Tax Analysts Urges Rejection of IRS's Argument Against Disclosure of Two-Hour Advice

IRS seeks review of that portion of the February 27, 2006, Order and Opinion of the United States District Court for the District of Columbia (Honorable Ellen Segal Huvelle) that grants in part Tax Analysts' motion for summary judgment and denies in part IRS' motion for summary judgment, and orders IRS to release legal advice, from IRS' Office of Chief Counsel ("OCC") to IRS and OCC field offices and personnel, that IRS is withholding on the ground that the advice took less than two hours to prepare. The Court's Order is at p. 202 of the Joint Appendix ("JA") and its Opinion is at JA pp. 203-18. The Opinion is reported at 416 F.Supp.2d 119.

(3) Related Cases:

This case has not previously been before this Court, nor are there any related cases of which counsel are aware.

                       TABLE OF CONTENTS

Did the district court correctly hold that OCC's policy of withholding written legal advice from publication when such legal advice takes less than two hours to prepare is a violation of § 6110(i)?

Guidance is issued in a variety of forms and with various names and with varying degrees of formality. Regardless of the title of a given document, however, or the degree to which the IRS views a document as an authoritative statement of the agency's views, the availability of such guidance is indispensable to the administration by IRS personnel of and compliance by the public with our nation's tax laws.

This case is the latest in a series of disputes between the IRS and Tax Analysts, a non-profit publisher of information on tax matters, about the availability of IRS guidance to the public. For nearly forty years IRS has sought to conceal various forms of guidance -- its agency working law -- from the taxpayers it serves. For more than three decades Tax Analysts has sought, using federal disclosure statutes, to force that secret law out into the light of day.

• In 1974 this Court ordered disclosure under the Freedom of Information Act ("FOIA") of IRS' private letter rulings ("PLRs"). Tax Analysts and Advocates v. IRS, 505 F.2d 350 (D.C. Cir. 1974). IRS lobbied Congress to overrule this Court's decision. Tax Analysts lobbied back, and the result was § 6110 of the Internal Revenue Code ("IRC"), which since 1976 has required disclosure of PLRs and Technical Advice Memoranda ("TAMs").¹

• In 1981 this Court ruled that IRS must disclose other agency working law documents: General Counsel Memoranda ("GCMs") (memos on tax law issues that were filed, indexed and used for research by IRS' OCC), Technical Memoranda ("TMs") (sort of a "legislative history" of Treasury regulations) and Actions on Decision ("AODs") (an explanation of the legal reasoning behind IRS' decisions to "nonacquiesce" in court decisions unfavorable to IRS). Taxation with Representation Fund v. IRS, 646 F.2d 666 (D.C. Cir. 1981). Soon thereafter IRS ceased to create GCMs and TMs and drastically curtailed creation of AODs.

• In the early 1990's, the tax profession began to see a sharp drop in the number of TAMs that IRS would agree to issue. It turned out that, in order to avoid the inconvenience of taxpayer participation in the TAM process, IRS had devised a new tool, Field Service Advice memoranda ("FSAs"). Field attorneys, revenue agents or appeals officers who work on the examination of a return would ask OCC for legal advice, and OCC attorneys would respond with written memos, FSAs, which were not to be shown to taxpayers, their lawyers or accountants.

The 1998 Amendment to Section 6110.

As it had twenty years earlier (p. 3, supra), IRS attempted to persuade Congress to overrule this Court's FSA decision. Under mediation by Treasury Department officials, agreement was reached between IRS and Tax Analysts on an amendment to IRC § 6110, now § 6110(i), that created Chief Counsel Advice ("CCA"). (JA 130, ¶ 13). That is the statute at issue here.

The 1998 amendments to § 6110, § 3509 of Pub. L. 105-206, 105th Cong., 2nd Sess. (July 22, 1998), added CCA to the definition of "written determination" in § 6110(b)(1). All written determinations are "open to public inspection." § 6110(a).

New § 6110(i) defined "Chief Counsel advice" in very broad terms. CCA is "written advice or instruction, under whatever name or designation, prepared by any national office component of OCC which (i) is issued to field or service center employees of the Service or regional or district employees of the Office of Chief Counsel" and (2) which conveys:

• "any legal interpretation of a revenue provision";

• "any Internal Revenue Service or Office of Chief Counsel position or policy concerning a revenue provision"; or

• "any legal interpretation of State law, foreign law, or other Federal law relating to the assessment or collection of any liability under a revenue provision." 26 U.S.C. § 6110(i)(1)(A)(ii) (emphasis added).

The Two-Hour Rule.

Despite the breadth of the statutory language, with its emphasis on disclosing "any" type of IRS interpretation "under whatever name or designation," IRS, by a "Chief Counsel Notice," CC Notice 2004-12 (2004), carved out an exception to § 6110(i) for "written legal advice . . . that can be rendered in less than two hours by a National Office component." The Notice declared that such advice "need not be released to the public." (JA 83, 102; JA 206-07).

In the Notice IRS asserted that "the law recognizes that certain types of advice are informal in nature and need not be released to the public." (JA 83; emphasis added). But CC Notice 2004- 12 did not specify, and in its filings below IRS did not specify, which "law" establishes that CCA is "informal" and need not be released if it takes less than two hours to prepare.

This two-hour rule has its origin not in any effort to implement the 1998 amendments to § 6110(i), but rather in an attempt to carry forward an IRS administrative practice, a so-called "business rule" (JA 24), about how IRS attorneys log their time.⁴

• On June 3, 1996, upon creation of "CASE-TR," a system for keeping track of work in OCC, the Chief Counsel instructed OCC "attorneys and managers" to "keep track of the number of informal advice requests, under two hours, received throughout the week as well as the time spent on those requests." (JA 25, 39; emphasis added).

• On September 21,1998, two months after Congress enacted § 6110(i), OCC issued a series of "Questions and Answers" about CCA. (JA 57-65). OCC conceded in Q&A No. 1 that "advice that conveys legal interpretations or positions of the Service concerning existing or former revenue provisions" are CCA. (JA 58). Q&A No. 2 then declared:

• Question 2: What about e-mail? Does an e-mail response constitute written instructions provided to the field?

  Answer: First, e-mail is a writing. However, following the CASE business rules, if the e-mail you are providing to the field consumed less than two hours of research and preparation, such that you need not open a case file, then, the e-mail is to be treated like informal telephone advice (which is memorialized in writing, also). The legislative history to section 3509 clarifies that informal advice is not considered to be CCA.⁵ Conversely, if the time expended in researching and preparing an e-mail response consumes two or more hours, or your local office practice is to open a case file because of the significance of the matter, then the e-mail is not informal advice and is CCA. The "two-hour" rule may appear to be artificial for determining whether the e-mail writing is CCA; however, this rule has historically been the touchstone for determining, for numerous business reasons, whether advice is considered "informal" or "formal." Because the "informal/formal" dichotomy has been incorporated into the concept of CCA,⁶ and since the Office is committed to retaining its business rules and document characterizations without regard to disclosure results, the Office has retained the "two-hour" rule (subject to other business rules defining informal advice) as indicative of CCA. The most important thing to remember is that the business rule as to what is informal advice has not, and will not, change regardless of the manner of delivery of the advice.

• On August 8, 2000, OCC issued a "Chief Counsel Desk Guide," with comprehensive instructions to OCC attorneys about the organization of OCC, their work and their responsibilities. (JA 147-49). The Desk Guide referred to less-than-two-hour "informal advice."

• Phone sheets are to be completed for all telephonic, walk-in, or email advice (consuming less than two hours' time); submitted to first line supervisor for review and initialing; submitted to Front Office for two year retention in chronological order in binders; copies of which are furnished to ACC (P&A) in weekly reading files. Advice to field copied for CRU distribution.

• On July 18, 2001, OCC issued a 32 page Business Rules Handbook. (JA 143-46). "[A] case should be opened" either "because the matter is significant," or, "regardless of the level of significance, more than two staff hours (including review time) is estimated or actually spent on the matter." (JA 144). These instructions are repeated verbatim on the next two pages of the Business Rules Handbook. (JA 145-46). Ten months later OCC declared that "short emails . . . are not CCA" -- even though in writing. CC Notice 2002-026 (May 16, 2002), (Q&A No. 4), reproduced in the district court record as Butler Decl. Ex. 9.

This Case and the District Court's Ruling.

Tax Analysts requested by letter, citing § 6110(i), that IRS release such "less-than-two-hour" CCA. (JA9-10). IRS never responded yes or no. (JA 10-11). Tax Analysts filed suit in the United States District Court for the District of Columbia. (JA 1). Both parties filed motions for summary judgment. (JA 2).

IRS proffered a single argument in the district court. IRS argued that when Congress spoke in § 6110(i) of Chief Counsel Advice being "issued" to other IRS employees, the word "issued" was "ambiguous"; that to resolve this alleged ambiguity, IRS had "interpreted" this word "to exclude written advice prepared in less than two hours," and that this interpretation was entitled to "deference" under Chevron. USA, Inc. v. NRDC, 467 U.S. 837 (1984), or at least to "respect" under Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944). (JA 210-11).

The district court gave short shrift to this argument. (JA 203-18). Relying on the text of the statute and its broad thrust in favor of disclosing CCA to the public, the district court held that IRS' interpretation was not "persuasive." (JA 212-16). The court rejected IRS' attempt to invoke the Conference Report for § 6110 to support its interpretation of "issued." (JA 212-16). The court held that legislative history cannot vary the clear language of a statute, and that the language of § 6110 is "indisputably broad, encompassing all nationally-prepared 'written advice or instruction,' under whatever name or designation. . . ." (JA 213; emphasis added).

The district court also rejected IRS' proposed category of informal advice, not subject to publication as CCA. Nothing in the statute "hinges disclosure on the 'formality' of the written advice." The congressional requirement of publication "includes documents that convey 'any legal interpretation of a revenue provision'. . . ." (JA213). This appeal followed.

On appeal, IRS' attorneys have abandoned that argument. Instead, they ask this Court to reverse the district court on the basis of a legal argument not presented below. They argue that legal advice that takes less than two hours to prepare is not issued by a "component" of OCC -- although, if that same advice, researched and written by an OCC attorney of less quickness, takes two hours or more, it is issued by a "component" of OCC, and hence must be published.

This argument is contradicted by the record and was not raised below. First, IRS' testimony and the OCC internal regulations that established OCC's "less-than-two-hour" rule show that this rule was not based on an interpretation of § 6110(i), but is derived from an OCC "business rule" that required different time reporting for attorney work projects based on whether the attorney spent more or less than two hours on the project. Second, an argument not made to the district court is deemed waived, and this Court will not entertain it. Flynn v. Commissioner of Internal Revenue, 269 F.3d 1064, 1068-69 (D.C. Cir. 2001). The wisdom of such an approach is underscored here, where IRS alternatively argues that (a) the "plain language" of § 6110(i) warrants reversal (language not plain enough to argue to the district court) (IRS Br. 18-27), and (b) the phrase "prepared by a component of the Office of Chief Counsel" is ambiguous. (IRS Br. 28-34).

Moreover, the concept that IRS is advancing in this case, that there exists a category of "informal advice" that is not subject to § 6110(i) publication, is without basis. Its flimsy genesis is a statement in the § 6110(i) legislative history, that advice given by telephone is "informal" and not subject to publication under the statute, even if later summarized in writing. However, IRS arbitrarily designates written advice, whether mailed, faxed or e-mailed, as "informal" if the attorney took less than two hours to prepare it. IRS' appellate attorneys, looking for any port as a harbor for OCC's business rule, have concocted the argument that advice that can be rendered quickly is "informal" and therefore is not issued by a "component;" however, if it takes more than two hours to prepare, then it is "formal" and is issued by a "component." The construct is logically absurd and is contradicted by OCC's own instructions to its attorneys in its Chief Counsel Directives Manual ("CCDM"), referring to "legal advice that can be rendered in less than two hours by a National Office [of OCC] component." (JA 83, 102 (emphasis added)).

IRS' new argument proposes to distinguish between individual attorneys, who send out less-than-two-hour e-mailed advice, and "components," who send out e-mailed two-hour-or-over advice. But, as noted above, IRS' CCDM refers to components that send out less-than-two-hour advice (JA 102); pp. 7, supra, pp. 22, 30, infra, and other instructions establish that in sending legal advice out to the field, no matter how short or long it takes to prepare, each individual attorney acts as an agent for his or her "component" principal. (JA 100-01). Dictionary definitions of "component" likewise make clear that an individual can be or act on behalf of a component of an organization. OCC's individual attorneys thus are components of OCC.

The short answer is that nothing in § 6110(i) contains a temporal component of the sort IRS has conjured up here. To illustrate the point, suppose that two attorneys both receive a similar assignment to respond to a field request for advice. Under IRS' new reading of the statute, an attorney who is a fast researcher, a fast typist and someone who can complete the task in under two hours is not a "component" of OCC, and his or her work product would not be treated as CCA. By contrast, an attorney who takes two hours or more to research and type the advice is a "component" of OCC, and his or her work product is treated as CCA. Whatever else Congress may have meant, it surely did not intend § 6110(i) to be construed in such a bizarre and inconsistent manner.

A. IRS' Argument to the District Court.

In the district court IRS' only argument was that "less-than- two-hour" advice "was not "issued' to the field within the meaning of § 6110(i)." (JA 209) (District Court Opinion). To support that claim, IRS contended that its interpretation of "issued," as applying to a legal advice memorandum only after 120 minutes of work on the advice, was entitled to "deference" under Chevron or at least to "respect" under Skidmore. (JA 210-16).

The district court roundly rejected IRS' argument. (JA 210-16). It noted that even IRS, in its papers filed in support of its motion for summary judgment, conceded that the two-hour standard was "artificial" (JA 215), and "is itself an irrational means of isolating those materials representing the 'considered view' of the Office of Chief Counsel." (Id.). The district court also rejected IRS' attempt to create a category of "informal advice" that did not fall under the publication requirements of IRC § 6110(i). (JA 215-16; see II. A., infra).

IRS here has abandoned its argument that its interpretation of the term "issued" in § 6110 is entitled to "deference" under Chevron, or even to "respect" under Skidmore. Rather, it argues that for advice to be "issued," it must be "issued" at "the component level." (IRS Br. 28-29). IRS now defends the two-hour standard as a "sound[] . . . managerial decision" that "cannot fairly be characterized as an unreasonable practice, even if it is somewhat 'artificial'" (IRS Br. 33) -- as IRS itself had conceded. (JA 215). IRS concedes that its new argument was "not precisely raised below," but defends it as "an elaboration of our arguments below." (IRS Br. 29). There is no basis for this. Nothing in the record below even hints at the new "component" argument.

There is no hint of any "component" argument in IRS' Answer (JA 13-17) or its Memoranda of Law (Dkt. Nos. 9, 10 (#8), 13, 22). In its Memorandum of Points & Authorities in Support of Internal Revenue Service's Motion for Summary Judgment ("IRS P&A") at 13, IRS includes the "component" language in quoting the text of § 6110(i). However, it is the word "issued" that IRS features in bold face and then goes on to make its now-abandoned Chevron argument that "issued" is ambiguous and warrants adoption of a the less-than-two- hour rule. Nowhere else did IRS even hint at the "component" language as justifying its 120-minute rule.

What the IRS did do below was to extend arbitrarily the label of "informal," which the Conference Report for § 6110(i) gave to advice given over the telephone, in order to cover e-mails -- "written advice," § 6110(i)(1)(A) -- but only if they take less than two hours to prepare. (IRS P&A at 18-20) (quoted in part and out of context, IRS Br. 20). But even there, IRS did not argue that less-than-two-hour e-mails are not issued by an OCC "component." Rather, it argued there that its construction of the word "issued" in § 6110(i), as excluding written advice that IRS defines as "informal" based on an arbitrary two-hour cutoff, is "reasonable" and "permissible" under Chevron and its progeny. (IRS P&A at 20).

B. IRS' Exhibits Recording OCC's Internal Procedures Also Demonstrate That IRS' "Component" Argument Was Invented for the First Time for This Appeal.

The two-hour rule was not based on an interpretation or application of the statutory term "component." The present argument was devised by the creative minds of IRS' appellate counsel.

In moving for summary judgment in the district court, IRS submitted a lengthy declaration of Associate Chief Counsel Deborah A. Butler ("Butler Decl.") and 16 exhibits. The declaration and Exhibits 3 through 14 (some in part) are reproduced in the Joint Appendix. The bulk of this material is instruction to OCC attorneys about how to deal with CCA, in particular explanation about the instructions at issue here; that despite § 6110(i), written advice to the field that takes less than two hours to prepare is not to be published. None of it suggests that the two-hour rule is based on a notion that advice that takes less than two hours to prepare is not issued by an OCC "component," as IRS argues here.

The Butler declaration explains that the two-hour rule was an OCC case management "business rule." It was adopted two years before enactment of § 6110(i) "to keep track of the number of informal [sic] advice requests (responded to in less than two hours)," data to be entered in OCC's then new computerized work management system. (JA 25).

After enactment of § 6110(i), OCC imported its case management rule into the publication of CCA. (JA 25-26). In 1998, after § 6110(i) became effective, OCC issued instructions to its attorneys about how to handle e-mail advice to the field. "Following the CASE . . . business rules," if the e-mail advice took two hours or less to research and write -- less than 120 minutes on the clock -- "such that you need not open a case file," "it is to be treated like informal telephone advice" and "is not considered to be CCA." But "conversely," if the e-mail took more than two hours to research and write -- 120 minutes or more on the clock -- or if the matter covered was "significanf[t]," the "e-mail is not informal advice and is CCA." (JA 26 (quoted in the Butler declaration), 59 (reproduction of the instructions)).

The instruction continued, "the 'two-hour rule' may appear to be artificial" but is based on the "numerous business reasons" for calling advice formal or informal -- business rules that OCC "is committed to retaining . . . without regard to disclosure results." In short, IRS declared, the public disclosure requirements of the statute may be ignored if they would interfere with OCC's case management convenience. (JA 26, 59).

As the Butler declaration went on, "[w]hile the two-hour business rule was instituted for management information purposes, it provided an easy-to-administer rule for determining when legal advice is CCA." (JA 26-27). (Never mind that nothing in the statute permitted this "easy-to-administer" rule.) A better example of the bureaucratic tail wagging the statutory dog would be hard to imagine.

Other internal OCC instructions similarly belie any notion that the 119-versus-120-minute-rule was based on an effort to construe the actual words in the statute. The CCDM, a compendium of instructions to OCC attorneys that is published, includes several provisions directly contradicting IRS' argument here that an individual OCC attorney's e-mail to the field that takes less than two hours to prepare is not CCA, while one reviewed and signed by, say, an Assistant Chief Counsel or a Branch Chief (such a supervisor being, presumably, a "component") is CCA.⁷

For example:

"Each component of [OCC], individually and collectively, must ensure that the legal advice it renders accurately reflects the position of the Office." (JA 92; emphasis added). Thus each individual attorney, when he or she sends e-mailed advice to the field, whether it takes 119 or 120 minutes to research, draft, finalize and send, represents the organizations where he or she is employed -- the Office of Chief Counsel, Office of Associate Chief Counsel, Office of Assistant Chief Counsel, or Branch. As such, that attorney must ensure that the advice given, no matter how few or how many minutes it takes to prepare, is correct advice.

"Chief Counsel attorneys [not 'components'] provide legal advice in a number of contexts to the Service. . . ." (JA 92; emphasis added).

"An attorney providing informal assistance" by e-mail "should have it reviewed and approved by a manager." (JA 96; emphasis added).

"Copies of the advice given" are maintained to permit "retrieval," probably for research purposes. (Id.).

"Requests for legal advice" are transmitted to Associate Chief Counsel offices, are "submitted by e-mail" and routed down to attorneys through "the Technical Services Support Branch." "The attorney" to whom the request is assigned "should communicate with the requesting office." (JA 100-01); see pp. 29-32, infra.

Most telling: "legal advice that can be rendered in less than two hours by a National Office component even if it is reduced to writing," "need not be released to the public." (JA 102; emphasis added). Thus, contrary to IRS' argument here, OCC's touchstone for deciding what is CCA is not whether advice is issued by a "component," but whether it takes 119, or 120, minutes to prepare.

And finally:

To sum up: OCC's business rule, that written legal advice to the field, whether e-mailed, snail-mailed or faxed, that is prepared in less than 120 minutes, is "informal advice," would supersede a statutory plan that provides that all written legal advice from OCC to the field is CCA to be published -- as the district court held. (JA 213-14). This "informal advice" distinction has no basis in the statute, under which it makes no difference if the e-mail is signed by an individual attorney or by a branch chief or supervisor, is sent by an individual attorney or a "component," is reviewed before transmittal or afterwards. IRS' argument to this Court is unsupported and unsupportable. As the district court held, nothing in § 6110(i) "suggests a temporal restriction" on the definition of CCA. (JA 213).

C. Under Established Law in This Circuit, This Court Will Not Consider an Argument Not Presented Below.

Under this Court's longstanding jurisprudence, this Court should decline to consider the argument thus made in IRS' Brief at 16 and 17-27. Flynn v. Commissioner, 269 F.3d at 1068-69.

In Flynn the U.S. Tax Court relied on a Treasury regulation to deny relief to the petitioners. On appeal, the petitioner-appellants raised a constitutional argument not presented below. IRS "argue[d] in response that because appellants failed to raise the issue at the Tax Court, this court should not now consider it."

This Court agreed:

Moreover, there are strong countervailing policies against permitting IRS to advance a new argument here. This is a disclosure case. In the parallel area of FOIA litigation, this Court has generally barred agencies from asserting new exemptions for the first time on appeal. This Court requires that agencies raise any and all exemptions to be asserted no later than proceedings in district court, absent a substantial change in the factual context of a case, an interim development in an applicable legal doctrine, or pure mistake. August v. FBI, 328 F.3d 697, 700 (D.C. Cir. 2003) . The reason for this approach is sound, for otherwise, FOIA litigation could drag on interminably.

As we have shown (LA. and B. supra). IRS' position in its written arguments below, as well as the record of OCC instructions to its staff, contradict any argument that OCC's less-than-two-hour rule was based on application of the reference to "component[s]" of OCC in § 6110(i). Instead, it was an application of a pre- existing "business rule," for "case management" convenience, to defeat a statutory requirement of publication of legal advice to the field.

Even the Chevron-based argument made by IRS' district court counsel was an afterthought. Today's "component" argument is a second-tier afterthought.

A. "Informal Advice."

The concept of "informal advice" that IRS is promoting here (see I.B., supra) is simply inapplicable to written advice. The Conference Report characterized only "telephonic advice" as "informal." (Conf. Rep. at 300). The text of the statute refers explicitly to "written advice," and the legislative history confirms that "written documents issued by the National Office of Chief Counsel to its field components and field agents of IRS should be subject to public release." Conf. Rep. at 299 (emphasis added). OCC expressly instructs its attorneys that e-mail "is a writing." (JA 26, 59; quoted at p. 8, supra). There are no exceptions covering written advice in either the statute or the report.

Nonetheless IRS would magically transform a reference to oral advice in the legislative history into an exception covering a range of written advice -- presumably to avoid the inconvenient requirements attendant on CCA publication.

As reflected in OCC documents reproduced in an Appendix to this brief, IRS continues to expand its concept of "informal" advice, even in "written" form, that is not being published as CCA, despite Congress' intention in enacting § 6110(i). A Service study has reported that "[f]ield counsel is increasing its reliance on informal advice from the national office." OCC Task Force Report (reproduced in the Appendix to this brief at App. 4-6), on which Chief Counsel Notice 2006-13 (May 5, 2006) is based. That Notice in turn states that OCC is looking for improvements" to the "process" "by which it provides informal advice to field counsel and to Service personnel." Chief Counsel Notice 2006-13, "Implementation," ¶ (5) (App. 2). Unless this Court corrects OCC, its zeal to maintain agency working law as unpublished, "informal" advice may swallow up all CCA.

The anomaly is that supposedly "informal" advice is looking more "formal" in nature. On January 17, 2007, OCC issued Chief Counsel Notice CC-2007-003. It incorporates into the CCDM, as new section 33.1.2.2.3.3, elaborate instructions for formatting legal advice to the field. Id. (App. 8-10). The format includes a "Statement of Facts," "Law and Analysis" and "Case Development, Hazards and Other Considerations." Id. (App. 9). The format is found in "CC Macros," which the attorney preparing the advice "should . . . use[] to ensure [that] the format of the memoranda is correct." (Id.). The new instruction provides that current Blue Book citation forms be used. (Id.). This mandatory standard format applies to all legal advice, investing so-called "informal" advice with a high degree of formality, whether the advice is e-mailed or snail-mailed, and whether prepared in 119 minutes or 120 minutes or more. See CC Notice 2007-003, ¶ (4) (App. 8), referring to CCDM 33.1.3.1.1 (reproduced at JA 104-05, paragraph (2)(c) of which states the "two-hour" rule).

The vice of these instructions is that IRS is taking a clear statutory text requiring the disclosure of "written" advice and adding limitations based on temporal considerations, as well as the supposed degree of formality, that Congress never wrote into law.

B. Individual OCC Attorneys Are "Components" of OCC.

The request then is assigned to an "Associate attorney" who contacts Field Counsel "to inform them of their assignment." Id. ¶ (5) (JA 100). "The attorney assigned primary responsibility for preparing written legal advice" is to communicate with the requester to carry out "a meaningful dialogue." Id. (7) (JA 101). And the requester "must follow the advice" unless the requester asks for reconsideration. Id.

Thus, each OCC attorney to whom a request for legal advice is assigned is an agent of the Associate Chief Counsel office in which he or she works. He or she is an agent of that "component." Under ancient principles of the law of principal and agent, that attorney acts as a "component," even under the Appellate Section's formula. Qui facit per alium, facit per se, whether he or she spends less than 120 minutes, or 120 minutes or more on the advice he or she transmits.

Release of Legal Advice to the Public

C. FSAs, One Kind of CCA, Are Prepared By Individual Attorneys.

In a last ditch effort to confuse the issue, IRS argues that the FSA case supports its position. (IRS Br. 30). IRS argues that the Field Service Advice memoranda ("FSAs"), which this Court held were IRS agency working law that must be disclosed, 117 F.3d at 617, "are reviewed prior to issuance." (IRS Br. 30).

That is not so. This Court in the FSA case described FSAs as follows: "Attorneys in the National Office of [OCC] prepare FSAs in response to requests from field personnel of either the [OCC] or the IRS, such as field attorneys, revenue agents, and appeals officers." 117 F.3d at 609 (emphasis added). There is no reference in the opinion to "review[] prior to issuance." (IRS Br. 30).⁸ Moreover, this Court found "no need . . . to decide whether FSAs are 'statements of policy and interpretations which had been adopted by the agency' under [5 U.S.C. § ] 552(a)(2)(B)." 117 F.3d at 610.

Nevertheless, like the CCA that Congress created based on the FSA decision⁹ (see Conf. Rep. at 298-99), FSAs are "agency law" and "considered statements of the agency's legal position." 117 F.3d at 617. No ingenuity by IRS' attorneys can make 119 minute OCC legal advice to the field, such as FSAs written by individual attorneys, anything but "considered statements of [OCC's] legal position." They are CCA that must be published.

This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because it has been prepared in a proportionally spaced typeface using Word Perfect 9.0 in Times New Roman 14 font.

DATED: February 16, 2007

² The most recent round in the continuing bout over IRS secret law was decided by this Court in Tax Analysts v. IRS, 350 F.3d 100 (D.C. Cir. 2003). There Treasury had issued a regulation providing that IRS letter rulings that either denied an organization's application for tax exempt status under IRC § 501(c)(3), or revoked tax exempt status previously granted, were not letter rulings that § 6110 required be made public. Tax Analysts challenged the regulation. This Court held that the regulation violated the plain language of §§ 6110 and 6104, and ordered the rulings disclosed.

³ The Conference Report accompanies the bill that became the Internal Revenue Service Restructuring and Reform Act, Pub. L. 105-206, 105th Cong., 2nd Sess. (1998), which in § 3509 enacted § 6110(i).

The 1998 amendment to section 6110(i) had the effect of mandating disclosure of certain other types of guidance, access to which was being litigated at the time of enactment in Tax Analysts v. IRS, 97 F.Supp.2d 13, 14 (D.D.C. 2000). See § 3509, supra, subsection (d)(2), Transition Rules. On appeal, this Court ordered release of some of the remainder, notably OCC legal advice memos to IRS program managers that stated the view of OCC on a legal issue, while approving withholding of others. Tax Analysts v. IRS, 294 F.3d 71, 80, 81 (D.C. Cir. 2002). This Court held that whatever the programmatic responsibilities of program managers, if the advice memos "represent OCC's final legal position" on the tax law, they must be disclosed, for "[u]nder the FOIA 'working law' must be disclosed." 294 F.3d at 81 (emphasis in original).

⁴ OCC included in its instructions that advice that was rendered by transmitting a pre-existing legal memorandum also was not to be released. (JA 84, 103). IRS claims no business rule as a basis for this instruction. In this brief we include this instruction within the category of "less-than-two-hour" advice.

⁵ This statement is incorrect. The Conference Report states that "CCA does not include written recordations of informal telephonic advice," i.e., Congress considered only advice given orally by telephone to be "informal." Conf. Rep. at 300.

⁶ Incorrect again. See n. 5, supra.

⁷ Although, according to appellate counsel, an Assistant Chief Counsel who is swift enough to get his or her advice out in 119 minutes is no longer a "component."

⁸ Indeed, in the district court IRS had argued to the contrary, that FSAs "are only occasionally subjected to high level review." Tax Analysts v. IRS, C.A. No. 94-0923 (D.D.C.), Mem. Op. (March 15, 1996) at 3.

⁹ And see the CCA transition rules, Pub. L. 105-206, 105th Cong. (1998), § 3509(d)(2), expressly designating pre- enactment FSAs as CCA under § 6110(i).