District Court Allows IRS to Use Glomar Defense In FOIA Suit Seeking Whistleblower Info

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This summer I discussed Mongomery v IRS, a FOIA case that was the latest in a long saga of litigation between the Montgomery family and the IRS.  This past month the district court returned to the FOIA dispute and partially resolved the case in favor of the government. In so doing it considered a so-called Glomar defense, when the government seeks to neither confirm nor deny the existence of the records that are the subject of a FOIA request.

As a refresher, the family’s partnership transactions attracted the attention of the IRS, leading to court opinions that upheld the determination that the partnerships were shams and that the IRS properly issued final partnership administrative adjustments, but also a separate refund suit that the IRS ultimately settled, leading to an almost $500,000 refund.  The Montgomerys filed a FOIA claim because they wanted to unearth how the IRS came to scrutinize the transacations, with a particular interest in finding out if there was an informant that spilled some of the partnership beans.

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To that end, they filed FOIA requests for two distinct categories of records: 1) various forms the IRS uses in connection with whistleblower cases and 2) lists, documents and correspondence with third parties concerning the partnership investments or the Montgomerys’ personal tax liability.

This past summer the court denied a summary judgment motion that the IRS filed that claimed that a settlement agreement the IRS and Montgomerys entered into prevented a FOIA suit. That opinion cleared the way for a decision on the merits of the FOIA suit, which takes us up to the district court opinion issued this past month and this post.

The main issue in the case involves the FOIA claims that sought the whistleblower information. IRS took what is known as a Glomar response, which is neither to deny nor confirm the existence of the records. This is a tactic the government has used in other types of cases but to my knowledge not in tax cases. The so-called Glomar response originates from the Cold War and the government’s desire to keep secret its efforts to uncover a sunken Soviet submarine:

In certain circumstances, […] an agency may refuse to confirm or deny that it has relevant records. This “Glomar response” derives from a ship, the Hughes Glomar Explorer, about which the CIA refused to confirm or deny the existence of records. See Phillippi v. CIA, 546 F.2d 1009, 1011 (D.C. Cir. 1976). Such responses are appropriate only when “`confirming or denying the existence of records would’ itself reveal protected information.” Bartko v. DOJ, 62 F. Supp. 3d 134, 141 (D.D.C. 2014) (quoting Nation Magazine v. U.S. Customs Serv., 71 F.3d 885, 893 (D.C. Cir. 1995)).

Despite Glomar having pedigree as a judicial exception to FOIA, the opinion notes that when the government raises a Glomar defense, it still needs to tether the defense to one of the nine statutory FOIA exemptions. In this case, the government asserted Exemption 7D:

Exemption 7(D) excludes 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 disclose the identity of a confidential source … [who] furnished information on a confidential basis.” 5 U.S.C § 552(b)(7)(D).

There was no disagreement over whether the records (if they existed) were filed for law enforcement purposes, which is the threshold requirement under 7D. Instead, the opinion turned on whether there was an expectation that the source (again if it or they existed) who spoke to the government expected the information to remain confidential. Yet as my parenthetical notes that question presupposes that an informant exists:

The difficulty here is that if the Government describes its interactions with a specific source, it would thereby undercut the protection that Glomar provides. In other words, because a Glomar response is meant to obscure the very existence of the source (or attempted source), the Government cannot offer any public statement concerning the confidentiality assurances given to that source (or a statement that no source exists). As the Service persuasively argues, even though the identity of an informant may not be at risk in every case, to protect whistleblowers in cases where disclosure of the existence of records could lead to their identification, it must assert Glomar whenever an informant is involved.

The opinion nicely frames how the court must consider not only the content of the documents but the possible harm arising from revealing the very existence of the documents:

For example, in a situation where there is only one suspected whistleblower, the Service’s affirmative or negative response to a request for certain forms would either confirm or refute the suspicion. Either the documents exist, in which case the identity of the informant could be apparent even if the IRS does not release anything, or they do not. Even though the non-existence of records does not implicate a harm cognizable under Exemption 7(D), the IRS can only protect against the damage that confirming such records would engender by asserting Glomar in all situations.

This suggests a robust role for asserting Glomar in the context of FOIA requests seeking information relating to informants. Yet the opinion notes that Glomar is not a blank check for the IRS in these cases, as the government must offer a public explanation why the exemption applies and then provide for in camera review to allow a district court judge to confirm the agency’s conclusions before it will allow Glomar to swat away the FOIA claims.

The government did that in this case, relying on IRS employee affidavits which attested to its policy of asserting Glomar consistently “when a requester seeks records pertaining to a confidential informant in order to protect the identity of whistleblowers” to avoid giving requesters sufficient information “to determine when [it] is protecting records and when there are no records to protect.”

During in camera review, the government was able to establish that either no records existed, or if they did exist, the informant had an express or implied expectation of privacy when dealing with the IRS. As such, the court granted the government’s summary judgment motion as relating to the FOIA request for forms the IRS uses in connection with whistleblower cases.

Conclusion

This is a significant victory for the IRS and paves the way for future Glomar responses in FOIA cases where someone is seeking information to determine if there was an informant that led to an IRS investigation.

It is not, however, the end of the line. Montgomery has also sought information pertaining to correspondence with other third parties concerning the partnership investments or their personal tax liability. That part of the FOIA dispute continues. Stay tuned for at least one more chapter in this case.

Leslie Book About Leslie Book

Professor Book is a Professor of Law at the Villanova University Charles Widger School of Law.

Comments

  1. Here is an amusing tale by a FOIA requester who last year received a “Glomar” response from IRS, on an encrypted CD that required a password.

    https://www.muckrock.com/news/archives/2017/mar/28/irs-password-glomar/

  2. Norman Diamond says:

    After the way circuit courts have overturned Supreme Court rulings US v. Sullivan and Garner v. US, it is refreshing to see that the Glomar defence breathes new life into the Fifth Amendment in FBAR cases.

    (There are reasons why people can include include income in US tax calculations but can’t dare to reveal the source. For example, prior to this year, suppose a Saudi Arabian woman had taken a job as a bus driver in the US. Or suppose she had taken a job as a truck driver in a third country but married a US citizen. The IRS and US Tax Court still seem to uphold those two important US Supreme Court rulings, but other courts and the DOJ overturn them.)

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