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Tax Analysts Litigation

Since its founding, Tax Analysts has relied on open-records laws and selective litigation to bring transparency to tax administration nationwide.

From our first lawsuit forcing the IRS to disclose its private tax rulings for individual companies, to our recent efforts to obtain and publish state tax auditor training manuals, Tax Analysts has fought to give taxpayers the information they need to comply with the tax law and hold their tax authorities accountable. Along the way we’ve set precedents that increased all citizens’ access to government records.

The links below present key documents from Tax Analysts’ long history of litigation to bring the tax system to light.

Cases

In a 1973 decision under the Freedom of Information Act (FOIA), the U.S. District Court for the District of Columbia compelled public disclosure by the IRS of some private letter rulings and technical advice memoranda and related correspondence. The D.C. Circuit modified and remanded the decision, holding that letter rulings were subject to disclosure but technical advice memoranda were not.

In response to a Tax Analysts suit, the U.S. District Court for the District of Columbia held that Rev. Rul. 72-355 was "null, void and of no effect," because it was inconsistent with IRC section 2503(b). The IRS was permanently enjoined from treating political contributions by one donor to multiple political committees established to further a candidate's campaign as gifts to distinct persons for purposes of the annual $3,000 federal gift tax exclusion.

The U.S. District Court for the District of Columbia held that granting relief would restrain the collection of taxes from section 501(c)(4) organizations and their donors and that a suit that has as its purpose to restrain the collection of taxes from other parties is nevertheless barred by the Anti-Injunction Act.

Thomas Field, Tax Analysts' founder, acquired an oil well and together with Tax Analysts and Advocates sought a declaratory judgment that IRS rulings that allowed tax credits for payments made to foreign countries in connection with oil extraction and production, and calculated on a fixed per barrel basis, are unlawful under Code section 901(b) and 903. The court held that there was no tax consequence to the plaintiffs as a result of the revenue rulings they challenged. Moreover, the sections on which the rulings were based did not have an identifiable effect on the plaintiffs other than that on every other taxpayer and did not create an interest that included the well owner as an intended beneficiary; thus, the plaintiffs did not have standing to sue. The D.C. Circuit agreed, and the Supreme Court denied certiorari.

The U.S. District Court for the District of Columbia ruled that the requirement that the IRS turn over the specific private letter rulings requested in Tax Analysts' first letter ruling suit also applies to all letter rulings, which were requested in this suit. However, the court stayed further proceedings pending the IRS's appeal to the Supreme Court in a different letter ruling case.

General counsel memoranda (GCMs), technical memoranda (TMs) and actions on decision (AODs) all documented the IRS's reasons for agency action; therefore, the U.S. District Court for the District of Columbia held they were of vital public concern. The court also determined that releasing the documents would not harm the decision-making process of the agency. Consequently, none of the documents were protected from disclosure and the IRS was required to turn them over. The D.C. Circuit affirmed the decision, but clarified that undistributed GCMs, TMs that had not been approved, and "predecisional" documents of the three types were not covered by the opinion.

Tax Analysts, prompted by difficulties in obtaining tax decisions of various U.S. district courts, attempted to secure those decisions from the Tax Division of the Department of Justice. The U.S. District Court for the District of Columbia denied the request on the basis that the documents were publicly available, if not without difficulty, and were not being improperly withheld. The D.C. Circuit reversed the district court's decision, and the Supreme Court affirmed the appellate court decision. The district court subsequently denied Tax Analysts' suit for attorney fees; the appeals court affirmed the decision.

Tax Analysts recovered attorney fees arising from the IRS losing , destroying, or misfiling the plaintiff's Form 990 for 1981, then assessing a late filing penalty and interest, and only stipulating to its error after suit was filed. The court found that the IRS's pre-litigation conduct was relevant to the reasonableness inquiry and that the IRS's proceedings were unreasonably protracted.

The U.S. District Court for the District of Columbia held that a legal research database created and maintained by the Department of Justice did not constitute an "agency record" subject to disclosure under the Freedom of Information Act.

  • D.D.C.: Tax Analysts v. Department of Justice; 94-0043, 1/16/96
  • D.C. Cir.: Tax Analysts v. Department of Justice; 96-5109, 107 F.3d 923, 1/21/97
  • SCOTUS: Tax Analysts v. Department of Justice; 97-112, 522 U.S. 931, 10/20/97. Cert den'd.

The U.S. District Court for the District of Columbia ordered the IRS to release to Tax Analysts field service advice memoranda (FSAs) prepared by the IRS Office of Chief Counsel. The court agreed with Tax Analysts that the documents were "statements of policy and interpretations which have been adopted" by the IRS and were therefore subject to disclosure under section 552(a)(2) of the Freedom of Information Act. Furthermore, the court said that for FOIA purposes, "FSAs have the same characteristics and serve the same purpose as the GCMs and [technical memoranda] that the IRS was [previously] ordered to disclose.”

The U.S. District Court for the District of Columbia dismissed an action filed by Tax Analysts against the IRS and the National Archives and Records Administration, which sought to compel the defendants to comply with the Federal Records Act and to protect IRS records. The court ruled that the action was not ripe for judicial review because the IRS was currently attempting to comply with recommendations made by the records administration regarding record maintenance.

The U.S. District Court for the District of Columbia held that Tax Analysts was not entitled to the disclosure of closing agreements relating to exempt organizations because the agreements were not "issued" by the IRS.

Tax Analysts sought disclosure under the Freedom of Information Act of a closing agreement the IRS entered with the Christian Broadcasting Network (CBN). In that agreement, the IRS terminated CBN's tax liability while granting CBN's application for restoration of its exempt status. The U.S. District Court for the District of Columbia concluded that the closing agreement was "return information" excepted from disclosure under 5 U.S.C. section 552(b)(3), FOIA exemption 3. The fact that tax-exempt status may have been granted simultaneously with the extinguishment of tax liability was irrelevant, the court added, as was the fact that section 6104 requires an applicant for exempt status to make its application papers available to the public. According to the court, section 6104 "does not contemplate a private right of action to enforce the obligation." The appeals court dismissed CBN, vacated the remainder of the holding and remanded. On remand, the case was dismissed with prejudice.

The U.S. District Court of the District of Columbia and the D.C. Circuit sorted through numerous categories of IRS chief counsel internal documents: legal memoranda (LMs), pending issue reports (PIRs), field service advice monthly reports (FSA reports), post-1985 legal guideline memoranda (LGMs), technical assistance (TA), and tax litigation bulletins (TLBs). The courts issued numerous opinions that wove together redaction issues, the effect of P.L. 105-206 on the court’s jurisdiction to order release of some of these documents, the scope of deliberative process privilege and other privileges, a motion to reconsider, and several more opinions that cut and shuffled previous holdings. See document summaries for details.

Tax Analysts did not receive all the IRS records it had requested pertaining to the Pacific Association of Tax Administrators (PATA) and G-4 because some of the records were exempt from disclosure under the section 6105(c)(1)(E) treaty secrecy exemption.

The U.S. District Court for the District of Columbia held that the IRS did not have to disclose determinations revoking or denying tax-exempt status because section 6104, not section 6110, covered information about exempt organizations. The D.C. Circuit reversed that decision, holding that the section 6104(a)(1)(A) disclosure exemption applies only to tax-exempt organizations. Tax Analysts was requesting determinations regarding revocations or denials of tax-exempt status; therefore, the organizations at issue were not tax-exempt organizations and section 6104(a)(1)(A) did not apply.

The U.S District Court for the District of Columbia determined that chief counsel advice memoranda were protected by the attorney work product doctrine, there were no segregable portions, and therefore they were not subject to disclosure under the Freedom of Information Act or section 6110.

The IRS claimed that if an email took less than two hours to research and write, it did not need to be disclosed as chief counsel advice. Neither the district nor the appeals courts saw anything in section 6110 to support such a distinction; instead, section 6110 expressly required all chief counsel advice to be disclosed.

The IRS was ordered to produce any remaining nonexempt documents responsive to Tax Analysts' Freedom of Information Act request related to training materials used by IRS staff in making determinations regarding organizations' tax-exempt status.

A Kentucky circuit court held that the state's taxpayer confidentiality statutes did not provide a basis for the Department of Revenue to withhold its final rulings and ordered the department to release redacted versions of those rulings under the state's Open Records Act. The Commonwealth of Kentucky Court of Appeals and the Kentucky Supreme Court affirmed.