Taxation With Representation Fund v. I.R.S., 80-1688
| Citation | 646 F.2d 666,207 U.S.App.D.C. 331 |
| Decision Date | 12 March 1981 |
| Docket Number | No. 80-1688,80-1688 |
| Parties | , 81-1 USTC P 13,397, 81-1 USTC P 9252, 7 Media L. Rep. 1448 TAXATION WITH REPRESENTATION FUND v. INTERNAL REVENUE SERVICE, Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (District of Columbia) |
Stephen Gray, Atty., Dept. of Justice, Washington, D. C., with whom M. Carr Ferguson, Asst. Atty. Gen., Charles F. C. Ruff, U. S. Atty., Michael L. Paup and Richard W. Perkins, Attys., Dept. of Justice, Washington, D. C., were on brief for appellant. Ernest J. Brown, Atty., Dept. of Justice, Washington, D. C., also entered an appearance for appellant.
William A. Dobrovir, Washington, D. C., with whom Thomas F. Field, Washington, D. C., was on brief for appellee.
Before ROBB and EDWARDS, Circuit Judges, and PENN, * District Judge, United States District Court for the District of Columbia.
Opinion for the court filed Circuit Judge HARRY T. EDWARDS.
The issues raised by this appeal require this court's consideration for the first time whether certain records of the Internal Revenue Service ("IRS") may be withheld from public disclosure pursuant to Exemption 5 of the Freedom of Information Act ("FOIA"), 5 U.S.C. § 552(b)(5). Exemption 5 of the FOIA protects "inter-agency or intra-agency memorandums or letters which 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). While Exemption 5 has been construed generally to exempt those documents normally privileged in the civil discovery context, 1 the focus of this litigation is the "deliberative process" privilege portion of Exemption 5.
The records in dispute in this case fall under three general headings: General Counsel's Memoranda ("GCMs"), Technical Memoranda ("TMs"), and Actions on Decisions ("AODs"). After carefully considering the evidence before it, the District Court found that none of the disputed documents were covered by Exemption 5. Taxation With Representation Fund v. Internal Revenue Service, 485 F.Supp. 263 (D.D.C.1980). As to the GCMs, the trial court found that these documents "contain the reasons behind the adoption of revenue rulings, private letter rulings, and technical advice memoranda," and that they are "indexed and have important precedential value in determining future tax questions." Id. at 266. As to AODs, the trial court found that the documents "contain the reasons behind the acquiescence or nonacquiescence of the IRS in court decisions," and that the documents are "made available to IRS personnel and are cited and applied by IRS personnel in later AOD's, and TM's to promote the consistent application of the tax laws." Id. at 267. As to the TMs, the trial court found that these documents "explain the reasons behind the adoption of (a) Treasury Decision" and that "(t)hey are used by IRS personnel in determining the tax status of taxpayers." Id.
Given these findings, the District Court concluded that the disputed documents could not be protected from disclosure under the executive "deliberative process" privilege encompassed by Exemption 5. The court also concluded that the disputed material was "not protected by the attorney-client privilege and does not constitute protected attorney work product." Id. at 268. Pursuant to these conclusions, the District Court ordered the IRS to make available all existing and future GCMs, TMs and AODs, and related indices, upon request, subject to the nonapplicability of other exemptions. See Taxation With Representation Fund v. Internal Revenue Service, 485 F.Supp. 263 (D.D.C.1980) and Supplemental Order, reprinted in Joint Appendix ("J.A.") at 191. For the reasons discussed below, we affirm the judgment of the District Court with certain modifications indicated in this opinion.
In order to get a clear understanding of the issues at stake here, it is essential to focus on the disputed documents which are the subject of this appeal. To this end, in this section we will first describe GCMs, TMs and AODs, and explain the function and significance of each document in IRS decisionmaking processes, and then outline the procedural history of this case.
General Counsel's Memoranda are:
legal memorandums from the Office of Chief Counsel to the Internal Revenue Service prepared in response to a formal request for legal advice from the Assistant Commissioner (Technical). They are primarily prepared by attorneys in the Interpretative Division of the Office of Chief Counsel and usually addressed to the Office of the Assistant Commissioner (Technical) in connection with the review of proposed private letter rulings, proposed technical advice memorandums, and proposed revenue rulings (hereinafter proposed determinations) of the Service. The GCM sets forth the issues presented by whichever of these proposed determinations is under review, the conclusions reached and a brief factual summary. The body of the GCM contains a lengthy legal analysis of the substantive issues, and the recommendations and opinions of the Office of Chief Counsel. The GCM is often accompanied by a draft of the proposed determination that reflects the changes and modifications recommended in the GCM.
Affidavit of Jerome D. Sebastian, Director, Interpretative Division, Office of Chief Counsel, Internal Revenue Service, reprinted in J.A. at 165, 166.
Generally, GCMs are prepared in connection with approximately two percent of all proposed revenue rulings, private letter rulings, or proposed technical advice memoranda issued by the Office of Assistant Commissioner (Technical). Defendant's "Statement of Material Facts As To Which There Is No Genuine Issue," reprinted in J.A. at 153, 155 (hereinafter "Defendant's Statement"). The preparation of GCMs involves the research of appropriate statutes, regulations, revenue rulings and case law, as well as previous GCMs and briefs prepared by the Office of Chief Counsel. Id. While less elaborate GCMs may consist of a single, short paragraph, full scale GCMs follow a specific format including "Issue," "Conclusion," "Facts," and "Analysis" which is set out in written instructions to the lawyers who prepare GCMs. Id. at 156.
A completed GCM is forwarded to the Office of the Assistant Commissioner (Technical), who uses the memorandum to determine "what positions will be taken in the proposed revenue ruling, proposed private letter ruling, or proposed technical advice memorandum." Id. The Office of the Assistant Commissioner (Technical) is responsible for the issuance of IRS revenue rulings, private letter rulings, and technical advice memoranda; in handling this responsibility, the Assistant Commissioner "acts as the principal assistant to the Commissioner in providing basic principles and rules for the uniform interpretation and application of the Federal tax laws." Internal Revenue Service Manual § 1113.9, reprinted in Appellee's brief, Addendum. In other words, the Assistant Commissioner (Technical), is the final decisionmaker of significant agency law and policy.
If differences arise between the positions of the Office of Assistant Commissioner (Technical) and the Office of Chief Counsel, the differences "are generally reconciled on an informal basis before the adoption of the revenue ruling, private letter ruling, or technical advice memorandum in question." "Defendant's Statement," supra, at 156-57. After the Assistant Commissioner (Technical) makes a final decision on the substantive issue(s) posed in a revenue ruling, private letter ruling or technical advice memorandum, the GCM is modified and rewritten "to represent the position taken in the ruling." 2 The District Court's finding that "differences between the GCM and ruling are resolved before the GCM is considered complete and before it becomes available for future reference," 3 as well as our own understanding from the record and the oral arguments made by counsel as to what happens to the memoranda, support the conclusion that the entire document, body and conclusion, is rewritten to reflect the Assistant Commissioner's position.
Completed GCMs are then copied and distributed to key officials within the Internal Revenue Service, including the Office of Chief Counsel. "Defendant's Statement," supra, J.A. at 157. The Digest Section of the Interpretative Division, Office of Chief Counsel, also prepares 161 copies of a weekly "Library Digest Bulletin," which summarizes the GCMs that have been recently finalized. The Digest is distributed to key IRS and Office of Chief Counsel officials, to "60-some" Interpretative Division attorneys, as well as to the field offices. Id.; Sebastian Deposition, J.A. at 69-70. 4
The Office of Chief Counsel retains completed GCMs, and indexes and digests the memoranda "for the purpose of an in-house research tool." "Defendant's Statement," supra, J.A. at 157. This is done to ensure that "there (will) be some uniformity of positions taken." Sebastian Deposition, J.A. at 75. Citations of GCMs in subsequent GCMs are noted on "citator" index cards, along with the Code and Regulations sections cited in the GCM, "just like Shepherd's." Id. at 61, 63. These index cards are plugged into a "RIRA system," 5 and placed on microfilm, which is available to IRS personnel in the field offices. Id. at 65-66.
IRS personnel who confer or negotiate on tax liability matters with taxpayers may refer to GCMs for guidance as to the positions to take in such negotiations. During such negotiations, IRS staff members do not typically state that a particular position is required by a GCM, nor do agency personnel provide copies of GCMs to taxpayers. Answer to Interrogatory, reprinted in J.A. at 30. In addition, IRS personnel are instructed by section 4245.3(3) of the Internal Revenue Manual that GCMs should not be used "as precedents in the disposition of ...
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