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TAXATION v. IRS

January 22, 1980

TAXATION WITH REPRESENTATION FUND, Plaintiff,
v.
INTERNAL REVENUE SERVICE, Defendant.



The opinion of the court was delivered by: RICHEY

MEMORANDUM OPINION

The complaint in this action was filed by the Taxation With Representation Fund under the Freedom of Information Act, 5 U.S.C. § 552, for access to records of the defendant Internal Revenue Service (hereinafter, "IRS"). The records the plaintiff seeks are IRS General Counsel's Memoranda (hereinafter, "GCM's"), IRS Technical Memoranda (hereinafter, "TM's"), and IRS Actions on Decisions (hereinafter, "AOD's"), issued after July 4, 1967, *fn1" and IRS indices to these records. The plaintiff has exhausted its administrative remedies, and the Court has jurisdiction of this action pursuant to 5 U.S.C. § 552(a)(4)(B).

 I. THE STATUTORY FRAMEWORK

 Cases such as this one in which a party seeks what arguably can be called systems of interpretative law involve the interplay between three subsections of the Freedom of Information Act. First, there is section 552(a)(2) *fn2" which requires each federal agency to make certain information available to the public. Furthermore, section 552(a)(2) requires the agency to maintain indices and make them available to the public. Thus, if records qualify under section 552(a)(2), not only are they subject to mandatory disclosure, the agency must create an indexing system and make that system available to the public.

 As opposed to the limited language of section 552(a)(2), section 552(a)(3) *fn3" is virtually all inclusive. This latter section requires agencies to promptly make available all reasonably described records which have been requested pursuant to the procedures set down by the agency. There is no requirement in section 552(a)(3) for the agency to create indices as there is under section 552(a)(2).

 Finally, section 552(b) sets out nine exemptions from mandatory disclosure under the Act. Therefore, if records are encompassed within sections 552(a)(2) or (3), they are exempt from disclosure if described in section 552(b)(1) through (9). See National Labor Relations Board v. Sears, Roebuck & Co., 421 U.S 132, 154 n.21, 95 S. Ct. 1504, 1518, 44 L. Ed. 2d 29 (1975).

 In this case, all the parties agree that indices are already in existence with respect to the records at issue. Thus, the plaintiff need not invoke the authority of section 552(a)(2) to force the defendant to create indices. It is clear that all of the requested records as well as the indices to these records constitute records within the meaning of section 552(a)(3). Accordingly, there is no need to examine the question whether the records at issue fall within section 552(a)(2). Instead, this case turns on whether the records are exempt from mandatory disclosure under section 552(b).

 II. GCM'S, AOD'S, AND TM'S ARE NOT EXEMPT FROM DISCLOSURE BY THE DELIBERATIVE PROCESS PRIVILEGE.

 The defendant contends that the records at issue in this case are exempt from disclosure pursuant to exemption (5) of the Freedom of Information Act which protects "inter-agency or intra-agency memorandums or letters which would not be available by law to a party other than an agency in litigation with the agency." It has long been recognized that exemption (5) "was created to protect the deliberative process of the government, by ensuring that persons in an advisory role would be able to express their opinions freely to agency decision-makers without fear of publicity." Ryan v. Department of Justice, 199 U.S.App.D.C. 199, 617 F.2d 781 at 789 (D.C.Cir., 1980). Oftentimes, exemption (5) cases turn on whether the government action at issue is final. Exemption (5) does not apply to final actions of agencies. Thus, statements of policy and final opinions which have the force of law or which explain actions an agency has already taken are not within the scope of exemption (5). Ryan v. Department of Justice, supra at 199 U.S.App.D.C. at -- -, 617 F.2d at 790.

 The most important case on this issue is National Labor Relations Board v. Sears, Roebuck & Co., supra. In the Sears case, the company sought certain memoranda known as "Advice Memoranda" and "Appeals Memoranda," and related documents, generated by the Office of the General Counsel in the course of deciding whether or not to permit the filing with the National Labor Relations Board (hereinafter, "the Board") of unfair labor practice complaints. Id. 421 U.S. at 135-36, 95 S. Ct. at 1509. The Court noted that "crucial to the decision of this case is an understanding of the function of the documents in issue in the context of the administrative process which generated them." Id. at 138, 95, S. Ct. at 1510. The memoranda in issue in the Sears case pertained to the General Counsel's decision whether a unfair labor practice complaint would issue. Id. If the General Counsel decided to issue a complaint, adjudication then occurs before the Board, and the General Counsel becomes an advocate in support of the complaint before the Board. Id. at 138-39, 95 S. Ct. at 1510-1511. If the General Counsel decides not to issue a complaint, the statutory scheme completely precludes any proceeding before the Board. Id. at 139, 95 S. Ct. at 1511. The Supreme Court held that Advice and Appeals Memoranda which explain decisions by the General Counsel not to file complaints are "final opinions" made in the adjudication of cases and fall outside the scope of exemption (5), but that Advice and Appeal Memoranda which explain decisions by the General Counsel to file complaints and commence litigation before the Board are not "final opinions" made in the adjudication of cases and fall within the scope of exemption (5). Id. at 148, 95 S. Ct. at 1515.

 The Court in Sears points out that the timing of the communications received by the decision-maker is crucial. Communications received by the decision- maker prior to the time the decision is made are protected because damage to the quality of the agency's decisions will result, and the public has little interest in communications which have not been accepted by the agency. Id. at 151-53, 95 S. Ct. at 1516-1517. On the other hand, communications made after the decision is made by the agency and which are designed to explain it have little effect on the decision-making process and high public interest. Id. at 152, 95 S. Ct. at 1517. However, the Court noted that the public is "vitally concerned with the reasons which did supply the basis for an agency policy actually adopted" id., and these reasons constitute the "working law" of the agency which is not protected by exemption (5). Id. at 162-63, 1522-1523. The Court indicated that there is embodied in the Act a strong congressional aversion to secret agency law and an affirmative congressional purpose to require disclosure of documents which have the force and effect of law. Id. at 153, 95 S. Ct. at 1517. Accordingly, pursuant to the Supreme Court's decision in the Sears case, the task before the Court is to determine whether GCM's, AOD's, and TM's contain the reasons behind policy actually adopted by the IRS.

 A. GCM'S

 In support of the defendant's motion for summary judgment with respect to GCM's, the affidavit of Jerome D. Sebastian, the Director of the Interpretative Division, Office of Chief Counsel, of the Internal Revenue Service was filed. According to this affidavit, GCM's are legal memoranda from the Office of Chief Counsel to the Internal Revenue Service prepared in response to a formal request for legal advice from the Assistant Commissioner (Technical). Mr. Sebastian states in his affidavit that GCM's are primarily prepared by attorneys in the Interpretative Division of the Office of Chief Counsel and usually addressed to the Office of the Assistant Commissioner (Technical) in connection with the review of proposed private letter rulings, proposed technical advice memoranda, and proposed revenue rulings of the IRS. According to Mr. Sebastian, the GCM's set forth the issues presented by whichever of these proposed determinations is under review, the conclusions reached and a brief factual summary. The body of the GCM's, according to Mr. Sebastian, contains a lengthy legal analysis of the substantive issues, and the recommendations and opinions of the Office of Chief Counsel. The Sebastian affidavit states that GCM's are often accompanied by a draft of the proposed determination that reflects the changes and modifications recommended in the GCM. According to this affidavit, GCM's are maintained by the Office of Chief Counsel and frequently cited in subsequent GCM's to insure consistency, avoid duplication of research, provide a reference source, and update earlier memoranda when a position on an issue is sustained, modified, or changed within the Office of Chief Counsel.

 The defendant's answers to the plaintiff's interrogatories provide material and relevant information. In response to the plaintiff's Interrogatory No. 11, the defendant points out that IRS personnel who confer or negotiate on tax liability matters with taxpayers or taxpayer representatives may refer to GCM's for guidance as to the positions to take in such negotiations. Furthermore, the defendant states that the interpretation of law contained in prior GCM's are knowingly applied, distinguished, or rejected of application, as the case may be, in subsequent GCM's to insure ...


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