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December 6, 2013
IRS Cites Exceptional Circumstances as Reason for Delayed Response to FOIA Request
by Lindsey McPherson

Full Text Published by Tax Analysts®

Arguing that the unexpected volume of information requests it has received regarding the IRS determinations process for tax-exempt organizations constitutes exceptional circumstances under the Freedom of Information Act, the IRS has filed a motion in U.S. District Court to delay proceedings in litigation with Tax Analysts, which sued the IRS to compel release of exempt organizations training materials previously requested under FOIA.

The motion for stay and an attached brief of support were filed November 27 in the District Court for the District of Columbia by an attorney from the Justice Department Tax Division, who is representing the IRS in the case.

The IRS said in the motion that it is seeking either a stay of proceedings until January 15, or an extension until that date for responding to Tax Analysts' FOIA request, which the IRS received May 28. Tax Analysts brought suit against the Service in August, seeking to compel expedited processing of the request.

Tax Analysts' request is one of numerous FOIA, congressional, and investigatory document requests related to the IRS's dealings with tax-exempt organizations that the agency has been processing, the IRS said in the brief of support that detailed the argument for delaying the proceedings.

The flood of requests came after the Treasury Inspector General for Tax Administration released a report in May finding that the IRS had used inappropriate criteria to flag conservative groups' exemption applications for extra review, held up processing of those applications, and asked unnecessary, burdensome questions of the applicants.

The training materials Tax Analysts is seeking were also requested by the Senate Finance Committee.

After Tax Analysts filed suit, the IRS released some documents in response to the company's FOIA request -- roughly 1,000 pages in September, followed by another 1,800 pages in November.

The basis of the IRS's argument for delay in fulfilling the remainder of the request is a FOIA provision that says "if the government can show exceptional circumstances exist and that the agency is exercising due diligence in responding to the request, the court may retain jurisdiction and allow the agency additional time to complete its review of the records."

In this case, the unexpected volume of requests, particularly from Congress and investigatory agencies, constitutes exceptional circumstances, the IRS argued, citing precedent that a large volume of congressional or non-FOIA requests could be included among exceptional circumstances for delayed response.

The IRS said it has received 73 formal congressional requests and more than 100 FOIA requests for information on its dealings with tax-exempt organizations since the release of the May TIGTA report. The IRS added that it "has had to deal with hearings, interviews, and other aspects of investigations by four congressional committees."

Arguing that it has acted with due diligence, the IRS said it has reassigned dozens of attorneys and other staff to respond to the information requests. The IRS said it currently has 95 employees dedicated to processing the requests and had devoted 145 employees to the task at its peak. It said that it has gathered documents from 147 custodians and released more than 800,000 pages in response to various requests.

The IRS argued that it has met the burden of due diligence by providing "readily available" documents in response to Tax Analysts' request shortly after producing the same documents to Congress. The agency expects to produce the remaining documents relevant to Tax Analysts' request by late December.

"We understand the IRS's obligation to respond to congressional inquiries, but the IRS also has an obligation to respond to the laws that Congress enacts, including the requirement that the IRS expedite the processing of requests from the news media on timely issues," said Cornish F. Hitchcock, Tax Analysts' attorney in the matter.

"Given that IRS says it has 100 lawyers working on disclosure matters, we don't see why it should take this long to fulfill a request that IRS agrees should be expedited," he added.

Pushback Against Tax Analysts' Injunction Request

The Service also pushed back against Tax Analysts' previously filed motion for preliminary injunction to require immediate production of the documents, saying Tax Analysts has not demonstrated that it is entitled to immediate production of the documents. The agency argued that Tax Analysts failed to prove it would suffer irreparable injury absent the injunction and that the injunction would not injure other parties.

Tax Analysts "has not shown 'irreparable harm' because it has not shown that producing its requested documents as they are produced to Congress forces it to publish only 'stale' information to the public," the IRS said. "In contrast, other interested parties would be harmed if an injunction were granted; the Service may have to divert even more resources to exempt organization disclosure matters, and Congress, investigators, and others who seek information, including the general public, may face additional delays due to the resulting disruption."

The IRS also argued that Tax Analysts is seeking mostly dated material, as the company was provided the most recent material responsive to its request.

Three of the four training manuals provided to Tax Analysts included revision dates indicating the material was updated in June or July 2012, after an internal IRS investigation had alerted senior officials to the problems in the determinations office. It could not be determined whether the 2012 editions included any updates in response to that investigation. The other manual had last been revised in September 2009.

The IRS admitted that most of the information provided to Tax Analysts to date is from 2012, although the company requested information dating back to 2009. The Service pointed out that fact in arguing against Tax Analysts' claim that the information could become stale if not immediately released to the public, saying "concerns about staleness are undermined" by the IRS releasing the more recent information.

The IRS also pointed out that it has released documents to Congress that lawmakers have subsequently made public.

Tax Analysts "sought only training materials going back to 2009, which should be in someone's hard drive or in a loose-leaf notebook or otherwise readily accessible," Hitchcock said. "Training materials represent only a small fraction of what Congress requested, and there should be no need for redaction of 'return information.' In fact the Taxpayer Advocate indicated a few months ago that this type of information should have been posted on the IRS website a long time ago."

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