The Right to Be Informed: Using the Freedom of Information Act and Internal Revenue Manual to Secure Taxpayer Records

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Today we welcome first time guest blogger, Nicholas Xanthopoulos, who directs the low income taxpayer clinic at Nevada Legal Services.  Nick posted on the low income taxpayer listserv an experience he had when seeking records through FOIA in which an IRS FOIA Public Liaison suggested that he should request the information from the front line IRS employee.  You can read below how that worked. 

Sometimes IRS employees use FOIA as a way to shield themselves from possible disclosure violations, the charitable view, or just doing the work to copy appropriate documents from a taxpayer’s file, the less charitable view.  In my clinic this comes up most often in Tax Court cases where we first get involved after the case has gone to Appeals.  More often than not, the Appeals employee declines to provide information in the file referring us to the FOIA process if we want the information.  This is a shortsighted and incorrect response.  The Appeals employee has the ability to provide the information in the file almost all of which the taxpayer or the representative has the right to see.  Suggesting FOIA creates more work for everyone including the Appeals employee and greatly slows the process of information flow.  With cases in Tax Court in which Appeals declines to provide the requested information, my clinic simply makes a Branerton request to the Chief Counsel attorney which usually results in a call from the Attorney to the Appeals employee directing the Appeals employee to provide the information.  This tactic does not work, however, when no Tax Court case exists. 

TIGTA recently looked at the IRS performance in FOIA requests.  It found that the IRS was getting slower in responding but also that it failed to send response documents in certain cases.  That it takes longer should surprise no one given the staffing problems caused by the budget cuts.  TIGTA recommended providing more information to the parties requesting information during the search and response process.  This good idea does, however, take time away from actually responding.  Making a FOIA request can be a slow, painful process but can also produce important information necessary to proper representation of a client.  Nick provides some good insights and citations regarding the process.  Keith

The Freedom of Information Act (“FOIA”) requires the Internal Revenue Service to “promptly” provide records when a person requests them.  5 U.S.C. § 552(a)(3)(A).  A request qualifies for FOIA treatment if it “reasonably describes” the records and follows agency policy.  Id.   The request must “fully comply” with various form requirements, such as stating whether the requestor wants to view the records before receiving copies of them.  26 C.F.R. § 601.702(c)(4).

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Usually, a FOIA request “reasonably describes” the records if it provides “the name, taxpayer identification number (e.g. social security number…), subject matter, location, and years at issue of the requested records.  § 601.702(c)(5)(i).  In making a request, a practitioner must provide a completed “power of attorney, Privacy Act consent, or tax information authorization.”  § 601.702(c)(5)(iii)(C).  Sample FOIA requests are available from various sources, including the IRS.  The Treasury processes record requests under both FOIA and the Privacy Act of 1974, as amended, a topic outside the scope of this post.

FOIA deadlines for the IRS to provide requested records is slightly more complicated.  Within 20 days[1] of receiving the request, the IRS must decide whether to comply with it and notify the requestor about the decision.  5 U.S.C. § 552(a)(6)(a)(i); 26 C.F.R. § 601.702(c)(9)(B)(ii).  The IRS can extend the deadline by up to 10 business days if it has “to search for and collect” the records from other locations.  5 U.S.C. § 552(a)(6)(B)(i), 552(a)(6)(B)(iii).  In one of my cases, the IRS invoked this “unusual circumstances” extension; I imagine such extensions are relatively common when requesting records from an examination administrative file.

If the IRS chooses to provide the records, it generally must mail them to the requestor at the time of the determination or “shortly thereafter.”  26 C.F.R. § 601.702(c)(9)(B)(iii).  (Section 601.702 does not define “shortly.”)  If the IRS does not notify the requestor of its determination within 20 days of receiving the request, then administrative remedies are considered exhausted.  5 U.S.C. § 552(a)(6)(C)(i); 26 C.F.R. § 601.702(c)(12).  The requestor may then seek from the U.S. District Court an order for the IRS to produce the requested records.  5 U.S.C. § 552(a)(6)(B).  The Court may also order the IRS to pay reasonable attorney fees and costs if the requestor “substantially prevails” in the action.  5 U.S.C. § 552(a)(6)(E).

I have a case where the IRS did not, within 20 days of receiving my FOIA request, notify me of its determination or invoke the unusual circumstances extension.  As a result, I called a FOIA Public Liaison to ask about the status of my request.  (A list of Liaisons’ names and phone numbers is available at http://www.irs.gov/uac/IRS-Disclosure-Offices.)  The Liaison told me that it may be more effective to request records directly from a representative in the relevant IRS division.  I was also told that, if the IRS representative wouldn’t release the records, I should cite the Internal Revenue Manual (“IRM”): section 5.1.22.6 for a “copy of the [collection] case file” and section 4.2.5.7 for “a copy of the examiner’s files or workpapers.”  Finally, a Liaison told me that the records provided might be broader than those disclosed in response to a FOIA request.

Both IRM sections refer to Internal Revenue Code section 6103(e) as authority for releasing taxpayer records.  For collection files, the IRM says that “[a] taxpayer or taxpayer representative has a right to information used to collect his/her tax liability, which includes a copy of the case file.”    IRM 5.1.22.6.  However, IRM 5.1.22 does not describe what a “case file” contains, and I have been unable to find a definition of the term elsewhere in the IRM.  When I requested a copy of a taxpayer’s case file, the representative agreed to fax it to me.  Due to technical difficulties, I only received the cover pages to the fax attempts.  When I spoke with a different collection representative, he told me that the “case file” I was faxed consisted only of an account transcript; he also told me that he didn’t know what documents a “case file” includes.

For exam cases, the IRM disclosure provisions read less strongly.  To be exact, “the examiner may be asked…for a copy of the examiner’s files or workpapers.” IRM 4.2.5.7.  The section adds that IRC section 6103(e) “advises that the Service shall [generally] give taxpayers access to their returns or return information.”  Id.  When I asked a representative for a copy of workpapers and cited to the IRM, she told me that the disclosure is not allowed.  I accepted her offer for a call back from a supervisor about my request, but I never received one.

The IRM disclosure provisions each offer a remedy to aggrieved requestors.  If a collections representative refuses to release a copy of a case file and a taxpayer can’t resolve the issue with managerial involvement, then a “[FOIA] or Privacy Act request process is available.”  IRM 5.1.22.6 at ¶ 7.  Likewise, a FOIA request is sometimes “necessary” for representatives to provide taxpayers with copies of examination files or workpapers.  IRM 4.2.5.7 at ¶ 6.

So far, my experiences with the IRM sections on disclosure and requesting hardship CNC when a taxpayer isn’t in filing compliance are similar: explain what they say, provide the citation, and hope the IRS representative is willing to listen.  If the representative is not responsiveand litigation isn’t pending, then FOIA and the Privacy Act are the only disclosure paths I’m aware of that offer a judicial remedy.

 

 

 

Comments

  1. Bob Kamman says:

    A distinction might be made between Appeals Officers and Settlement Officers. Several years ago the Phoenix Appeals Office invited practitioners to a meeting to tell us what a wonderful job they were doing. Appeals staff from Fresno and Los Angeles were flown in to help. I wasn’t invited but found out about it from a friend.

    One of the speakers said that Appeals Officers were always more than willing to share everything they had in the file. A few weeks earlier I had asked to see the file in my client’s Trust Fund Recovery Penalty case, and the SO told me I would have to submit a FOIA request. So I asked the speaker about this, and a manager in the back of the room acknowledged that well, yes, maybe in SO cases it wasn’t that easy.

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