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TAX ANALYSTS v. I.R.S.

United States District Court, District of Columbia


May 21, 2001

TAX ANALYSTS, PLAINTIFF,
V.
INTERNAL REVENUE SERVICE, DEFENDANT.

The opinion of the court was delivered by: Kollar-kotelly, District Judge.

  MEMORANDUM OPINION

(Reconsideration of Earlier Opinion and Renewed Cross-Motions for Summary Judgment)

This case was brought pursuant to the Freedom of Information Act, 5 U.S.C. § 552, as amended, by Plaintiff Tax Analysts ("Plaintiff") seeking disclosure of various documents produced by the Internal Revenue Service's Office of Chief Counsel. Pending before the Court are Renewed Cross-Motions for Summary Judgment filed by Plaintiff and Defendant Internal Revenue Service ("Defendant" or "IRS"). In addition, Plaintiff has filed a Motion for Reconsideration of this Court's Order and Opinion of March 31, 2000. For the reasons stated below, the Court denies Plaintiffs Motion for Reconsideration and grants in part and denies in part Plaintiffs and Defendant's Renewed Cross-Motions for Summary Judgment.

I. BACKGROUND

When Plaintiff first filed this Freedom of Information Act ("FOIA") suit, it sought full disclosure of six categories of documents produced by the IRS's Office of Chief Counsel: Legal Memoranda ("LMs"), Litigation Guideline Memoranda ("LGMs"), Tax Litigation Bulletins ("TLBs"), Technical Assistances ("TAs"), Field Service Advice Monthly Reports ("FSA Reports"), and Pending Issue Reports ("PIRs"). This case has since been narrowed by the parties via stipulations and/or concessions as to certain issues. Congress further narrowed the case by enacting the Internal Revenue Service Reform and Restructuring Act of 1998 ("IRSRRA"), Pub.L. 105-206, 112 Stat. 685, 772 (codified as I.R.C. § 6110 (West Supp. 1999)), which deprives the Court of jurisdiction over Plaintiffs claims to the extent that they pertain to TLBs, TAs "to the field," and post-1985 LGMs. As a result of these developments, when cross-motions for summary judgment were first filed before the Court, the summary judgment record was quite complex.

Nevertheless, on March 31, 2000, this Court found that some of Plaintiffs claims were amenable to summary disposition and granted summary judgment in part ("March Order"). The Court granted IRS's motion for summary judgment and denied Plaintiffs motion for summary judgment as to those categories of documents that were unaffected by Congress enactment of IRSRRA: LMs, PIRs and FSA Reports. Both parties' motions were denied as moot with respect to TLBs, post-1985 LGMs, and TAs to the field, all three of which had been dismissed from the case in the context of the IRS's IRSRRA motion to dismiss. This left two remaining categories of documents: pre-1986 LGMs and TAs other than TAs to the field. As for the pre-1986 LGMs, because the motions for summary judgment were filed at a time when neither party could have anticipated that the Court would be forced to narrow its ruling along these lines, the Court denied without prejudice this portion of the motions for summary judgment with the expectation that the parties would renew their motions in light of the changed landscape of this litigation. As to TAs other than TAs to the field, the portion of the motions pertaining to TAs was granted in part, denied in part, and remanded to the IRS for an enhanced Vaughn index that would enable the Court to fully evaluate the claimed exemptions.

Subsequent to the Court's ruling, Defendant has conceded that as to the pre-1986 LGM's, the case is moot because these documents have already been released to Plaintiff. See Def. Praecipe Withdrawing Portion of Defs Renew. Summ. J. Brief. Therefore, the only remaining category of documents pending before the Court at this time is TAs other than TAs to the field. Accordingly, complying with the Court's request in the March Order, the IRS has submitted supplemental Vaughn a indexes and both parties have now further briefed the Court on the remaining issue of TAs other than TAs to the field in their respective Renewed Cross-Motions for Summary Judgment. In addition, however, Plaintiff has also filed a Motion for Reconsideration of the Summary Judgment Order of March 31, 2000, in regard to the Court's ruling that IRS is not bound by the so-called "harm" rule.

II. DISCUSSION

A. Reconsideration of March Order for Summary Judgment

Plaintiff asks this Court to reconsider its ruling in its March Order that IRS's foreseeable "harm" rule, articulated in the Internal Revenue Manual ("IRM") Part 1230 § 293(2), is not binding on IRS. Before addressing the merits of Plaintiffs motion, the Court will first consider whether it is timely. Plaintiff filed its Motion for Reconsideration almost seven months after this Court's Order on March 31, 2000. The question of whether the motion is timely is determined by whether it is governed by Federal Rule of Civil Procedure Rule 54(b) ("Rule 54(b)") or Federal Rule of Civil Procedure Rule 59(e) ("Rule 59(e)").

Defendant argues that Plaintiffs motion is untimely because it is subject to the ten — day limitation of Rule 59(e). See Defendant's Opposition to Plaintiffs Motion for Reconsideration ("Def. Opp. to Recons.") at 2-3. Under Rule 59(e), a party seeking reconsideration of a final or appealable judgment has ten days from the judgment in which to file and serve the opposing party with the motion to reconsider. See Fed.R.Civ.Pro. 59(e).*fn1 Plaintiff argues that its motion is timely because it falls within Rule 54(b). See Plaintiff Reply to Defendant's Opposition to Plaintiffs Motion for Reconsideration ("Pl. Reply for Recons.") at 1. Under Rule 54(b), a court may reconsider any order not certified for appeal when the order in question did not resolve all the claims of all parties in the action. See Fed.R.Civ.P. 54(b).*fn2 However, this Court cannot agree with Plaintiff that its Motion for Reconsideration is governed by Rule 54(b).

Motions to reconsider are governed by Rule 54(b) when such motions are filed after an interlocutory order and before the entry of a "final judgment." See Pivot Point International, Inc. v. Charlene Products, Inc., 816 F. Supp. 1286, 1287 (N.D.Ill. 1993) (citing Gridley v. Cleveland Pneumatic Co., 127 F.R.D. 102, 103 (M.D.Pa. 1989)). Motions to reconsider made after a final judgment or after a trial are governed by Rules 59(e) and 60(b).*fn3 See Pivot Point International, Inc., 816 F. Supp. at 1287. Therefore, the timeliness of Plaintiffs Motion for Reconsideration turns on whether this Court's March Order granting partial summary judgment was a final judgment. See id. If the March Order was final, the motion is governed by Rule 59(e) and is thus untimely. See id. at 1288. In contrast, if the March Order was not a final judgment, then the motion is governed by Rule 54(b) and although filed seven months after the Order, it may be timely.*fn4 See id.

Judgment is defined for the purposes of the Federal Rules of Civil Procedure in Rule 54(a): "`Judgment' as used in these rules includes a decree and any order from which an appeal lies." Fed. R.Civ.P. 54(a). Accordingly, at issue is whether this Court's March Order was appealable. Defendant argues that a FOIA suit constitutes a request for injunctive relief and thus an order granting partial summary judgment for the Government and denying Plaintiffs request for injunctive relief may be appealable under 28 U.S.C. § 1292 (a)(1). See Def. Opp. to Recons. at 2 (citing Safe Flight Instrument Corp. v. McDonnell-Douglas Corp., 482 F.2d 1086, 1093 (9th Cir. 1973) (denial of injunctive relief constitutes an order subject to an interlocutory appeal)). Section 1292 carves out a limited category of interlocutory orders that can be subject to appellate review. In particular, the provision allows appellate review of orders by a district judge "granting, continuing, modifying, refusing or dissolving injunctions. . . ." 28 U.S.C. § 1292 (a)(1). However, not every order of a district court denying injunctive relief is reviewable through an interlocutory appeal. See Center for National Security Studies v. Central Intelligence Agency, 711 F.2d 409, 411 (D.C.Cir. 1983). If the district judge's order has the practical effect of denying injunctive relief, an appeal is available under Section 1292(a)(1) when the order involves a decision directly addressing the merits of the case. See id. at 412. If the injunctive order fails to address the merits of the case, appeal will lie only if appellant can show some serious, perhaps irreparable, harm resulting from delay caused by denial of review. See id.

The initial question is whether the March Order granting partial summary judgment for IRS was a denial of injunctive relief. In Center for National Security Studies, the D.C. circuit court held that a court's function in a FOIA case, determining whether to order disclosure or to permit an agency to withhold requested documents, is clearly injunctive in nature. 711 F.2d at 412. Therefore, the March Order, granting summary judgment to IRS as to all categories of requested documents except for TAs other than TAs to the field, plainly had the practical effect of denying Plaintiff an injunction requiring the disclosure of the requested documents. See id. Furthermore, in granting summary judgment for IRS, this Court ruled on the merits as to the various requested documents. The Court conducted the weighing process of all evidence as required under Rule 56 of the Federal Rules of Civil Procedure and determined that no material issue of fact was in dispute. Clearly, in so doing, the Court ruled on the merits as to all documents except for TAs other than TAs to the field. See Center for National Security Studies, 711 F.2d at 413. It appears, therefore, that the Court's March Order is appealable under Section 1292(a)(1) since the Order was a denial of injunctive relief directly addressing the merits of the case.

However, the determination of whether an interlocutory appeal is permissible here, and ultimately, whether the Court's March Order was final, is further complicated because the March Order left pending one issue, namely whether Defendant must disclose TAs other than TAs to the field.*fn5 There is disagreement as to which interlocutory orders granting judgment to a party on a FOIA issue are immediately appealable.*fn6 However, the standard articulated by the D.C. circuit court is controlling for this Court. The D.C. circuit court has held that interlocutory appeals are allowed where the injunctive order affected "predominantly all" of the merits of the case. Center for National Security Studies, 711 F.2d at 413. (citing Laffey v. Northwest Airlines, Inc., 642 F.2d 578 (D.C.Cir. 1980)); I.A.M. Nat. Pension Fund Benefit Plan A v. Cooper Industries, Inc., 789 F.2d 21, 24, (D.C.Cir. 1986). In Center for National Security Studies, the district court had denied injunctive relief as to only one count without addressing the merits of the remaining eleven FOIA claims, and therefore, the appellate court reasoned that the district court's order resolved only a portion of the overall case, ultimately ruling that the order was not appealable. 711 F.2d at 412. In contrast, this Court's March Order denied injunctive relief as to all categories of documents and left pending only one sub-category — TAs other than TAs to the field. The Court's March Order affected predominantly all of the merits of the case, and as such was subject to immediate appeal, and therefore, was final. Accordingly, Plaintiffs Motion for Reconsideration should have been filed within the ten-day period required under Rule 59(e). Plaintiffs Motion for Reconsideration filed seven months after the March Order is untimely and therefore, Plaintiffs Motion must be denied.

In the alternative, the Court voluntarily revisits the question of whether the IRM is binding on IRS and again finds that it is not. Plaintiffs Motion for Reconsideration argues again — for the third time — that IRS bears the additional burden of demonstrating that it has complied with the so-called "harm" rule in the IRM.*fn7 See Plaintiffs Motion for Reconsideration of the Summary Judgment Order of March 31, 2000 ("Pl. Mot. for Recons.") at 1-2. This Court's March Order rejected Plaintiffs same argument and found that the relevant language of the IRM did not sufficiently demonstrate that IRS intended to be bound by the "rule." See Memorandum Opinion for Summary Judgment of March 31, 2000 ("Mem. Op. for Summ. J.") at 3 n. 8. Plaintiff asks the Court to reconsider its previous ruling arguing that because the August 31, 2000, revision of the IRM ("Revised IRM") now contains three references to the "harm" rule, instead of just one as in the old IRM, the Revised IRM evinces IRS's intention to be bound by the rule. Pl. Reply for Recons. at 4. The relevant provision of the Revised IRM provides,

"[t]he Commissioner of Internal Revenue issued a FOIA policy directive that the agency will assert FOIA exemptions (other than those required by law) only when it is determined that disclosure would significantly impede or nullify IRS actions in carrying out a responsibility or function. . . ."

Revised IRM 1.3.13.1(6) (emphasis added). The referenced policy directive states that IRS

"will grant a request under [FOIA]. unless: (a) the record is exempt from required disclosure under the FOIA; and (b) public knowledge of the information contained in the record would significantly impede or nullify IRS actions in carrying out a responsibility or function . . ."

Policy Statement P-1-192. This is the same language the Court previously held in its March Order to be insufficient to bind IRS.*fn8

As a general rule, an agency pronouncement of an internal policy, like the IRM here, is transformed into a "binding regulation" only if so intended by the agency. See Doe v. Hampton, 566 F.2d 265, 281-82 (D.C.Cir. 1977); Chiron Corp. and PerSeptive Biosystems, Inc. v. Nationol Trans. Safety Bd., 198 F.3d 935, 943-44 (D.C.Cir. 1999) (stating that the agency's intent to be bound is the determinative factor). An agency's intent, in turn, is "ascertained by an examination of the statement's language, the context, and any available extrinsic evidence." Padula v. Webster, 822 F.2d 97, 100 (D.C.Cir. 1987) (citing Doe, 566 F.2d at 281). The Court previously determined in its March Order that the IRM's language and the context did not demonstrate IRS's intent to bind itself, and neither the Revised IRM's language nor the context has changed sufficiently for the Court to come to a different conclusion.*fn9 The language of the Revised IRM language simply informs that a FOIA policy directive has been issued. See Revised IRM 1.3.13.1(6). The language of the Policy Statement itself is only a directory "will" rather than a mandatory "shall" or "must." Cf. Doe, 566 F.2d at 281. Again, the Court finds that the relevant language of the Revised IRM speaks not of mandatory binding "regulation," but merely of precatory internal procedures.

Plaintiff quotes two other provisions from the Revised IRM mentioning the "harm" rule and argues that the quoted language is mandatory. See Pl. Mot. for Recon. at 11-12. However, these provisions also seem to indicate that the IRM's "harm" rule is not binding on IRS. The first quoted provision states that the "[d]iscretionary exemption should not be asserted unless: [(a)] there is a substantial legal basis for withholding; and [(b)] a foreseeable harm can result from the disclosure." Revised IRM 1.3.13.7.1(5) (emphasis added). "Should" is directory, not mandatory, language. See Doe, 566 F.2d at 281. Although the second quoted provision uses the mandatory word "must," it simply refers back to the directory language of the discretionary disclosure policy of the Revised IRM 1.3.13.7.1(5). See Revised IRM 1.3.13.7.2.5(b)(5), ¶ (6) (stating that "records must be examined in light of the discretionary disclosure policy") (emphasis added). Furthermore, in light of the other provisions, which state that "the Counsel attorney is recommended to ascertain the foreseeable harm," the Court cannot agree with Plaintiff that the Revised IRM evinces IRS's intention to bind itself to the "harm" rule. See Revised IRM 1.3.13.7.2.5(b)(5) ¶ (7) and ¶ (8) (emphasis added). Accordingly, Plaintiffs Motion for Reconsideration is denied.

B. Renewed Cross-Motions for Summary Judgment

As a general rule, an agency must respond to a FOIA request for information concerning its records and make those records available to the requester, unless the records fit into one of several exceptions. See 5 U.S.C. § 552 (a)(3) and (b). "Summary judgment is available to the defendant in a FOIA case when the agency proves that it has fully discharged its obligations under the FOIA, after the underlying facts and the inferences to be drawn from them are construed in the light most favorable to the FOIA requester." Moore v. Aspin, 916 F. Supp. 32, 33 (D.D.C. 1996) (citing Weisberg v. Department of Justice, 705 F.2d 1344, 1350 (D.C.Cir. 1983)). The agency bears the burden of demonstrating the validity of any exemption that it asserts. See 5 U.S.C. § 552 (a)(4)(B); Beck v. Department of Justice, 997 F.2d 1489, 1491 (D.C.Cir. 1993) ("[c]onsistent with the purpose of the Act, the burden is on the agency to justify withholding requested documents").

As discussed above, on March 31, 2000, this Court granted IRS's motion for summary judgment as to most documents. However, the Court also ordered the parties to further brief the Court in regard to the one remaining category of documents — TAs other than TAs to the field. Accordingly, the parties filed renewed cross-motions, oppositions and replies on that remaining question. The Court finds that the pending issue regarding TAs other than TAs to the field is now amenable to summary disposition and grants in part and denies in part the two parties' renewed motions for summary judgment.

TAs are prepared by four technical divisions within the Office of Assistant Chief Counsel with the Office of Associate Chief Counsel (Domestic): the Passthroughs & Special Industries division, the Income Tax & Accounting division, the Corporate division, and the Financial Institutions & Products division. See Def. Stmt. of Material Facts ("Def.SMF") ¶ 81. These technical divisions prepare TAs in response to requests from many different offices for many different purposes. The IRS has attempted to group the TAs by requester. Id. ¶ 84. One such group, TAs to the "field-that is TAs to the district or regional offices of the IRS or the Office of Chief Counsel or Service Centers — has already been dismissed from the case. See Memorandum Opinion to Dismiss of March 31, 2000 ("Mem. Op. to Dismiss"). Four other groups of TAs remain: (1) TAs to program managers in the national office, (2) TAs to the component offices of the national Office of Chief Counsel ("intra-divisional TAs"), (3) TAs to specific taxpayers, and (4) TAs to federal and state government agencies. Id. ¶ 84, 89. Within each of these groups, IRS further "sub-groups" the TAs with reference to their purpose. For example, TAs to program managers are divided among eight different purpose groups, and intranational office TAs are divided among four.

To further complicate matters, the IRS raises a host of different exemptions to justify withholding some or all of the TAs that were responsive to Plaintiffs FOIA request. These exemptions can be placed into three general categories. First, IRS again asserts FOIA Exemption 3 in conjunction with Internal Revenue Code § 6105 over one TA document (TR-45-1362-93) claiming treaty secrecy.*fn10 Second, IRS also continues to assert FOIA Exemption 7(E) for withholding TAs prepared for law enforcement purposes. Finally, IRS still withholds portions of certain TAs pursuant to the attorney work product privilege, the attorney client privilege, and the deliberative process privilege under FOIA Exemption 5.

The Court resolves the disputed disclosure of these documents as follows: With respect to the TA covered by the treaty exemption (TR-45-1362-93), the Court grants Defendant's renewed motion for summary judgment and denies Plaintiffs. With respect to the TAs prepared for law enforcement purposes, the Court grants in part and denies in part Plaintiffs and Defendant's renewed motions. With respect to TAs covered by the attorney work product privilege. the Court grants Defendant's renewed motion and denies Plaintiffs. With respect to the TAs covered by the deliberative process privilege, the Court grants in part and denies in part Plaintiffs and Defendant's renewed motions. Finally, with respect to TAs covered by the attorney-client privilege, the Court denies Defendant's renewed motion. The Court discusses each of these determinations in turn.

1. TA Withheld Pursuant to FOIA Exemption 3 in Conjunction With Section 6105

FOIA Exemption 3 allows an agency to withhold information prohibited from disclosure by another statute if the statute "establishes particular criteria for withholding or refers to particular types of matters to be withheld." See 5 U.S.C. § 552 (b)(3)(B). Previously, IRS asserted FOIA Exemption 3 for information in one TA (TR-45-1362-93) in conjunction with a certain tax treaty between the United States and the government of Australia or Canada, arguing that treaties meet the Exemption 3 statute requirement.*fn11 See Defendant's Motion for Summary Judgment ("Def.Mot.") at 27-28; Defendant's Renewed Motion for Summary Judgment ("Def.Renew.Mot.") at 11-13. The Court held in its earlier opinion that the parties must further brief the Court on this particular issue. See Mem. Op. for Summ. J. at 14. Since the date of that opinion, however, there has been a new development in the law. On December 21, 2000, Congress enacted a new Section 6105 to the Internal Revenue Code.*fn12 See 26 U.S.C. § 6105. Both parties agree that the new Section 6105 qualifies as a FOIA Exemption 3(B) statute and is applicable to this case.*fn13 See Def.'s Notice of Change in Applicable Law ("Def.Notice") at 3; Pl. Resp. to Notice at 1.

Section 6105 provides that, as a general rule, "tax convention information shall not be disclosed." 26 U.S.C. § 6105 (a), reported in 146 Cong. Rec. H12399 (daily ed., Dec. 15, 2000). Tax convention information includes:

"(A) [any] agreement entered into with the competent authority of one or more foreign governments pursuant to a tax convention;

(B) an application for relief under a tax convention;

(C) any background information related to such agreement or application; (D) documents implementing such agreement; and

(E) any other information exchanged pursuant to a tax convention which is treated as confidential or secret under the tax convention."

26 U.S.C. § 6105 (c)(1)(E).*fn14 The information contained in the withheld TA here fits under the last element of the definition, as it was received "pursuant to a tax convention," and the information is being withheld in accordance with tax treaty secrecy clauses.*fn15 See Def. Reply to Pl. Resp. to Notice, Ex. 1 ("2d Sissman Decl.") at ¶ 2-3.*fn16 Thus, the withheld TA meets the definition of "tax convention information" and falls within the general confidentiality rule of Section 6105(a).

Plaintiff also argues that IRS has not established that it has complied with the requirements of Section 6105(b)(3). See Pl. Resp. to Notice at 7-16. Section 6105(b)(3) provides that the general confidentiality rule of Section 6105(a) does not apply to "any tax convention information not relating to a particular taxpayer if the Secretary [of the Treasury] determines, after consulting with [the treaty partner], that such disclosure would not impair tax administration." 26 U.S.C. § 6105 (b)(3) (emphasis added). Here, however, the document at issue concerns a particular taxpayer, and thus, Plaintiffs argument is inapplicable. The withheld TA was written to assist in the IRS's response to a tax treaty partner's request for legal advice — specifically, whether the proceeds from particular transactions undertaken by an identified taxpayer were treated as taxable income under a certain section of the Internal Revenue Code. See 2d Sissman Decl. at ¶ 3. Since the withheld document is taxpayer-specific, IRS does not need to consult with the tax treaty partner nor show that disclosure would not impair tax administration. See 26 U.S.C. § 6105 (b)(3); see also Conf. Rep. No. 106-1033. reported in 146 Cong. Rec. H12414 (daily ed., De. 15, 2000) ("taxpayer-specific information could not be publicly disclosed, even if it would not impair tax administration"). Because the withheld document here contains taxpayer-specific information, the TA at issue containing tax convention information is protected under the general confidentiality rule of Section 6105(a), and accordingly, exempt under FOIA Exemption 3.

Plaintiff further argues that even if some portion of the TA is exempt, IRS must apply the general FOIA segregation requirement to the TA in question, and release any non-taxpayer-specific information. See Pl. Resp. to Notice at 10-11. In particular, Plaintiff points to a D.C. Circuit decision which held that discussions of tax law principles, legal analysis or legal conclusions in certain Field Service Advice Memoranda ("FSA") were not protected by Internal Revenue Code Section 6103. See Tax Analysts v. IRS, 117 F.3d 607, 611 (D.C.Cir. 1997) (holding that legal analysis or legal conclusions are not "return information" protected under Section 6103); 26 U.S.C. § 6103.*fn17 Plaintiff contends that similar to Section 6103, Section 6105 requires the segregation and disclosure of legal analysis of a tax treaty or of U.S. or foreign tax law. See Pl. Resp. to Notice at 10-11. However, the Court agrees with IRS that at least in regard to this particular "tax convention information" document, the legislative history reflects congressional intent to exempt the entire document. See Def. Reply to Pl. Resp. to Notice at 4.*fn18

The legislative history suggests that Section 6105 is separate and distinct from Section 6103. See Conf. Rep. 106-1033, reported in 146 Cong. Rec. H12412-14 (daily ed., Dec. 15, 2000). In enacting Section 6105, Congress was responding in particular to the Tax Analysts, a D.C. Circuit opinion issued in 1997. See id. at H12413. In that case, the circuit court held that while FSAs are subject to disclosure under Section 6103, assertions of treaty secrecy privilege must be further addressed by the district court. See Tax Analysts, 117 F.3d at 620. While this issue was still pending in the district court, Congress passed the new provision. Section 6105, which directly prohibits disclosure of tax convention information. See Conf. Rep. 106-1033, reported in 146 Cong. Rec. H12413 (daily ed., Dec. 15, 2000). In other words, Congress expressed its clear intent that regardless of their exemption status under Section 6103, FSAs are fully exempt under Section 6105 if they qualify as tax convention information. Accordingly, the reasoning of the circuit court in Tax Analysts, which interpreted only Section 6103, is not controlling here.

However, Tax Analysts does provide guidance on how to interpret the new Section 6105. The circuit court first looked to the language of Section 6103. See Tax Analysts, 117 F.3d at 613-15. The circuit court noted that each specific item listed as "return information" in Section 6103(b)(2)(A) is factual in nature, and therefore, reasoned that legal analysis and conclusions probably were not meant to be "return information." See id. at 613-14. In contrast, the legislative history of Section 6105, in conjunction with the language of the provision itself, reveals that Congress considered an "explanation of law" to fall within exempted tax convention information. See Conf. Rep. 106-1033, reported in 146 Cong. Rec. 1112413 (daily ed., Dec. 15, 2000). As discussed above, there are five different categories of "tax convention information." See 26 U.S.C. § 6105 (1)(A)-(E). As to competent authority agreements, the first category of tax convention information, Congress states that "generally, [such agreements] do not contain an explanation of the law or application of law to facts." Conf. Rep. No. 106-1033, reported in 146 Cong. Rec. H12413 (daily ed., Dec. 15, 2000) (emphasis added). Congress does not articulate a similar "understanding" in regard to any of the other four categories of tax convention information, including the fifth category, which is at issue in this case.*fn19 This suggests that Congress, by not expressly excluding "legal explanations" from the other categories of tax convention information as it did for the first category, "understood" that the fifth category of tax convention information could "contain an explanation of the law' or application of law to facts" and still be exempt. Conf. Rep. No. 106-1033, reported in 146 Cong. Rec. H12413 (daily ed., Dec. 15, 2000)

The purpose of Section 6105 also indicates that the TA in question, including the legal opinion it may contain, is exempt as tax convention information. In addition to the language of the provision, the circuit court in Tax Analysts placed even greater emphasis on the purpose of Section 6103 in concluding that legal analysis is not "return information." See Tax Analysts, 117 F.3d at 615-16. The court concluded that Section 6103's core purpose of protecting taxpayer privacy was not served by exempting legal analyses and conclusions as "return information." See id. (finding that the other concerns articulated by IRS — that revealing the legal analysis in FSAs would be disruptive to its enforcement efforts and might discourage those in the field from seeking national office advice — are not relevant to the core purpose of Section 6103). In contrast, in declining to disclose the TA at issue here, IRS has expressed the precise concern that Congress sought to address in enacting Section 6105. One of the primary purposes of Section 6105 is to avoid adversely affecting the working relationship among treaty partners. See Conf. Rep. No. 106-1033, reported in 146 Cong. Rec. 1112414 (daily ed., Dec. 15, 2000). In particular, the Conference Report specifically states that the "association of a particular treaty partner with a specific issue or matter" is protected as tax convention information under Section 6105. See id. at H12413. IRS here seeks to protect the identity of the tax treaty partner and the fact that this particular country made a specific request for legal advice regarding the particular transactions of a certain identified taxpayer. See 2d Sissman Decl. at ¶ 2-3. Furthermore, IRS has explained that because the TA in question was generated as a result of a communication from a treaty partner, the disclosure of the discussion and analysis contained therein would reveal the substance of that communication; the very content which is considered confidential under the treaty articles. See Def. Opp. to Pl. Renew. Mot at 8-9. Clearly, to order disclosure of the TA at issue here would thwart the purpose of Section 6105 — in general, to avoid adversely affecting working relationships with treaty partners, and in particular, to protect the association of a particular treaty partner with a specific issue or matter. The Court cannot agree with Plaintiff that this TA's legal analysis or conclusions relating to a tax treaty or tax law must be segregated and disclosed. Accordingly, the Court grants IRS's renewed motion for summary judgment with respect to this TA (TR-45-1362-93).

2. Portions of TAs Withheld Pursuant to FOIA Exemption 7(E)

IRS also withholds portions of sixteen TAs pursuant to FOIA Exemption 7(E), see Def. Renew. Mot. at 14, which protects from disclosure information

compiled for law enforcement purposes, but only to the extent that the production of such law enforcement records or information . . .

(E) would disclose techniques and procedures for law' enforcement investigations or prosecutions, or would disclose guidelines for law' enforcement investigations or prosecutions if such disclosure could reasonably be expected to risk circumvention of the law.

5 U.S.C. § 552 (b)(7). To invoke Exemption 7(E), IRS must first meet the "threshold" statutory requirement and prove that the documents in question were compiled for "law enforcement purposes."
*fn20 See John Doe Agency v. John Doe Corp., 493 U.S. 146, 153, 110 S.Ct. 471, 107 L.Ed.2d 462 (1989). Exemption 7 can be claimed with regard to documents generated pursuant to civil enforcement investigations. See Windels, Marx, Davies & Ives v. Department of Commerce, 576 F. Supp. 405, 413 (D.D.C. 1983) (citing Rural Housing Alliance v. United States Department of Agriculture, 498 F.2d 73, 81 (D.C.Cir. 1974)). However, the D.C. circuit court distinguishes between agencies serving principally the cause of criminal law enforcement and agencies having an admixture of law enforcement and administrative functions. See Pratt v. Webster, 673 F.2d 408, 416-19 (D.C.Cir. 1982). While a court may apply a more deferential attitude toward Exemption 7 claims of "law enforcement purpose" made by a criminal law enforcement agency, for agencies whose principal function is not law enforcement, it is appropriate to apply more exacting scrutiny. See id. Accordingly, in assessing the Exemption 7 claim of IRS, clearly a mixed-function agency, this Court must apply the more exacting scrutiny articulated in Rural Housing Alliance v. Department of Agriculture, 498 F.2d 73, 81-82 (D.C.Cir. 1974)*fn21

In Rural Housing Alliance, the D.C. circuit court held that in the context of a mixed-function agency, Exemption 7 embraces only "investigations which focus directly on specifically alleged illegal acts, illegal acts of particular identified officials, acts which could, if proved, result in civil or criminal sanctions." 498 F.2d at 81. The purpose of the document is thus the crucial factor — that is, to cross Exemption 7's threshold, the information at issue must have been gathered in the course of "an inquiry as to an identifiable possible violation of law . . . whether the individual were a private citizen or a government employee." Id. at 82.

While some of the disputed TAs meet this threshold test, some do not. The TAs that focus directly on specifically alleged illegal acts of a particular identified case or individual meet the threshold. These include TR-45-396-92, TR-45-1465-94, TR-45-472-93, TR-45-531-93, TR-45-304-94, and TR-45-1763-93; all of which were written in connection with an identified case. See Voughn Index (submitted June 6, 2000) Ex. 2 at 1 (TA discusses "an identified case which was being litigated by [IRS] at the time"), 10 (TA addresses "whether a particular case should be designated for litigation"), 19 (TA discusses whether IRS "should appeal an adverse decision of the Tax Court"), 49 (TA gives legal advice with respect to "identified issues arising in a case which was being litigated by [IRS) in bankruptcy court"), 57 (TA recommends whether IRS should concede "an issue arising in a case currently in litigation"), and 65 (TA gives legal advise in connection with "a specific issue arising in a case in litigation"). In addition, TR-45-396-93 and TR-45-511-93, two identical documents which discuss "a certain action contemplated by IRS to combat a known scheme by an identified group of persons to avoid the payment of federal income taxes," also satisfy the threshold. See id. at 29, 31.

In contrast, TR-45-0008-95, TR-45-798-93, TR-45-1000-94 Tr-45-1001-94, TR-45-1691-94, TR-45-699-93, TR-45-396-92,*fn22 TR-45-934-94, and TR-45-933-94 were not compiled for "law enforcement purposes" since none of these TAs focus on a specifically alleged illegal act of any particular identified case or individual. TR-45-0008-95 gives "legal advice concerning an issue arising with respect to the filing of documents by taxpayers" in general. See Id. at 27. It does not focus on any particular alleged illegal act of any particular taxpayer. See id. Similarly, TR-45-798-93 does not discuss any alleged illegal act, but simply assesses proposed changes to an identified income tax form. See id. at 33. TR-45-1000-94/Tr-45-1001-94 discusses a particular case, but the case in question has been completely resolved, and more importantly, the purpose of the TA is to project the consequences, including administrative difficulties, of extending the holding of that decided case to other areas. See id. at 35. TR-45-1691-94 comments on proposed changes to an identified income tax form and thus cannot be considered to have been written "for law enforcement purpose." See id. at 37. Finally, TR-45-699-93, TR-45-396-92 (hereinafter "TR-45-396-92-A"), TR-45-934-94, and TR-45-933-94 also do not focus on any possible violation of the law, but simply evaluate a proposed draft of the Appeals Settlement Guideline ("ASG"). See id. at 39 (TA discusses the problem of certain cases relied upon in the analysis section of the ASG not being applicable to the facts presented in the ASG), 41 (TA comments on the legal strengths and weaknesses of a particular position taken by IRS in the draft of the ASG for Structured Settlement prior to finalization), 44 (TA comments on the legal strengths and weaknesses of a particular position taken by IRS in the draft of the ASG for Amortization of Cable Television Franchises prior to finalization), 47 (TA comments on the legal strengths and weaknesses of a particular position taken by IRS in the draft of the ASG for Amortization of Federal Communications Broadcast License prior to finalization). IRS has failed to meet the threshold requirement under Exemption 7(E) to justify withholding any portion of these eight TAs. Furthermore, although IRS allegedly asserts other FOIA exemptions for withholding these documents in their entirety, IRS declines to inform the Court which exemption it is claiming for which particular TA.*fn23 See Id. at 27, 33, 35, 37, 39, 41, 44, 47. Therefore, IRS has failed to meet its burden of justifying withholding these eight TAs in their entirety and is ordered to disclose them in their entirety. Accordingly, the Court grants Plaintiffs renewed motion for summary judgment and denies Defendant's with respect to TR-45-0008-95, TR-45-798-93, TR-45-1000-94/Tr-45-1001-94, TR-45-1691-94, TR-45-699-93, TR-45-396-92-A, TR-45-934-94, and TR-45-933-94. As for the documents that withstand the Rural Housing Alliance threshold inquiry, the Court now proceeds with its analysis.*fn24

With respect to TR-45-396-92, TR-45-1465-94, TR-45-472-93, TR-45-531-93, TR-45-304-94, and TR-45-1763-93, IRS withholds portions under Exemption 7(E) and also asserts the attorney work product privilege to withhold these six TAs in their entirety. Because the Court finds that these documents are protected as attorney work product under FOIA Exemption 5, as further explained below, there is no need to address whether some portions of these documents would also be protected under Exemption 7(E). That leaves only the two identical TAs, TR-45-396-93 and TR-45-511-93, to be considered under Exemption 7(E).*fn25

To claim protection under Exemption 7(E), IRS must show that the two documents are protected by one of Exemption 7(E)'s two distinct protective clauses. The first clause of Exemption 7(E) protects "records or information compiled for law enforcement purposes . . . [that] would disclose techniques and procedures for law enforcement investigations or prosecutions." 5 U.S.C. § 552 (b)(7)(E) (emphasis added). The second clause of Exemption 7(E) protects "guidelines for law enforcement investigations or prosecutions if [their] disclosure could be reasonably be expected to risk circumvention of the law." Id. (emphasis added). IRS asserts that the withheld portions of the two TAs fall within the second clause of Exemption 7(E). See Vaughn Index (submitted June 6, 2000) Ex. 2 at 30, 32. The second clause of Exemption 7(E) protects law enforcement guidelines "compiled for law enforcement purposes" only if they "could reasonably be expected to risk circumvention of law." PHE, Inc. v. United States Dep't of Justice, 983 F.2d 248, 251 (D.C.Cir. 1993).*fn26 IRS has satisfied its burden of showing that disclosure of the withheld pages 1 and 2 of these two identical TAs would risk circumvention of the law. These two pages summarize how a certain tax avoidance scheme is carried out, including identification of vulnerabilities in the IRS's operations which allow this scheme to be successful. See Vaughn Index (submitted June 6, 2000) Ex. 2 at 29, 31. The disclosure of this particular tax avoidance scheme to the public would allow other taxpayers to copy and similarly engage in the same tax avoidance scheme. Mote importantly, disclosure of vulnerabilities in the IRS's operations, which allow this particular scheme to work, could facilitate other taxpayers to develop new and varied tax avoidance schemes which could also successfully manipulate such vulnerabilities. Therefore, the Court finds that disclosure of the withheld pages of these two TAs could reasonably be expected to risk circumvention of the law. Accordingly, with respect to pages 1 and 2 of TR-45-396-93 and TR-45-511-93, the Court grants Defendant's renewed motion for summary judgment and denies Plaintiff's.*fn27

3. Portions of TAs Withheld Pursuant to FOIA Exemption 5

Exemption 5 of the FOIA 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." 5 U.S.C. § 552 (b)(5). Courts have "construed this exemption to encompass the protections traditionally afforded certain documents pursuant to evidentiary privileges in the civil discovery context," including "materials which would be protected under the attorney-client privilege, the attorney work-product privilege, or the executive `deliberative process privilege,'" all of which are asserted by IRS in this case. Taxation With Representation Fund v. IRS, 646 F.2d 666, 676 (D.C.Cir. 1981) ("TWRF") (citations omitted).

a. Attorney Work Product Privilege

IRS asserts the attorney work product privilege to withhold six TAs in their entirety. See Vaughn Index (submitted June 6, 2000) Ex. 2 at 1, 8, 19, 49, 57, 65. Attorney work product privilege shields materials "prepared in anticipation of litigation or for trial by or for [a] party or by or for that . . . party's representative (including the . . . party's attorney, consultant, . . . or agent)." Fed.R.Civ.P. 26(b)(3); see also Hickman v. Taylor, 329 U.S. 495, 509-10, 67 S.Ct. 385, 91 L.Ed. 451 (1947).*fn28

The parties are in dispute about what constitutes "true" attorney work product. Plaintiff contends that attorney work product privilege protects only "the mental impressions, conclusions, opinions or legal theories of an attorney" and "factual materials prepared in anticipation of litigation." See Pl. Renew. Mot. at 20. Plaintiff further argues that work product does not include, and therefore "the requester is entitled to[,] the agency working law, legal analysis and conclusions." See id. at 21 (quoting Tax Analysts v. IRS, 1998 WL 419755 at *3 (D.D.C. May 1, 1998)). However, the Court agrees with IRS that even assuming that portions of the TAs at issue constitute IRS's working law, this information is still protected by the attorney work product privilege. See Def. Opp. to Pl. Renew. Mot. at 15. The Supreme Court has explicitly stated that "a memorandum subject to the affirmative disclosure requirement of [Section] 552(a)(2) [(the FOIA provision which requires disclosure of agency's working law)] is nevertheless shielded from disclosure under Exemption 5[if] it contain[s] a privileged attorney's work product." Federal Open Market Committee v. Merrill, 443 U.S. 340, 360, n. 23, 99 S.Ct. 2800, 61 L.Ed.2d 587 (1979) ("FOMC").*fn29 In addition, the D.C. Circuit opinion in Tax Analysts is not to the contrary. See Tax Analysts, 117 F.3d at 620. Plaintiff quotes a D.C. district court opinion which states,

[g]iven the entire tenor of the [Court of Appeals's opinion in Tax Analysts], it is clear that however "work product" is defined, and therefore redacted, the requester is entitled to the agency working law . . .

Tax Analysts v. IRS, 1998 WL 419755 at *3 (D.D.C. May 1, 1998).

The Court cannot agree with the Plaintiffs conclusion. The circuit court in Tax Analysts simply held, in one part of its opinion addressing the deliberative process privilege claim by IRS, that FSAs are not entitled to a blanket exemption of deliberative process privilege because they are not deliberative process material but instead are agency working law. See Tax Analysts, 117 F.3d at 616-18. The court also noted, however, that although a blanket exemption of deliberative process privilege does not apply to all FSAs, the applicability of other specific FOIA exemptions deserves a separate and distinct analysis. See id. at 620. Thus, the circuit court's analysis of the deliberative process privilege has no bearing on whether certain FSAs that are exempted under the attorney work product privilege must also be disclosed as agency working law. Furthermore, the Court observes that the Supreme Court itself distinguished between the deliberative process privilege and the attorney work product privilege, explaining that the former does not trump the mandatory disclosure requirement under Section 552(a)(2), but the latter does. See FOMC, 443 U.S. at 360, n. 23, 99 S.Ct. 2800. Accordingly, the Court cannot agree with Plaintiff that attorney work product does not include agency working law. Therefore, as long as the eight TAs in dispute are documents that were prepared in anticipation of litigation or for trial, they can be withheld, including any agency working law that they may contain.

TR-45-396-92, TR-45-1465-94, TR-45-472-93, TR-45-531-93, TR-45-304-94, and TR-45-1763-93 are all documents prepared for trial. TR-45-396-92 was written to prepare for litigating a particular issue in an identified case. See Vaughn Index (submitted June 6, 2000) Ex. 2 at 1-3. Notably, the document also makes a recommendation as to whether IRS should settle, rather than litigate, the case. See id. The attorney work product privilege covers such documents as TR-45-396-92 which "relate to possible settlements" of litigation. See Cities Servs. Co. v. FTC, 627 F. Supp. 827, 832 (D.D.C. 1984), aff'd, 778 F.2d 889 (D.C.Cir. 1985) (unpublished table decision). TR-45-1465-94 is also protected as attorney work product as it was written to address whether a particular case should be designated for litigation. See Vaughn Index (submitted June 6, 2000) Ex. 2 at 10-12. TR-45-472-93 was also prepared in anticipation of litigation as it assesses whether IRS should appeal an averse decision of the Tax Court. See id. at 19-20. TR-45-531-93 also falls within the attorney work product privilege since it was written to assess whether IRS should litigate certain identified issues arising in a case which was being litigated by IRS in bankruptcy court. See id. at 49-51. TR-45-304-94 is also protected as a document written to recommend whether IRS should concede an issue arising in a case currently in litigation. See id. at 56-58. Finally, TR-45-1763-93 is also protected as attorney work product since it was written in connection with a specific issue arising in a case in litigation. See Id. at 65-66. Therefore, with respect to TR-45-396-92, TR-45-1465-94, TR-45-472-93, TR-45-531-93, TR-45-304-94, and TR-45-1763-93, the Court grants Defentant's renewed motion for summary judgment and denies Plaintiff's.

b. Deliberative Process Privilege

IRS contends that some twenty-six TAs are shielded from disclosure by the executive or governmental deliberative process privilege, which is one of the three privileges incorporated by FOIA Exemption 5. See 5 U.S.C. § 552 (b)(5); Coastal States Gas Corp. v. Dep't of Energy, 617 F.2d 854, 862 (D.C.Cir. 1980). The deliberative process privilege covers "documents reflecting advisory opinions, recommendations and deliberations comprising part of a process by which governmental decisions and polices are formulated." NLRB v. Sears, Roebuck & Co., 421 U.S. 132 150, 95 S.Ct. 1504, 44 L.Ed.2d 29 (1975). Three policy purposes constitute the basis for this privilege: (1) to encourage open, frank discussions on matters of policy between subordinates and superiors; (2) to protect against premature disclosure of proposed policies before they are finally adopted; and (3) to protect against the public confusion that might result from disclosure of reasons and rationales that were not in fact ultimately the grounds for an agency's action. See Coastal States Gas Corp., 617 F.2d at 866.

To invoke the privilege, the document must be (1) predecisional in that it was "generated before the adoption of agency policy" and (2) deliberative in that it "reflects the give-and-take of the consultative process." Id. (emphasis added); see also Tax Analysts, 117 F.3d at 616. Thus, IRS must establish that the withheld TAs "contain `the ideas and theories which go into the making of the law' and not `the law itself.'" Arthur Andersen & Co. v. Internal Revenue Sec., 679 F.2d 254, 258 (D.C.Cir. 1982) (quoting Sterling Drug, Inc. v. FTC, 450 F.2d 698, 708 (D.C.Cir. 1971)). "[A]n agency will not be permitted to develop a body of `secret law,' used by it in the discharge of its regulatory duties and in its dealings with the public, but hidden behind a veil of privilege . . ." Coastal States, 617 F.2d at 867. Accordingly, this "exemption is to be applied `as narrowly as consistent with efficient Government operation.'" Id. at 868 (quoting S. Rep. 89-813 at 9 (1965)).

In its previous motion for summary judgment, the basic thrust of IRS's deliberative process argument was that intranational office and program manager TAs are both predecisional and deliberative because they flow "horizontally" as part of a discussion or dialogue between equals. See Def. Mot. 28-31. In this regard, IRS likened these TAs to LMs, which flow upward to assist higher level reviewers as they develop revenue rulings, and tried to distinguish these TAs from TAs to the field and FSAs, which flow authoritatively downward or outward from the Office of Chief Counsel to be applied by the field to taxpayers. See Mem. Op. for Summ. J. at 15. However, the Court found that such broad categorical statements about the intra-national office and program manager TAs were not corroborated by the TAs submitted for in camera review. See id. In addition, the Court deemed the Vaughn index, which recycled the same justification for withholding all of the various TAs without regard to the differences among them, inadequate. See id. at 16 (quoting Campbell v. United States Dep't of Justice, 164 F.3d 20, 20 (D.C.Cir. 1998) ("An affidavit that contains merely a `categorical description' of redacted material coupled with categorical indication of anticipated consequences is clearly inadequate.")). Furthermore, the Court was not convinced that IRS had properly shown that the allegedly privileged material is so intertwined with non-privileged material that it could not be segregated. See id. at 16-17. Accordingly, the Court remanded this portion of the case to the agency for a supplemental Vaughn index including the necessary information. See id. at 17. IRS has since complied with the Court's request, and the Court is now prepared to make its final ruling.

i. TAs to Program Managers

TAs to program managers arise in eight situations: (1) TAs prepared in a review for technical accuracy of booklets, pamphlets, tax forms and instructions; (2) TAs with respect to the preparation of Appeal Settlement Guidelines; (3) TAs with respect to draft Industry Specialization Program papers; (4) TAs with respect to draft Market Segment Specialization Program papers; (5) TAs responding to requests from the Public Affairs Division; (6) TAs directed to national office program managers with respect to other policy and program initiatives; (7) TAs prepared with respect to the liability of a particular taxpayer; and (8) TAs that address the interpretation or application of the internal revenue laws generally. See Def. SMF ¶ 87. IRS asserts that ten such TAs to program managers (TR-45-2233-93, TR-45-2820-92, TR-955-93, TR-45-2164-93, TR-45-307-93, TR-45-1383-93,*fn30 TR-45-1974-93, TR-45-1796-93, TR-45-2473-93, and TR-45-1642-94) are predecisional and deliberative. IRS bases this contention on the argument that these TAs are part of a larger deliberative process relating to the scope and direction of program initiatives, which generally result in publicly issued tax forms, Internal Revenue Manual Instructions to staff, Policy Statements; Industry Specialization Papers, or Appeals Settlement Guidelines. See Def. Renew. Mot. at 18. IRS further asserts that these TAs are more akin to LM-type deliberative materials, which lead up to final decisions on revenue rulings, see Mem. Op. for Summ. J. at 4-8, than to FSAs, which have been found to be statements of the considered policy of Chief Counsel's Office to personnel in the field. See Def. Renew. Mot. at 18 (construing Tax Analysts, 117 F.3d at 617). The Court, however, cannot agree that all portions of these nine TAs to program managers are deliberative materials.

As stated before, in order for IRS to invoke the deliberative process privilege, IRS must show that the TAs to program managers are predecisional, not post-decisional. Predecisional documents are thought generally to reflect agency "give-and-take" leading up to a decision that is characteristic of the deliberative process; post-decisional documents, on the other hand, often represent the agency's position on an issue, or explain such a position, and thus may constitute the "working law" of an agency which must be disclosed. TWRF, 646 F.2d at 677. In Tax Analysts, the D.C. circuit court declined to extend the privilege to the legal interpretation and analyses in FSAs, holding that they are post-decisional statements representing the legal position and considered view of the Chief Counsel's national office. 117 F.3d at 617. As the circuit court noted, FSAs contain the answers of the national office of the Office of Chief Counsel to legal questions, usually with reference to the situation of a specific taxpayer, submitted by field personnel. See id. at 609, 617. The circuit court found that the legal conclusions the Office of Chief Counsel constitute agency law, even if those conclusions are not formally binding, because the documents are "routinely used" and generally followed by field personnel. See id. In reaching its conclusion, the court also emphasized that the structure and purposes of the FSA system reveal that the national office is attempting to develop a body of coherent, consistent interpretations of the federal tax laws nationwide. See id. Therefore, the court concluded, rather than documents produced in the process of formulating policy, FSAs are themselves statements of an agency's legal position and cannot be viewed as predecisional.

The Court finds little reason to distinguish between FSAs in Tax Analysts and TAs to program managers related to a specific taxpayer*fn31 and TAs to program managers that address the interpretation or application of the internal revenue laws generally.*fn32 Even IRS concedes that taxpayer-specific TAs are almost identical to FSAs. See Def. Stmt. of Genuine Issues in Opp. to Pl. Stmt. of Material Facts ("Def. Opp. to Pl. SMF") ¶ 3.12 (responding to Pl. Stmt of Material Facts ("Pl.SMF") ¶ 3.12). Like FSAs, TAs contain the national office's answers to legal questions submitted by IRS personnel, specifically program managers. Like FSAs, TAs to program managers consist of legal advice, including reviews of the proper interpretation of sources of tax law, such as, the I.R.C., regulations, revenue rulings, revenue procedures, court decisions and other legal authorities or precedents. See Def. Opp. to Pl. SMF ¶ 3.13 (responding to Pl. SMF ¶ 3.13). Moreover, even though they are open to revision prior to issuance, these TAs are treated as final documents once they leave the Office of Chief Counsel. See Pl. Response to Def. Stmt of Genuine Issue in Opp. to Pl. Stmt of Material Facts ("Pl. Resp. to Def. Opp. to Pl. SMF") ¶ 3.25 (quoting Kugler Dep. at 137-38). The Court fails to see how these TAs to program managers relating to specific taxpayer situations and TAs to program managers interpreting internal revenue laws are any different from FSAs that were at issue in Tax Analysts. Furthermore, to establish that the TAs do not constitute the "working law" of the agency, IRS must present to the Court (1) the "function and the significance of the [TAs] in the agency's decisionmaking process," (2) "the nature of the decisionmaking authority vested in the office or person issuing the disputed [TAs]," and (3) "the flow" of the TAs whether they are "from superiors to subordinates, or vice versa." TWRF, 646 at 678-81. However, IRS has failed to do so. Therefore, the Court finds that the following documents, which include the Office of Chief Counsel's legal conclusion relating to specific taxpayers, are not exempted, deliberative materials: TR-45-2233-93 (TA consisting of Office of Chief Counsel's legal analysis and conclusion regarding certain activities undertaken by a class of taxpayers), see Vaughn Index (submitted March 30, 1999) Ex. 1 at 1-6; TR-45-1383-93 (TA consisting of the Office of Chief Counsel's legal interpretations of certain sections of the Internal Revenue Code with regard to an issue arising with respect to a third party taxpayer), see id. at 93-98; TR-45-1974-93 (TA consisting of the Office of Chief Counsel's legal analysis and position regarding an issue of how certain sections of the Internal Revenue Code apply to a certain taxpayer), see Vaughn Index (submitted July 7, 2000) Ex. 3, at 1-5; and TR-45-2473-93 (TA consisting of the Office of Chief Counsel's legal analysis and position regarding whether a particular entity qualifies as an organization exempt from federal taxation), see id. at 17-21. In addition, the Court also finds that the legal conclusions that the Office of Chief Counsel provides to IRS's program managers regarding the tax laws generally are not protected as deliberative material. Accordingly, TR-45-2820-92 is not exempted from disclosure. See Vaughn Index (submitted March 30, 1999) Ex. 1 at 7-12 (TA consisting of the Office of Chief Counsel's interpretation of the requirements of a section of the Internal Revenue Code with respect to correspondence between taxpayers and the Service). The Court's in camera review of these documents also supports the conclusion that these TAs represent and explain the considered view of the national office of the Office of Chief Counsel on particular issues and therefore, are not protected under the deliberative process privilege. Accordingly, with respect to TR-45-2233-93, TR-45-1383-94, TR-45-1974-93, TR-45-2473-93, and TR-45-2820-92, the Court grants Plaintiffs renewed motion for summary judgment and denies Defendant's.*fn33

However, the Court finds that the other five TAs to program managers — TR-955-93, TR-45-2164-93, TR-45-307-93, TR-1642-94, and TR-45-1796-93 — are distinguishable from FSAs in Tax Analysts. Unlike TAs which contain the Office of Chief Counsel's interpretation of the law in reference to particular issues, these five TAs are part of a larger deliberative process reflecting a give-and-take discussion between the Office of Chief Counsel and IRS's program managers regarding proposed tax forms, possible administrative or legislative changes, and proposed amendments to the Internal Revenue Code. TR-955-93 clearly contains predecisional, deliberative material, consisting of suggestions and recommendations of an attorney in the Office of Chief Counsel relating to proposed changes to an income tax form and its instructions. See Vaughn Index (submitted March 30, 1999) Ex. 1 at 13-19. The final decision to adopt or reject the proposed new tax form and its accompanying instructions had not been reached, and the TA is only a part of a larger debate surrounding the possible changes. See Id. Similarly, TR-45-307-93 is a part of the larger deliberation of a proposed amendment to a section of the Internal Revenue Code, in which an attorney from the Office of Chief Counsel expresses his opinion as to the proposed change. See id. at 33-37. In addition, TR-45-2164-93 is also a document which is part of a larger deliberative process, recommending possible solutions to a noted problem with the collection and accounting of a particular type of tax. See id. at 27-32. In that document, the Office of Chief Counsel recommends one proposed method but also describes two alternative potential solutions, as opposed to stating a firm legal position on the matter. See id. Moreover, it is plain that the debate is ongoing between the Office of Chief Counsel and IRS as indicated by the fact that the TA reexamines a previous memoranda written by the Office of Chief Counsel on the same issue. See id. TR-45-1642-94 similarly reflects an ongoing, upward flow of discussion relating to a particular type of financial transaction. See id. at 20-27. This TA was sought by an IRS's program manager so that he may better prepare a reply to a congressional inquiry. See id. Therefore, TR-45-1642-94, containing the Office of Chief Counsel's recommendations regarding the position the program manager should take with respect to this matter, is predecisional and deliberative; until the program manager actually decides on what position to take and writes his reply to Congress, the deliberative process is still ongoing. Finally, TR-45-1796-93 is also a predecisional, deliberative document. See Vaughn Index (submitted July 7, 2000) Ex. 3, at 6-11. Although it addresses IRS's authority to verify the Employer Identification Numbers (EINs) for a specific class of taxpayers, it is clear that the TA is not the final position or the considered view of the Office of Chief Counsel regarding this issue, but only a preliminary statement to be further reviewed by another component office of the Office of Chief Counsel. See id. The Court's in camera review of these documents also supports the conclusion that these four TAs are protected as part of a larger deliberative process. Accordingly, with respect to TR-955-93, TR-45-307-93, TR-45-2164-93, TR-1642-94, and TR-45-1796-93, the Court grants Defendant's renewed motion for summary judgment and denies Plaintiffs.

ii. Intra-divisional TAs

IRS asserts the deliberative process privilege for sixteen intra-divisional TAs. Intra-divisional TAs result when one component of the Chief Counsel's Office advises another component that is assigned to create Technical Advice Memoranda ("TAMs"), Private Letter Rulings ("PLRs"), Field Service Advices ("FSAs"), or when one component is called on to advise on issues of concern to more than one of the Chief Counsel's component offices. See Def. Renew. Mot. at 15. IRS asserts that these intra-divisional TAs are by nature predecisional and deliberative, as they are solicited during the deliberative process from a secondary component that does not have authority to issue the final work product. See id. at 16. The Court agrees.

As stated above, to establish that the TAs do not constitute the "working law" of the agency, IRS must present to the Court the (1) "function and the significance of the [TAs] in the agency's decisionmaking process," (2) "the nature of the decisionmaking authority vested in the office or person issuing the disputed [TAs]," and (3) "the flow" of the TAs whether they are "from superiors to subordinates, or vice versa." TWRF, 646 at 678-81. Here, IRS has adequately made such a showing. First, IRS has presented the function and the significance of these intra-divisional TAs. The TAs from one Office of Chief Counsel component to other components provides the issuing office's expertise on a subject within its jurisdiction, so that the requesting office that will ultimately issue the final work product (the TAMs, PLRs, and FSAs) can make the most sound decision regarding the Office of Chief Counsel's final position. See Pl. SMF at ¶ 3.22 (citing Kugler Dep. at 79-80). Second, the TAs are written by a component office without decisionmaking authority to a different component office that will eventually issue the final work product. Perhaps most importantly, the advice contained in these intra-divisional TAs are subject to modification or rejection prior to the finalization into the final work product as TAMs, PLRs or FSAs. See Def. Renew. Mot. at 16. Although a recipient of such a TA would be expected to follow it if the recipient agreed, if the recipient disagreed or had questions about the TA, further discussion of the matter to which the TA related would be expected. See Def. Opp. to Pl. SMF ¶ 3.10 (citing Brown Dep. at 142-43; Mattson Decl. ¶ 20). Furthermore, the Office of Chief Counsel commonly expects internal debate to follow TAs written between component offices of the national office. See id. (citing Mattson Decl. ¶¶ 17-20). In other words, while these intra-divisional TAs are circulating between and among the component offices within the national office, they constitute give-and-take discussion between components. Until the final work product is issued, the position of the Office of Chief Counsel is still under consideration; the intra-divisional TAs are part of that larger deliberative process. The Vaughn index supports, and IRS's in camera submission does not contradict, this conclusion. See Vaughn Index (submitted March 30, 1999) Ex. 1, at 38-92, 99-146. The Court finds, therefore, that these intra-divisional TAs are protected by the deliberative process privilege. Accordingly, with respect to TR-31-107-93, TR-31-87-93, TR-31-1954-94. TR-31-230-94, TR-31-2121-92, TR-31-1281-94, TR-31-1237-94, TR-31-1235-94, TR-45-155-94, TR-1011-94, TR-45-2608-93, TR-45-2535-93, TR-31-1434-92, TR-31-2162-92, CC:INTL-0902-93, and CC:INTL-0251-94, the Court grants Defendant's renewed motion for summary judgment and denies Plaintiffs.

c. Attorney-Client Privilege

IRS seemingly asserts the attorney-client privilege as to two TAs, TR-45-1642-94 and TR-45-2164-93.*fn34 See Vaughn Index (submitted June 6, 2000) Ex. 1 at 21, 28. In the Court's earlier opinion, the Court noted that IRS had narrowed its reliance on the attorney-client privilege as a basis for withholding to only one paragraph of one TA, TR-45-155-94. See Mem. Op. for Summ. J. at 17. In its Vaughn index previously filed on March 30, 1999, IRS asserted a "general" attorney-client privilege for various documents, including TR-45-1642-94 and TR-45-2164-93. See Vaughn index (submitted March 30, 1999) at 14-18, 19-22. However, in light of the D.C. Circuit's ruling in Tax Analysts, which limited the scope of the attorney-client privilege to "audit information," 117 F.3d at 619-20, IRS narrowed its assertion of this privilege to TR-45-155-94 alone, apparently foregoing the privilege assertion for all other TAs, including TR-45-1642-94 and TR-45-2164-93. See IRS's Opp. to Pl. Supp. Mot. for Summ. J. at 2 n. 2 ("The only TA for which the defendant is asserting the `audit information' attorney-client privilege is TR-45-155-94."). According to IRS's substantially narrowed assertion of the privilege, the Court ruled for IRS, finding that the revised Vaughn index for TR-45-155-94 quite specifically provided that TR-45-155-94 contained "audit information" protected under attorney-client privilege. See Mem. Op. for Summ. J. at 17-18. Now, after this favorable ruling by the Court, IRS evidently is attempting to resurrect the privilege for the two TAs, TR-45-1642-94 and TR-45-2164-93.*fn35 See IRS's Opp. to Pl. Supp. Mot. for Summ. J. at 2 n. 2.

The Court refuses to revisit this issue of the attorney-client privilege. The D.C. circuit court has noted that the interests of judicial economy and finality militate against a court's tolerating a piecemeal approach by a party. See Holy Spirit Association for Unification of World Christianity v. Central Intelligence Agency, 636 F.2d 838, 846 (D.C.Cir. 1980). The circuit court has accordingly directed that agencies not make new exemption claims to a district court after the judge has ruled in the other party's favor. See id. (citing Grumman Aircraft Engineering Corp. v. Renegotiation Bd., 482 F.2d 710, 721-22 (D.C.Cir. 1973)). In particular, the D.C. circuit court has warned of "[t]he danger of permitting the Government to raise its FOIA exemption claims one at a time, at different stages of a district court proceeding." See Ryan v. Department of Justice, 617 F.2d 781, 792 (D.C.Cir. 1980). The Court has already considered the attorney-client privilege as claimed by IRS — IRS claimed the privilege for only TR-45-155-94, and the Court considered the assertion to that one TA and ruled on the matter in its previous opinion. See Mem. Op. for Summ. J. at 17-18. If IRS had wanted to claim the attorney-client privilege for TR-45-1642-94 and TR-45-2164-93, the appropriate time to have asserted the privilege for these two documents would have been with TR-45-155-94 prior to the Court's March Order. Having once abandoned the privilege for the two TAs, the interests of judicial economy and finality dictate that IRS may not resurrect the attorney-client privilege for TR-45-1642-94 and TR-45-2164-93.

III. CONCLUSION

For the foregoing reasons, the Court denies Plaintiffs Motion for Reconsideration. In addition, the Court grants in part and denies in part Plaintiffs and Defendant's Renewed Cross-Motions for Summary Judgment as follows: With respect to the TA covered by the treaty exemption (TR-45-1362-93), the Court grants Defendant's renewed motion for summary judgment and denies Plaintiffs. With respect to the TAs prepared for law enforcement purposes, the Court grants in part and denies in part Plaintiffs and Defendants renewed motions. With respect to TAs covered by attorney work product privilege, the Court grants Defendant's renewed motion and denies Plaintiffs. With respect to the TAs covered by the deliberative process privilege, the Court grants in part and denies in part Plaintiffs and Defendant's renewed motions. Finally, with respect to TAs covered by attorney-client privilege, the Court denies Defendant's renewed motion.

An order accompanies this memorandum opinion.

ORDER

(Reconsideration of Earlier Opinion and Renewed Cross-Motions for Summary Judgment)

For the reasons stated in the accompanying memorandum opinion, it is, this 26 of March, 2001, hereby

ORDERED that Plaintiffs Motion for Reconsideration is DENIED WITH PREJUDICE; it is further

ORDERED that Plaintiffs and Defendant's Renewed Cross-Motions for Summary Judgment are DENIED IN PART and GRANTED IN PART, as follows:

• Defendant must release the following TAs: TR-45-0008-95, TR-45-798-93, TR-45-1000-94/Tr-45-1001-94, TR-45-1691-94, TR-45-699-93, TR-45-396-92-A, TR-45-934-94, TR-45-933-94, TR-45-2233-93, TR-45-1383-94, TR-45-1974-93, TR-45-2473-93, and TR-45-2820-92;

• Defendant may withhold in their entirety the following TAs: TR-45-1362-93, TR-45-396-92, TR-45-1465-94, TR-45-472-93, TR-45-531-93, TR-45-304-94, TR-45-1763-93, TR-955-93, TR-45-307-93, TR-45-2164-93, TR-45-1642-94, TR-45-1796-93, TR-31-107-93, TR-31-87-93, TR-31-1954-94, TR-31-230-94, TR-31-2121-92, TR-31-1281-94, TR-31-1237-94, TR-31-1235-94, TR-45-155-94, TR-1011-94, TR-45-2608-93, TR-45-2535-93, TR-31-1434-92, TR-31-2162-92, CC:INTL-0902-93, and CC:INTL-0251-94; and

• Defendant may withhold in part the following TAs: pages 1 and 2 of TR-45-396-93 and TR-45-511-93; it is further

ORDERED that the case is dismissed and that this is a final, appealable order.

SO ORDERED.


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