behalf before releasing sensitive taxpayer information.

Beginning in January 2018, the IRS generally required third-party representatives to provide their own Social Security numbers, in addition to previously requested information such as a Centralized Authorization File number. The IRS initially withheld seven portions of the manual under FOIA Exemption 7(E), which permits withholding records compiled for law-enforcement purposes when disclosure would reveal law-enforcement techniques and procedures, or certain guidelines whose disclosure could reasonably be expected to risk circumvention of the law. During the litigation, the IRS released two of those portions. Five redactions remained: a note, an exception, all of subsection (4), all of subsection (5), and about two lines under subsection (8).

Parties’ positions

The plaintiffs argued that the redacted material concerned routine administrative authentication rather than law-enforcement activity. They also argued that the released material, the location of the redactions within the manual, and the IRS’s declaration did not establish that Exemption 7(E) applied. The plaintiffs requested that the court conduct a private review of the redacted text.

The IRS argued that the redactions described investigative procedures used in special situations to prevent impersonators from obtaining and misusing sensitive taxpayer information. It also argued that the procedures helped protect taxpayer information as required by federal tax law.

Court’s analysis

The court held that the IRS had shown that the redacted material was compiled for law-enforcement purposes. Although the authentication process also had an administrative purpose, the court found that the redacted procedures were proactive measures designed to prevent identity theft, fraud, and unauthorized disclosure of confidential taxpayer information. The court stated that records can serve both administrative and law-enforcement purposes.

The court also held that the redactions revealed techniques and procedures used in law-enforcement investigations. The court distinguished the ordinary authentication procedures that the IRS had disclosed from the withheld procedures, which applied when the IRS identified a caller as presenting a special situation. The court found that gathering information to develop leads or determine whether a person was violating the law could qualify as an investigation.

The court further found that disclosure could reasonably be expected to risk circumvention of the law. It accepted the IRS’s evidence that disclosure could increase the risk of identity theft, unauthorized disclosure of taxpayer information, and fraud, and could reduce the effectiveness of the IRS’s investigative procedures. The court did not decide whether the FOIA Improvement Act imposed an additional or heightened showing because it concluded that the IRS prevailed under either approach.

Private review and segregability

The court declined to conduct an in-camera review, meaning a private judicial inspection of the withheld material. It found the IRS’s declaration sufficiently detailed because it identified the redactions as procedures used in special situations and explained why they remained withheld. The court also found no evidence of bad faith.

Under FOIA’s segregability requirement, an agency must release reasonably separable nonexempt material. The court expressly found that the IRS had not withheld any reasonably segregable, nonexempt material. The court relied in part on the IRS’s review of the records and its release of two previously withheld portions.

Disposition

The court granted the Internal Revenue Service’s Motion for Summary Judgment and denied Nicholas Xanthopoulos and T. Keith Fogg’s Cross Motion for Summary Judgment. It ordered that judgment be entered accordingly.