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TAX ANALYSTS & ADVOCATES v. IRS

June 6, 1973

Tax Analysts And Advocates, Thomas F. Field
v.
Internal Revenue Service et al.


Robinson, Jr., District Judge.


The opinion of the court was delivered by: ROBINSON, JR.

This is an action under the Freedom of Information Act, 5 U. S. C. § 552, presently before the Court on cross-motions for Summary Judgment. Plaintiffs seek to compel public disclosure by the Internal Revenue Service (IRS) of certain letter rulings, technical advice memoranda, and communications and indices relating thereto. Specifically, Plaintiffs seek to inspect and copy unpublished letter rulings, issued to producers of minerals other than oil and gas between July 26, 1968, and October 1, 1971, in which determinations were made of the processes to be treated as "mining" under Section 613(c) of the Internal Revenue Code, 26 U. S. C. § 613(c), when computing gross income from property for percentage depletion purposes. Plaintiffs also seek those portions of technical advice memoranda on this subject issued to taxpayers during the same period and so much of the IRS letter ruling index system as is needed to ascertain whether additional unpublished rulings in point exist. *fn1" Lastly, Plaintiffs seek disclosure of all communications to and from the IRS with regard to said rulings and memoranda from outside the Executive Branch of the United States Government. There is no dispute that Plaintiffs' request for the records complied with applicable regulations *fn2" and that Plaintiffs have exhausted their administrative remedies. The parties have engaged in extensive discovery and there is now no genuine dispute as to any material issue of fact.

 Under the Freedom of Information Act the burden is on the agency to sustain its claim that disclosure is not required. *fn3" Defendants' legal contentions are, first, that the Freedom of Information Act does not apply to letter rulings or technical advice memoranda and, secondly, that even if the Act applies, specific exemptions preclude disclosure of the materials here sought.

 A letter ruling is a written statement issued to a taxpayer by the Office of Assistant Commissioner (Technical) in which interpretations of the tax laws are made and applied to a specific set of facts. *fn4" The function of a letter ruling, usually sought by the taxpayer in advance of contemplated transaction, is to advise the taxpayer regarding the tax treatment that he can expect from IRS in the circumstances specified in the ruling. The letter rulings are not publicly disclosed by the IRS and it is clearly specified that no taxpayer is entitled to rely upon an unpublished private ruling not issued specifically to him. *fn5" The taxpayer who does receive such a ruling is advised to file it along with his tax return. *fn6"

 A technical advice memoranda (T. A. memo) is comparable to a letter ruling, except that it is not issued directly to a taxpayer, but to a District Director of the IRS in response to the director's request for instructions as to the treatment of a specific set of facts relating to a named taxpayer. *fn7" The director's question may relate to audit examination of a taxpayer's return or consideration of a taxpayer's claim for refund or credit. *fn8" The substantive portion of the memorandum if given to the taxpayer. *fn9"

 All letter rulings and technical advice memoranda are divided into two categories by the IRS for filing purposes. Many rulings and memos are considered of no significant "reference" value. These are placed in a historical file, alphabetically by taxpayer's name, and maintained for a period of four years. No separate index is prepared for materials in the historical file. *fn10" The other letter rulings and t. a. memos are deemed to have a continuing "reference" value for internal IRS purposes, and these are placed in the IRS' permanent reference file, along with Court decisions, published Revenue Rulings, *fn11" and other materials deemed to have a continuing reference value. The reference file is organized by code section and an "index-digest" card file is maintained, giving citations to the main "reference" file and usually summarizing the contents of the reference file. *fn12"

 Defendants have indicated that there are two unpublished letter rulings, eight technical advice memoranda and six index-digest cards within the category of information sought by Plaintiffs. *fn13"

 The communications in question, relating to letter rulings and t. a. memos, consist of communications to and from the taxpayer or his representative. *fn14" Letter rulings and t. a. memos are not to be confused with Revenue Rulings which are formal, published interpretations of the tax laws by the IRS, *fn15" nor with Income Tax Regulations. *fn16"

 I.

 A. Section (a) (2) (B) of the Freedom of Information Act, 5 U. S. C. § 552 (a) (2) (B), *fn17" expressly requires that all Federal agencies shall make available to the public "interpretations" adopted by the agency. Plaintiffs contend that letter rulings and technical advice memoranda (hereafter collectively referred to as letter rulings) are "interpretations . . . adopted by the agency" and therefore expressly required to be disclosed. As to such interpretations § 552(a) (2) further requires that a public and current index be maintained by the agency listing all interpretations adopted after July 4, 1967. *fn18" Defendants agree that a letter ruling in fact "interprets and applies the tax laws to a specific set of facts." *fn19" Despite this agreement the IRS contends that a letter ruling is not an interpretation adopted by the agency within the meaning of the statute. The IRS contends that "interpretation . . . adopted by the agency" means "precedent" and that since prior letter rulings are not cited or relied upon in the preparation of new agency determinations they are not "precedents."

 The Court must first look to the language of the statute itself to resolve the controversy, for if the plain meaning of the statutory language is clear resort to secondary sources such as legislative history is inappropriate. *fn20" In the present case the Court finds the statute clear and controlling. Policy and interpretations adopted by the agency are to be disclosed. There is no basis in the statutory language to support Defendants' contention that this means only interpretations which will be cited and relied upon by the agency in the future. The statutory language is not so limited. All interpretations are to be disclosed. The Court finds no ambiguity in the words "adopted by the agency." The ordinary meaning of those words reaches any interpretation issued by the agency or its delegates acting within the scope of their authority. The Supreme Court has said specifically of the IRS' private letter rulings that "such rulings do reveal the interpretation put upon the statute by the agency charged with the responsibility of administering the revenue laws." *fn21"

 The fact that an interpretation has been once adopted by the agency does not necessarily mean that it thereby becomes binding "precedent." As an interpretation, it is entitled only to such future weight or authority as its rationale will bear, both within and without the agency. *fn22" The agency's view might change quickly, in which case it would be free to revoke or disown the interpretation. *fn23" It matters not that the interpretation is never again cited or relied upon by the agency or anyone else, for this cannot obliterate the fact that the interpretation was once adopted by the agency and thereby came within the express terms of the Freedom of Information Act.

 This approach is supported by the structure of the statute. § 552(a) (1) (D) requires publication in the Federal Register of all "statements of general policy or interpretations of general applicability formulated and adopted by the agency," while § 552(a) (2) (B) requires that the agency make available for public inspection and copying "those statements of policy and interpretations which have been adopted by the agency and are not published in the Federal Register." Read together these provisions can only mean that interpretations of general applicability are to be published in the Federal Register while all other interpretations adopted by an agency, i. e. those not of general applicability, are to be made available to the public, albeit they need not be published. Thus, even those interpretations of very unique applicability must be made available under the Act. *fn24"

 Defendants rely for their interpretation of the statute equating "interpretation" with "precedent" upon language in the House Report on the Freedom of Information Act:

 
An agency may not be required to make available for public inspection and copying any advisory interpretation on a specific set of facts which is requested by and addressed to a particular person, provided that such interpretation is not cited or ...

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