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The FOIA and the Privacy Act are similar in
nature and tend to overlap in connection with access to one's
personal records held by the Government. In 1997 The House Committee
On Government Reform and Oversight issued a report entitled "A
Citizen's Guide on Using the Freedom of Information Act and the
Privacy Act of 1974 To Request Government Records." This guide is
available on the Internet. The Guide advises persons seeking
documents and information about their own tax files to use and cite
both the FOIA and the Privacy Act at the same time. "In order to take
maximum advantage of the laws an individual seeking information about
himself or herself should ordinarily cite both laws. Requests by an
individual for information that does not relate solely to himself or
herself should be made only under the FOIA."
IRS
Documents
Somewhat confusing the situation is the existence of IRC § 6103, "Confidentiality and disclosure of returns and return information," which provides a detailed process and guidelines for a taxpayer to obtain his or her own files. This statute seems redundant and unnecessary. However, several cases have held that § 6103 "represents the exclusive statutory scheme for taxpayers to gain access to their return information." This appears to be a minority view, however. In practice, most individuals use either the FOIA or cite both the FOIA and the Privacy Act.
If all that is required is a copy or copies of the client's tax returns, which may help verify that the client actually filed his returns, the IRS provides a simple form, IRS Form 4506, Request for Copy or Transcript of Tax Form. The tax form referred to is the tax return. IRS Form 8821, Tax Information Authorization, may also be used for this purpose.
The FOIA requires each agency to adopt specific guidelines and procedures on responding to requests for files. In the case of the IRS, the most important of such guidelines are contained in the Manual, in particular IRM Chapter 3, § [1.3] 3.1 et seq. and 3.1 et seq.
The Internal Revenue Code, at § 6103 et seq., also contain provisions for the releasee of tax return information.
However, generally speaking the most important procedures and requirements for a FOIA/Privacy Act request for files are found in the Acts themselves. The key features of the FOIA and the Privacy Act are discussed below.
7.13(b) When do you need the files?
Typically, most tax discharge cases can be investigated and verified with a combination of extensive client interview, examination of documents provided by the client, and obtaining and translating the relevant tax transcripts. However, in some cases the transcripts or other information will appear inconsistent or incomplete. This often happens when attempting to verify that the client filed a tax return or a constructive tax return, critical for dischargee under the two-year tax return rule.
In those cases counsel may need to obtain and examine the actual tax records held by the IRS or other taxing entity. It may be necessary, for example, to visually verify that a document exists, or the date it was signed or filed, and whether it was signed and by whom. Depending on the particular facts of a case counsel may need to obtain -
YOU MAY NEED TO OBTAIN -
o Tax returns, amended returns, schedules or other documents that may constitute a constructive return
o Audit exam changes reports (4549)
o Notices of deficiencies
o Tax liens
o Extensions of statutes of limitations
o Extensions to file tax return
o Installment agreements
o Offers in compromise
o Correspondence between taxing entity and the taxpayer
o Other similar information
o Documents establishing the IRS's knowledge of taxpayer's last known address (the ".i.mailing list;")
o Accounting of payments received
7.13(c) Prohibited disclosures
When using any of the methods described above to obtain documents held by the IRS, the law prohibits providing information in connection with certain sensitive subjects. There are a total of nine areas exempt from disclosure, and three "exclusions." Under the FOIA the IRS cannot disclose -
EXEMPT FROM DISCLOSURE
o 1. Classified documents
o 2. Internal personnel rules and practices
o 3. Information exempt under other laws
o 4. Confidential business information
o 5. Internal Government communications
o 6. Personal privacy
o 7. Law enforcement
o 8. Financial institutions
o 9. Geological information
THREE EXCLUSIONS -
o CRIMINAL INVESTIGATION. The first exclusion may be used when a request seeks information that is exempt because disclosure could reasonably be expected to interfere with a current law enforcement investigation (exemption (7)(A)). There are three specific prerequisites for the application of this exclusion. First, the investigation in question must involve a possible violation of criminal law. Second, there must be reason to believe that the subject of the investigation is not already aware that the investigation is underway. Third, disclosure of the existence of the records--as distinguished from the contents of the records--could reasonably be expected to interfere with enforcement proceedings.
o INFORMANT'S IDENTITY. The second exclusion applies to informant records maintained by a criminal law enforcement agency under the informant's name or personal identifier. The agency is not required to confirm the existence of these records unless the informant's status has been officially confirmed. This exclusion helps agencies to protect the identity of confidential informants. Information that might identify informants has always been exempt under the FOIA.
o FBI. The third exclusion only applies to records maintained by the Federal Bureau of Investigation which pertain to foreign intelligence, counterintelligence, or international terrorism. When the existence of these types of records is classified, the FBI may treat the records as not subject to the requirements of FOIA.
7.13(d) Procedure
Ordinarily, the procedure for obtaining files under FOIA, the Privacy Act, or referencing both acts is quite simple. The request must be in writing. One simply sends a letter to the appropriate government agency stating that the request is pursuant to the Freedom of Information Act and the Privacy Act, and specifying the files or documents requested. A power of attorney or other IRS form for release of documents must accompany the letter. The letter must indicate that the requester is willing to pay associated photocopy expenses. See sample, page 704.
Identify the proper agency from which to request the documents. For the IRS, this would be a national or local Disclosure Office. See Appendix, page 629 for a directory of disclosure offices.
Prepare and send the letter requesting the documents. The letter should include -
THE REQUEST LETTER -
o Reference the FOIA and Privacy Acts;
o Identify the taxpayer whose records are sought;
o Identify which documents are sought;
o Identify the requester, including phone number, e-mail, fax etc.
o Include an offer to pay the required costs (which may contain a cap)
o Optional, a request to expedite the search and response based on a "compelling need," together with justification of the compelling need.
See IRM § [1.3] 3.2(3).
7.13(e) Which files to request?
In the case of a delinquent taxpayer the IRS typically may have records in the audit division, the collection division, and possible the criminal division. In order to assure that you have all the documents in the possession of the IRS, your request letter should request the IRS to produce all documents and information, in whatever form or media it is contained, for -
IRS FILES TO REQUEST -
o The taxpayer's audit file
o The taxpayer's appeal file
o The taxpayer's collection file
o The taxpayer's administrative file
o The taxpayer's substitute for return file
o The taxpayer's criminal file
o Tax returns and the Return Information file
o The MFTRA-X, IMF-30 Specific, IMFOL, IMFOLT, SUMRY and TXMODA transcripts stored on electronic media, to be produced in hard copy for the tax years or tax periods indicated.
7.13(f) .i.FOIA costs
The FOIA statute provides the requester may be charged for the costs of providing the requested files. Typically, there is no charge for small, non-commercial requests (which probably covers most tax file requests). Charges may include the cost of photocopying the files and the costs of searching for the documents.
"There is no charge for the first 2 hours of search time and for the first 100 pages of documents. A noncommercial requester who limits a request to a small number of easily found records will not pay any fees at all."
The Act provides that "No agency may require advance payment of any fee unless the requester has previously failed to pay fees in a timely fashion, or the agency has determined that the fee will exceed $250.
7.13(g) Response time
Upon receipt of the written request the government agency has 20 working days in which to determine whether or not to comply with the request. Once having undertaken to comply the documents must be produced promptly; however, no time limit is set, as the requests are typically processed on a first-in, first-out basis. A request to expedite may be made if justified.
7.13(h) Appeal of denial
When a request is denied the agency must inform the requester of the reasons for the denial, and of the requester's right to appeal administratively. A person whose request was granted in part and denied in part may appeal the part denied. An appeal is filed by sending a letter to the head of the agency. The envelope containing the letter should be marked in the lower left corner with the words "Freedom of Information Request Appeal." There is no limitations period within which the appeal must be filed. The appeal letter should explain the justification for demanding that the request be honored.
If the appeal is denied, the requester may proceed in court on a complaint for injunctive relief, enjoining the agency from withholding the documents and ordering the agency to provide the held documents.
The court may assess against the United States reasonable attorney fees and other litigation costs reasonably incurred in any case under this section in which the complainant has substantially prevailed.
If the matter proceeds to court the court will probably require the agency to file a "Vaughn index." A Vaughn index is an index correlating each withheld document, or a portion thereof, with a specific exemption and relevant part of an agency's justification for nondisclosure. This document is a tool used to aid the court in determining whether the agency has properly withheld the information. In preparing a Vaughn index an agency must list the title of the document or category of documents, the date of the document, the author and recipient(s), a detailed factual description of the document, and the statutory exemption the agency is claiming to support nondisclosure. The index is named after the case in which it was adopted, Vaughn v. Rosen. In order to determine the validity of the agency's claims of nondisclosure it may be appropriate for the judge to examine the documents in camera.
7.13(i) Attorney's fees
The debtor is entitled to obtain tax records under the Freedom of Information Act and to collect attorney's fees and costs should litigation be required to obtain the documents and in which in which "the complainant has substantially prevailed.". 5 U.S.C. § 552(a)(4)(E); Joan Baez v. U.S. Dept. of Justice, 7 Media Law Reports 1469 (D.Columbia 1981).