The opinion of the court was delivered by: SIRICA
In its original answer to the complaint, the Internal Revenue Service (IRS) asserted that the records at issue or portions thereof were protected from disclosure pursuant to exemptions (b) (3), (b) (5), and (b) (7) (A) of the Freedom of Information Act. During the course of these proceedings, the Court granted partial summary judgment to the plaintiff with respect to the (b) (7) (A) exemption claim and subsequently, the IRS waived its (b) (5) exemption claim.
As such, the IRS was left with only its (b) (3) exemption claim as a basis for not releasing the undisclosed materials. That exemption permits the government to withhold material
specifically exempted from disclosure by statute, provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld.
Relying upon this provision, the IRS asserted that the material at issue was tax return information protected from disclosure by section 6103 of the Internal Revenue Code, 26 U.S.C. § 6103 and that section 6103 was an exempting statute within the meaning of exemption (b) (3). The plaintiff did not dispute that section 6103 was an exemption (b) (3) statute and in its Memorandum and Order of June 13, 1979, the Court specifically found it to be such a statute, then proceeded accordingly in its review.
After the decision in Zale v. Internal Revenue Service, 481 F. Supp. 486 (D.D.C. 1979), however, the IRS altered its previous position to assert that section 6103 operated independently of the Freedom of Information Act as the sole standard governing disclosure of tax return information.
Under this view, the Court's review would be confined to the narrow scope provided under the Administrative Procedure Act.
Nevertheless, the Court is not persuaded that it should abandon its earlier finding that section 6103 is an exempting statute within the meaning of exemption (b) (3) and concludes that its review should proceed within the parameters of the Freedom of Information Act and the de novo standard of review which it provides.
Section 6103 of the Internal Revenue Code, the statutory provision at issue herein, was completely revised with the enactment of the Tax Reform Act of 1976. That revision set forth a comprehensive scheme for regulating the release of tax returns and information collected to determine tax liability. Chamberlain v. Kurtz, 589 F.2d 827, 833-34 (5th Cir.), cert. denied, 444 U.S. 842, 62 L. Ed. 2d 54, 100 S. Ct. 82 (1979). The revised section 6103 generally specifies that tax returns and information collected with regard to establishing the existence or amount of tax liability are to be confidential and outlines the circumstances under which information may be released to various parties including the taxpayer. See 26 U.S.C. § 6103 (1976).
The defendant suggests that this comprehensive revision rendered section 6103 irreconcilable with the provisions of the Freedom of Information Act, and, as such, Congress must have intended for section 6103 to stand alone as the sole standard governing the disclosure of tax return information.
In view of the Moody decision, this Court finds it difficult to proceed in the present case under the assumption that section 6103 is the sole standard governing the disclosure of tax return information for two reasons. First, by stating that information is exempt from disclosure under the Freedom of Information Act pursuant to section 6103, which is specifically identified as an exemption (b) (3) statute, the language of the Moody decision suggests that section 6103 is not an independent provision, but instead should be read in light of the Freedom of Information Act. Second, the Court having approached the matter under the Freedom of Information Act without serious difficulty effectively demonstrates, as a practical matter, that the two statutes can be reconciled for purposes of review.
Further support for this position is evidenced in another recent decision of this circuit in which the Freedom of Information Act was applied to section 6103, that is, Neufeld v. Internal Revenue Service, 646 F.2d 661 (D.C. Cir. 1981). There, the Court found it necessary to address the definition of "return information" as used in section 6103 for "purposes of determining the scope of Exemption 3," and came to the conclusion that material which did not identify a taxpayer was not section 6103 "return information" and "thus subject to disclosure under the FOIA." Id. at 665. (emphasis added) Once again, this specific language applying the Freedom of Information Act to the issue of the withholding of tax return information appears to run contrary to the defendant's suggestion that the Act plays no role in such a determination. Moreover, because the Court determined the scope of exemption (b) (3) by defining the provisions of section 6103 relating to return information, it does not appear that there were any significant practical problems in reconciling the two statutes. Indeed, the Court's decision demonstrates that the Freedom of Information Act provides a workable framework for withholding return information in conjunction with section 6103.
But even apart from the assumptions implicit in the language and approach of these decisions, substantive analysis of the issue leads to the conclusion that section 6103 should not be the sole standard governing disclosure of tax return information and that it can be reconciled with the Freedom of Information Act. To begin with, there is little dispute that section 6103 satisfies the requirements necessary to qualify as an exempting statute within the meaning of exemption (b) (3) of the Freedom of Information Act. As noted previously, our Court has identified section 6103 as a statute exempting material from disclosure within the meaning of exemption (b) (3) of the Freedom of Information Act. Moody v. Internal Revenue Service, 654 F.2d at 797 n.4. In doing so, it cited with approval Chamberlain v. Kurtz, 589 F.2d at 838-39, a well-reasoned Fifth Circuit decision which dealt specifically with the question of whether section 6103 established particular criteria for withholding or referred to particular types of matters withheld so as to satisfy the requirements of part B of exemption (b) (3). After a thorough analysis of section 6103, the Court came to the conclusion that it did satisfy those requirements and qualified as an exempting statute within the meaning of part B of the exemption. 589 F.2d at 840. Similarly, an earlier, well-reasoned decision in Fruehauf v. Internal Revenue Service, 566 F.2d 574 (6th Cir. 1977) reached the same conclusion with respect to part A of exemption (b) (3), concluding that section 6103 contained a mandatory requirement as to the withholding of tax return information which left no discretion to the agency on the issue of disclosure. Thus it appears that section 6103 is certainly capable of being applied to exemption (b) (3) as an exempting statute.
This being the case, the question arises why section 6103 should not be so applied. As regards any particular directives from Congress on this issue, the Court notes that neither the language nor legislative history of section 6103 contains any specific statement indicating that section 6103 was to operate independently of the Freedom of Information Act. Of course, if section 6103 and exemption (b) (3) were irreconcilable, such silence might lend support to defendant's position in light of the Court's obligation to construe statutes harmoniously, Morton v. Mancari, 417 U.S. 535, 551, 41 L. Ed. 2d 290, 94 S. Ct. 2474 (1972), and section 6103, a later more specific provision than exemption (b) (3), would have to be given effect. The Court, however, for the reasons set forth in this Memorandum, finds that section 6103 and exemption (b) (3) are not in conflict and can indeed be reconciled.
In fact, in this instance, the silence in the language and legislative history of section 6103 actually weigh against it being viewed as a provision acting independently of the Freedom of Information Act. One reason for this is to be found in the treatment accorded by Congress to a provision which accompanied section 6103 in the Tax Reform Act, more specifically, section 6110 of the Internal Revenue Code, 26 U.S.C. § 6110. This provision, immediately preceding section 6103 in the Tax Reform Act,
sets forth a comprehensive scheme governing the disclosure of written tax determinations. Congress, wishing to exclude section 6110 from the coverage of the Freedom of Information Act, made known its intention by adding a specific provision to the effect that section 6110 was to be the exclusive remedy in cases where disclosure of written determinations was sought. See 26 U.S.C. § 6110(l). One can conclude from this action that in order to prevent the application of the Freedom of Information Act, Congress believed it advisable to add a specific provision guaranteeing exclusivity for section 6110.
In sharp contrast to section 6110, Congress made no mention in section 6103 of it being an exclusive provision to which the Freedom of Information Act would not apply. This being the case there is a strong indication that Congress did not intend section 6103 to operate independently of the Freedom of Information Act. Otherwise, it would have explicitly expressed that ...