Church of Scientology of California v. I.R.S.

• Decision Date: 27 May 1986
• Docket Number: No. 83-1856,83-1856
• Parties: , 58 A.F.T.R.2d 86-5039, 86-1 USTC P 9430 CHURCH OF SCIENTOLOGY OF CALIFORNIA, appellant, v. INTERNAL REVENUE SERVICE, et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 153

792 F.2d 153

253 U.S.App.D.C. 85, 58 A.F.T.R.2d

86-5039, 86-1 USTC P 9430

CHURCH OF SCIENTOLOGY OF CALIFORNIA, appellant, v. INTERNAL REVENUE SERVICE, et al.

No. 83-1856.

United States Court of Appeals,

District of Columbia Circuit.

Argued En Banc Dec. 5, 1985.

Decided May 27, 1986.

As Amended May 27, 1986.

Robert A. Seefried, Washington, D.C., for appellant.

Jonathan Cohen, Atty., U.S. Dept. of Justice, of the Bar of the Supreme Court of Conn., pro hac vice, by special leave of the Court, with whom Glenn L. Archer, Jr., Asst. Atty. Gen., U.S. Dept. of Justice, Joseph E. diGenova, U.S. Atty., and Michael L. Paup, Richard W. Perkins and Murray S. Horwitz, Attys., U.S. Dept. of Justice, Washington, D.C., were on brief, for appellee.

Judith E. Bendich and Stephen K. Strong, Seattle, Wash., were on brief, for American Civil Liberties Union Foundation of Washington, amicus curiae, urging adherence to the interpretation adopted by the panel opinion in Neufeld v. IRS.

David C. Vladeck and Alan B. Morrison, Washington, D.C., were on brief, for John L. Neufeld and Freedom of Information Clearinghouse, amici curiae, urging adherence to the interpretation adopted by the panel opinion in Neufeld v. IRS.

Before ROBINSON, Chief Judge, and WRIGHT, WALD, MIKVA, EDWARDS, GINSBURG, BORK, SCALIA, STARR and SILBERMAN, Circuit Judges.

Opinion of the Court filed by Circuit Judge SCALIA.

Concurring opinion filed by Circuit Judge SILBERMAN.

Dissenting opinion filed by Circuit Judge WALD, with whom Chief Judge ROBINSON and Circuit Judge MIKVA join.

SCALIA, Circuit Judge:

This is an appeal from the District Court's grant of summary judgment in favor of the Internal Revenue Service, in a Freedom of Information Act suit brought by the Church of Scientology under 5 U.S.C. Sec. 552(a)(4)(B) (1982). The only issue addressed by this en banc opinion is the meaning of the so-called Haskell Amendment, which excepts from the Internal Revenue Code's definition of nondisclosable "return information" "data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer." 26 U.S.C. Sec. 6103(b)(2) (1982). Specifically, we consider whether to adhere to a 1981 panel decision of this court which held that that provision removes from the defined category of protected information all material which, either in its original form or as redacted in response to a FOIA request, does not disclose the identity of the taxpayer to whom it pertains.

I

The facts of the present case are set forth in the panel opinion issued simultaneously with this opinion. For present purposes, it suffices to recite that the central issue in the appeal is the adequacy of the IRS's search for requested records; that one of the principal points bearing upon that issue is whether certain files could reasonably be excluded from the search as containing only "return information"; and that the latter point depends to a considerable extent upon whether redaction (specifically, elimination of portions of documents that would disclose the taxpayer's identity) removes the material from the protected category.

After the case had been briefed and argued before the assigned panel, the court en banc, on its own motion, requested supplemental briefing and, on December 5, 1985, heard oral argument limited to the following issue: ¹ Should the Court adhere to the interpretation of 26 U.S.C. Sec. 6103(b)(2) adopted by the panel opinion in Neufeld v. IRS, 646 F.2d 661, 665 (D.C.Cir.1981), or should it adopt a different interpretation, in particular that announced by the Seventh Circuit in King v. IRS, 688 F.2d 488, 490-94 (7th Cir.1982)?

Briefs amicus curiae were received from the American Civil Liberties Union Foundation of Washington and from Professor John L. Neufeld and the Freedom of Information Clearinghouse.

II

In relevant part, 26 U.S.C. Sec. 6103(a) provides as follows:

Returns and return information shall be confidential, and except as authorized by this title--

(1) no officer or employee of the United States,....

shall disclose any return or return information obtained by him in any manner in connection with his service as such an officer or an employee or otherwise or under the provisions of this section....

Willful violation of this provision is a felony. 26 U.S.C. Sec. 7213(a)(1).

"Return information" is defined in the statute as follows:

(A) 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, over-assessments, 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, and

(B) any part of any written determination or any background file document relating to such written determination (as such terms are defined in section 6110(b)) which is not open to public inspection under section 6110,

but such term does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer.

26 U.S.C. Sec. 6103(b)(2) (emphasis added).

The last clause in the defining paragraph is the Haskell Amendment, so called because it was inserted into the committee-proposed bill through a floor amendment introduced by that Senator. On the basis of that clause, the Ninth Circuit held in 1979 that data that do not identify a particular taxpayer because names, identifying numbers and other similar information have been deleted are not return information. Long v. IRS, 596 F.2d 362 (9th Cir.1979), cert. denied, 446 U.S. 917, 100 S.Ct. 1851, 64 L.Ed.2d 271 (1980). In a later case before this court in which the IRS had not briefed the question, the panel found it necessary to reach the issue and, without analysis of its own, followed what was at the time the only court of appeals precedent. Neufeld v. IRS, 646 F.2d 661, 665 (D.C.Cir.1981). In so doing, the panel observed that "[w]hile the IRS wishes to reserve the question of the proper statutory definition of return information for another day, it appears to concede, for this case only, that [no harmful error occurred] if in fact [the district court] employed the definition of return information articulated in Long." Id. (footnote omitted). Subsequently, the Seventh Circuit reached a conclusion different from Long, holding that the statute "protects from disclosure all non-amalgamated items listed in subsection (b)(2)(A), and that the Haskell Amendment provides only for the disclosure of statistical tabulations which are not associated with or do not identify particular taxpayers." King v. IRS, 688 F.2d 488, 493 (7th Cir.1982). The newly emerged circuit conflict has induced us to reconsider the position stated in our 1981 panel decision.

The starting point of analysis, of course, is the text of the provision at issue, which, we agree with the Seventh Circuit, is ill suited to achieve the result pronounced in Long. It would be most peculiar to catalogue in such detail, in subparagraph (A) of the body of the definition, the specific items that constitute "return information" (e.g., "income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, over-assessments, or tax payments, ... or any other data, received by, recorded by, prepared by, furnished to, or collected by the Secretary with respect to a return") while leaving to an afterthought the major qualification that none of those items counts unless it identifies the taxpayer. Such an intent would more naturally have been expressed not in an exclusion ("but such term does not include ...") but in the body of the definition--by stating, for example, that "the term 'return information' means the following information that can be associated with or identify a particular taxpayer: ...." If the intended scope of the exclusion is as broad as Long holds, the structure of the provision is akin to defining mankind as "all mammals in the world, but excluding those that are not relatively hairless bipeds with the power of abstract reasoning." While such a form of definition is conceivable, it would constitute "everyday language" (as the dissent characterizes it, Dissent at 174) only for one of Lewis Carroll's characters, and it hardly takes "talmudic dissection[]" or "microscopic scrutiny," id., to reject it as implausible.

The Long interpretation produces a similarly mindless consequence in subparagraph (B) of the definition of return information. That subparagraph includes within the definition of return information IRS-written determinations and related background files that are not open to public inspection under Sec. 6110. The latter section excludes from the public inspection requirement not only identifying data, Sec. 6110(c)(1), but many other matters, such as trade secrets, Sec. 6110(c)(4), information prepared for the use of an agency regulating financial institutions, Sec. 6110(c)(6), and (with respect to most written determinations) material relating to a taxpayer's change of annual accounting period, Sec. 6110(g)(5)(B)(ii). It would be absurd to incorporate these exclusions so precisely into the body of the definition of return information, and then, in the immediately following clause, to write all of them back out--except the identifying data exclusion (Sec. 6110(c)(1)), which is not deleted by the Haskell exclusion but merely rendered entirely redundant.

We also agree with the Seventh Circuit that the formulation of the Haskell...