Lead Opinion
Plaintiffs Mary Hull, Nelson Phelps, and the Association of US West Retirees appeal a district court’s order rejecting their Freedom of Information Act (FOIA) claim against Defendant Internal Revenue Service (IRS). This appeal focuses primarily on one question: Does Plaintiffs’ FOIA request on its face seek only a third party’s return information to which they are not entitled without the authorization of that third party? We conclude yes, it does, and, therefore, the IRS properly withheld the requested information in the absence of US West’s consent. Accordingly, we affirm the judgment of the district court in favor of the IRS.
I.
Plaintiffs are retired employees of US West, Inc. and participants in the US West Pension Plan. According to Plaintiffs’ 2008 FOIA request:
On or about March 15, 1996, US WEST, Inc. made a submission to the IRS under the Voluntary Compliance Review ... Program [VCRP], in which submission the company fully described the problem [with some of its payments to US WEST Pension Plan participants] and requested IRS grant approval to make adjusted pension payments---On August 28, 1996, the IRS formally approved of US WEST’S proposal and*1176 issued a Compliance Statement mandating US WEST pay the disputed claims within 90 days....
Plaintiffs Appendix (Appx.) at 112. Plaintiffs requested:
[A] complete copy set of all documents associated with the IRS handling of US WEST’S submission in 1996 resulting in the IRS Compliance Statement, plus all other associated records in the agency’s file.... This FOIA request includes the full March 15, 1996 dated submission made [to the VCRP] by US WEST and pension plan administrators, including supporting documents, supplemental reports, informal and formal discovery requests, orders, if any, and the written and electronic (e-mail) responses given thereto, including the August 28, 1996 dated IRS’s Compliance Statement issued to US WEST.
Id.
In a letter, the IRS informed Plaintiffs their FOIA request for “[VCRP] records regarding US West Pension Plan” sought “tax records” which “are confidential and may not be disclosed unless specifically authorized by law. We must receive US West Pension Plan’s written consent before we can consider releasing the information you requested.” Id. at 114. The letter did not inform Plaintiffs if or how they could appeal this determination. Nonetheless, Plaintiffs appealed the IRS’s response to the IRS’s FOIA Appeals Office. That office provided essentially the same response, only with slightly greater detail:
You asked for [VCRP] records regarding US West Pension Plan.... FOIA exemption 5USC 552(b)(3) exempts from releasing documents that by statute can not be released. Internal Revenue Code § 6103 does not allow the release of documents to a person other than the taxpayer without their consent. Since the government did not receive a consent form ... from US West Pension Plan allowing you to view their tax documents, the government is prohibited by statute from releasing these documents to you. In conclusion the disclosure office has fulfilled their requirements under FOIA.
Id. at 119. The IRS then advised Plaintiffs of their “judicial remedies” under FOIA: “You may file a complaint in the United States District Court for the District in which you reside, or have your principal place of business, or in which the agency records are located, or in the District of Columbia.” Id.
Shortly thereafter, Plaintiffs did just that: They filed a complaint in Colorado federal district court pursuant to the civil enforcement provision of FOIA, 5 U.S.C. § 552, seeking the IRS’s disclosure of the requested information or, alternatively, an in camera court review of the withheld information.
The district court granted the IRS’s motion for summary judgment, denying Plaintiffs’ motion and request for an in camera review. The court determined “[bjecause information submitted under [the VCRP] could implicate tax liability, the specific information that [Plaintiffs] seek is return information” which the IRS could not disclose to Plaintiffs without US West’s authorization. Hull v. IRS, No. 09-cv-0024,
Plaintiffs’ timely appeal followed. Exercising our appellate jurisdiction under 28 U.S.C. § 1291, we first reject the district court’s conclusion that it was jurisdiction-ally barred from deciding the merits of Plaintiffs’ FOIA claim. Nevertheless, reaching the merits, we agree the IRS properly withheld the requested information and, so, affirm the district court’s judgment in favor of the IRS. Before doing either, however, we will review the law applicable to this summary judgment action.
II.
We review a district court’s grant of summary judgment de novo, applying the same legal standard used by the district court, drawing all reasonable inferences in favor of the nonmoving party — in this case, in favor of Plaintiffs. Trentadue v. Integrity Comm.,
To satisfy its burden of proof under FOIA, an agency typically submits affidavits. These:
[A]ffidavits must show, with reasonable specificity, why the documents fall within the exemption. The affidavits will not suffice if the agency’s claims are conclusory, merely reciting statutory standards, or if they are too vague or sweeping. If the affidavits provide specific information sufficient to place the documents within the exemption category, if the information is not contradicted in the record, and if there is no evidence in*1178 the record of agency bad faith, then summary judgment is appropriate without in camera review of the documents.
Quiñon v. FBI,
Central to this case is FOIA’s Exemption 3, which provides FOIA’s disclosure requirements do:
[N]ot apply to matters that are ... (3) specifically exempted from disclosure by statute ..., if ■ that statute (i) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (ii) establishes particular criteria for withholding or refers to particular types of matters to be withheld.
5 U.S.C. § 552(b)(3). One such statute, Internal Revenue Code (IRC or the Code) § 6103, generally prohibits the disclosure of “returns and return information” in order “to protect the taxpayer’s right to privacy and confidentiality in return information, while at the same time to afford disclosure to those congressional committees and federal and state authorities which ha[ve] legitimate needs for such information.” Grasso v. IRS,
[IJnitial request for records must ... (E) [i]n the case of a request for records the disclosure of which is limited by statute or regulations (as, for example, the Privacy Act of 1974 (5 U.S.C. § 552a) or section 6103 and the regulations thereunder), establish the identity and the right of the person making the request to the disclosure of the records in accordance with paragraph (c)(5)(iii) of this section.
26 C.F.R. § 601.702(c)(4)(i)(E). Paragraph (c)(5)(iii)(C) further provides: “in the case of ... [a] person requesting records ... pertaining to other persons, the requester shall furnish a properly executed power of attorney, Privacy Act consent, or tax information authorization, as appropriate.” Lest there be any confusion, the IRS regulations advise requesters “that only requests for records which fully comply with the requirements of this section can be processed in accordance with this section.” 26 C.F.R. § 601.702(c)(4)®.
III.
Before getting to the merits of this dispute, we must make a small detour, the navigation of which relies partly on the law we have just reviewed. Generally, a plaintiff must exhaust her administrative remedies under FOIA before filing suit in federal court “ ‘so that the agency has an opportunity to exercise its discretion and expertise on the matter and to make a factual record to support its decision.’ ” Wilbur v. CIA,
In the instant case, the IRS claims, and the district court agreed, because Plaintiffs requested US West’s “return information” without submitting US West’s authorization, Plaintiffs did not file a perfected FOIA request and, as a result, have not exhausted their administrative remedies. As the IRS implored it to do, the district court went on to hold Plaintiffs’ failure to exhaust their administrative remedies under FOIA deprived it of subject matter jurisdiction over this action.
We are not entirely convinced of the first premise of the IRS’s argument and the district court’s holding — that failure to file US West’s authorization with their initial FOIA request amounts to failure to exhaust administrative remedies. We acknowledge the IRS regulations, and thus FOIA, require Plaintiffs to submit a waiver from US West with their initial FOIA request, if they seek US West’s return information. 5 U.S.C. § 552(a)(3)(A); 26 C.F.R. § 601.702(c)(4)(i)(E). But even so, if Plaintiffs contest the IRS’s determination that they seek exempt third party return information, which they are allowed to do, they have no choice but to refuse to provide the consent and appeal the IRS’s determination. In turn, FOIA and IRS regulations require the IRS to notify Plaintiffs why it will not comply with their request and/or why they are not entitled to the information they seek, the reasons for that determination, and their right to appeal to the agency any adverse determination. 5 U.S.C. § 552(a)(6)(A)(i). See also Tanoue v. IRS,
For their part, Plaintiffs have done all they could to challenge the IRS’s adverse determination that their request seeks protected return information and to obtain a final administrative decision. They filed a FOIA request seeking records. The IRS responded, notifying Plaintiffs they were not entitled to the information they seek without US West’s waiver. Plaintiffs appealed that response to the IRS’s FOIA Appeals Office, seeking the same records without submitting the waiver because they contested the IRS’s determination it was required. The IRS again refused to release the requested records. See Nurse v. Sec’y of Air Force,
But assuming failure to file US West’s waiver could constitute a failure to exhaust administrative remedies under FOIA, we seize this opportunity for clarity by joining the majority of our sister circuits in concluding exhaustion under FOIA is a prudential consideration rather than a jurisdictional prerequisite.
Even the IRS confirms, though perhaps unintentionally, the purposes of exhaustion have been served. According to the IRS, it has compiled a sufficient record upon which we can definitively conclude all the information Plaintiffs have requested is US West’s return information, which is why it maintains Plaintiffs must submit US West’s waiver to perfect their request. The IRS also asserts it has given the courts and Plaintiffs all the benefit of its experience and expertise and provided as much of a record as it intends to give: “[E]ven if the IRS had treated the FOIA requests as perfected, and had searched for and located documents, the requested material properly would have been withheld for the reasons” it has already given. Aple. Br. at 34 n. 12 (internal citations omitted). Because exhaustion is a prudential consideration and the purposes of exhaustion have been served, we conclude the district court should have decided Plaintiffs’ FOIA claim on the merits.
IV.
We now turn to the heart of the matter: whether the IRS has proved all of the information Plaintiffs requested constitutes US West’s return information. The Code expansively defines return information as:
[A] taxpayer’s identity, the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, over-assessments, or tax payments, whether the taxpayer’s return was, is being, or will be examined or subject to other investigation or processing, or any other data, received by, recorded by, prepared by, furnished to, or collected by the Secretary with respect to a return or with respect to the determination of the existence, or possible existence, of liability (or the amount thereof) of any person under this title for any tax, penalty, interest, fine, forfeiture, or other imposition, or offense.
26 U.S.C. § 6103(b)(2)(A). “[Removal of identification from return information [does] not deprive it of protection under § 6103(b). Since such deletion would not make otherwise protected return information diseloseable, [the IRS] has no duty under the FOIA to undertake such redac
Plaintiffs’ FOIA request sought US West’s March 1996 submission to the IRS under the VCRP, “including supporting documents, supplemental reports, informal and formal discovery requests, orders, if any, and the written and electronic (e-mail) responses given thereto, including the August 28, 1996 dated IRS’s Compliance Statement issued to US WEST.” Appx. at 238. The IRS argues all of that information constitutes return information because all information US West submitted to and received from the IRS under the VCRP pertains to US West’s “deductions,” possible tax liability, and the pension plan’s qualification as a tax-exempt entity. That contention relies upon the nature of the VCRP and the Code’s treatment of pension plans and corporations’ contributions to them, which we now briefly review.
A.
As one of the IRS’s declarations explained, the IRS established the VCRP in 1992 to allow sponsors of qualified pension plans to identify and to correct voluntarily operational failures of the plans with the guidance of the IRS, while also allowing the sponsors and plans to continue providing participants with retirement benefits on a tax-favored basis. Rev. Proc. 94-62, 1994-
Aside from the VCRP, the IRS tells us, as it did the district court, that the Code provides a corporation’s contributions to a qualified pension plan are deductible to a defined extent. See 26 U.S.C. § 404. A pension plan may be disqualified for failing to operate in accordance with the pension plan’s terms or Section 401(a). See BNA Tax Mgmt., U.S. Income Portfolios, Comp. Planning 375-2d, § I. If a plan is disqualified, the corporations’ contributions to the plan may become taxable. See id. Moreover, disqualification of a pension plan would result in the plan losing its tax-exempt status. See 26 U.S.C. §§ 401(a) & 501(a). For some violations of a pension plan’s terms, instead of disqualifying the plan, the Code provides the corporation may be subject to an excise tax. See, e.g., 26 U.S.C. §§ 4971-4980.
B.
In response, Plaintiffs make essentially four arguments. They claim that (1) they seek information about the operation of a pension plan rather than return information; (2) no evidence exists that the requested information was received, collected, or prepared by the IRS with respect to an actual tax return, liability, or deduction; (3) the IRS has not met its burden of proving all requested information is return information because it has only provided conelusory assertions as to the information’s content without actually reviewing the information; and (4) all of the requested information does not fall within the meaning of “data.” We take each contention in turn. Because in the end we reject each of those arguments, we must also reject Plaintiffs’ claims that the IRS has improperly withheld segregable, nonexempt portions of the requested information and that the district court erred in refusing to conduct an in camera review.
1.
First and foremost, Plaintiffs assert they seek information about the operation and administration of US West’s pension plan, rather than return information. They, however, do not provide any explanation as to why the fact that the requested information pertains to the operation and administration of the pension plan means that the requested information does not also pertain to potential tax liability, the
2.
Next, Plaintiffs contend the IRS has presented no evidence that the requested information was received, collected, or prepared by the IRS with respect to an actual tax return, liability, or deduction. They even go so far as to maintain US West never actually took a deduction for any payments into the plan, filed a return associated with the plan, or was assessed a liability for contributions to the plan. The IRS takes no position as to those factual assertions. But even if those factual assertions about US West’s returns, deductions, and liabilities are correct, Plaintiffs’ argument on this point overlooks the fact that the Code defines return information broadly, reaching far more than just information that relates to an actual tax return, an imposed liability, or a taken deduction. Section 6103(b)(2)(A) protects “data received by ... prepared by, furnished to, or collected by the Secretary with respect to a return or with respect to the determination of the existence, or possible existence, of liability ... for any tax, penalty, interest, fine, forfeiture, or other imposition, or offense.” (emphasis added).
In many cases we know little more than that the communications arrived at the IRS, with no indication that it used them in any way or subjected them to anything more than minimal processing. But § 6103 seems deliberately sweeping in this respect, reaching data “received by, recorded by, prepared by, furnished to, or collected by” the Secretary. It appears to take no interest in the Secretary’s actual use of the material. To reach [the plaintiffs] reading we would have to excise the words “received by” and “furnished to,” and to disregard the extremely general character of the connecting phrase — “with respect to.”
Landmark,
■3.
Gaining slightly more traction, Plaintiffs assert the IRS has not carried its burden of proving all of the requested information constitutes return information because the IRS supplies only conclusory assertions as to the information’s content based upon declarations of individuals who admittedly have not looked at the requested information. So, Plaintiffs ask, how could the IRS possibly know that every single document in the requested information constitutes return information?
To this, the IRS responds it can tell just by reading Plaintiffs’ FOIA request that every document responsive to their request constitutes return information. Plaintiffs stated in their FOIA request they wanted all documents associated with US West’s submission to the VCRP in 1996. Therefore, according to the IRS, all of the documents Plaintiffs seek are US West’s return information which they are not entitled to receive without US West’s permission. For the reasons we provide, we agree. The IRS further admits it has neither searched for nor reviewed the requested information. It has not done so because Plaintiffs sought only US West’s return information and IRS regulations required Plaintiffs to submit US West’s consent with their initial request to receive that • information. See 26 C.F.R. § 601.702(c)(4)(i)(E), (c)(5)(iii)(C) (requiring a FOIA request seeking a third party’s return information to supply that third party’s authorization with the request). Not only would it have violated its own regulations to have begun processing Plaintiffs’ request without that consent, the IRS had no duty under FOIA to process Plaintiffs’ request until they provided that consent because “only a valid FOIA request can trigger an agency’s FOIA obligations.” Flowers,
But, when pushed at oral argument as to why it could not just look at the documents anyway before denying Plaintiffs’ request,
First, Section 6103(b)(2)(A) specifically protects from disclosure a “taxpayer’s identity.” Id. Second, it also protects “data ... with respect to the determination of the ... possible existence, of liability ... of any person.... ” Id. The Code does not define “data.” Nonetheless, in Landmark Legal Foundation v. IRS,
In addition to not reviewing the requested information, Plaintiffs urge us that the IRS has only provided the same sort of conclusory, unspecific assertions as to the requested information’s content as the Fifth Circuit deemed insufficient in Batton v. Evers,
[T]he district court did not make any factual descriptions of the documents in this case or conduct an in camera review. Nor does it logically follow that case history notes and information from private sources contain exclusively third party tax information, rather than segregable portions. We recognize that in many instances an agency may submit an affidavit or declaration categorically describing the types of documents and the applicable exemptions to justify its withholding. But where the agency*1190 affidavit fails to identify the particular type of the document being withheld— and the party seeking disclosure contests the type of information it contains — a district court may not simply rely on a broad categorical approach to withholding____The general description of “case history notes and information from private parties” does not tell us anything about the individual documents and why more general information — for example, the dates, authors, or brief description of the subject matter of the notes and information — cannot be disclosed.
Id. at 178 (emphasis added). While it does not logically follow that “case history notes and information from private parties” are return information, the IRS has demonstrated it does logically follow that information a pension plan and its sponsor submit to and receive from the IRS pursuant to the VCRP constitutes return information. Cf. Landmark,
And, Batton acknowledged “in many instances an agency may submit an affidavit or declaration categorically describing the types of documents and the applicable exemptions to justify its withholding.”
[A] claimed FOIA exemption consists of a generic exclusion, dependent upon the category of records rather than the subject matter which each individual record contains, resort to a Vaughn index is futile.... If, therefore, the Commissioner’s assertion of a Section 6103 exemption rests upon such generic grounds, he will ordinarily be able to make the requisite showing with an affidavit sufficiently detailed to establish that the document or group of documents in question actually falls into the exempted category. Some portions of § 6103 are plainly susceptible of such generic application— particularly that portion which defines protected return information to include all information, no matter what its subject, “received by, recorded by, prepared by, furnished to, or collected by the Secretary with respect to a return or with respect to the determination of the existence, or possible existence, of liability (or the amount thereof) of any person ... for any tax, penalty, interest, fine, forfeiture, or other imposition, or offense.”
Church of Scientology of Cal. v. IRS,
Plaintiffs additionally claim Kamman v. IRS,
The Kamman court decided the second affiant, although he had at least looked at the requested information, also failed to establish the appraisals fell within the definition of return information because his affidavit did not:
[A]ssert any facts indicating that the appraisals were furnished to the IRS “with respect to a return.” Nor are there any facts indicating that the appraisals were furnished to the IRS “with respect to the determination of the existence ... of liability.” Rather, the appraisals apparently were performed long after the property was seized by the IRS and after the third-party taxpayer had pleaded guilty to tax fraud charges. Thus, the taxpayer’s liability (or amount thereof) had already been determined. The appraisals were presumably commissioned in order to assist the IRS in determining what a fair price for the Indian jewelry might be at the auction— an action unrelated to the taxpayer’s return or liability. The IRS, at least, has failed to allege any facts that would lead us to believe otherwise.
Id. at 49. Again, this presents a very different situation than the one before us. In Kamman, the IRS provided no facts to suggest it had collected or prepared the requested information with regard to potential liability because it had in fact prepared the requested information long after it had calculated the third party taxpayer’s
4.
Lastly, relying primarily on Tax Analysts v. IRS,
In contrast, all of the materials describing a pension plan’s operational failures and proposed corrections submitted by a taxpayer or person to the IRS under the VCRP are inherently taxpayer-specific. A compliance statement and other materials provided by the IRS to the taxpayer are issued by an IRS examiner following a review of the taxpayer’s submissions and collaboration with the taxpayer on how to correct the failures identified by the taxpayer. The IRS designed the VCRP to provide guidance not to the IRS, but to specific taxpayers at taxpayers’ requests in collaboration with those taxpayers.
In addition, in Tax Analysts the plaintiff requested a kind of document, all FSAs, the release of which does not inherently implicate a particular taxpayer. But Plaintiffs’ FOIA request in this case explicitly seeks information pertaining to a specific taxpayer or person. Thus, any information the IRS releases, Plaintiffs would know pertains to US West. We, therefore, conclude the taxpayer-specific character of the entirety of the alleged communications between US West and the IRS under the VCRP point toward their classification as data under Section 6103.
V.
We caution that the IRS’s approach in this case is only acceptable under FOIA because it has demonstrated Plaintiffs’ FOIA request on its face solely seeks US West’s return information. FOIA only im
In many cases, however, the IRS may and must review the requested information before refusing to produce requested information as exempt third party return information. For instance, in Batton, the requester targeted information pertaining to the IRS’s audit of himself. It so happened that upon processing his request, the IRS discovered responsive information that was also third party return information. Likewise, in Church of Scientology of Texas v. IRS,
The FOIA requests and the IRS’s responses in Church of Scientology of California v. IRS,
In Landmark, the plaintiff sought any and all documents pertaining to inquiries about and requests for audits or investigations of tax-exempt organizations, including the names of the people inquiring or requesting the audits or investigations, the names of the tax-exempt organizations that were the target of those inquiries and requests, and the IRS’s responses to those inquiries and requests.
In closing, we come back to Plaintiffs’ refrain: because the IRS has not looked at the requested information, no one knows what is in it; there could be nonexempt information in there, which the IRS bears the burden to prove there is not. For the reasons we have explained, the IRS has met its burden of proving all of the requested information — all documents associated with the IRS’s handling of US West’s 1996 submission to the VCRP— either pertains to US West’s “nature, source, or amount of [its] ... deductions” or is “data, received by, ... prepared by,
Thus, although FOIA provides an agency must disclose any reasonably segregable non-exempt information, the IRS has demonstrated all of the requested information is exempt. Furthermore, “[t]he mere deletion of identifying material will not cause the remainder of the return information to lose its protected status, and document-by-document examination to determine the possibility of redaction for that purpose is therefore unnecessary.” Church of Scientology of Cal.,
VI.
We also affirm the district court’s decision not to conduct an in camera review of the requested information. The IRS has demonstrated with reasonable specificity why the requested information falls within FOIA’s third exemption and Section 6103. Plaintiffs have not provided any meritorious argument that contradicts the IRS’s claim. Nor have they asserted any colorable claim of bad faith on the part of the IRS.
VII.
We conclude the IRS has succeeded in carrying its burden of proving that Plaintiffs’ FOIA request on its face only sought US West’s return information to which Plaintiffs are not entitled without US West’s consent. Because Plaintiffs have not provided that consent, the IRS properly withheld the requested information. The district court’s judgment in favor of the IRS is hereby
AFFIRMED.
Notes
. While the district court litigation proceeded, Plaintiffs filed another FOIA request (with a different IRS disclosure office) in 2009 seeking the same information. Citing Section 6103, the IRS responded "as this request is equally invalid [as Plaintiffs’ 2008 FOIA request for the same information], we are closing our file on this matter.” Appx. at 120.
Plaintiffs filed an amended complaint, incorporating facts pertaining to the 2009 request. Because the 2008 and 2009 requests sought the same information and received basically the same response from the IRS, we address them as one, as the district court and parties also appear to have done.
. "A Vaughn index is a compilation prepared by the government agency ... listing each of the withheld documents and explaining the asserted reason for its nondisclosure.” Anderson,
. Henceforth, we will refer to US West, Inc. and US West Pension Plan together as US West. We, of course, recognize that US West, Inc. and US West Pension Plan are two different entities, two different "taxpayers” or "persons” under the IRC. The first is a corporation and the second is a tax-exempt, qualified pension plan or trust pursuant to IRC §§ 401(a) and 501(a). But as a practical matter they are obviously closely related — the corporation created and directed the operation of the pension plan for the benefit of its employees. Likely for that reason, the parties have not indicated consistently whose alleged return information — US West, Inc. or US West Pension Plan or both — Plaintiffs' FOIA
The distinction between the two, however, has become irrelevant (if it was ever otherwise). On appeal, Plaintiffs no longer dispute Section 6103 protects the return information of US West, Inc. and US West Pension Plan alike. Before the district court they claimed Section 6103 did not protect US West Pension Plan because as a tax-exempt entity they said it was not a “taxpayer.” They have clearly, and likely wisely, abandoned that argument on appeal. See 26 U.S.C. § 6103(b)(2)(A) (" '[RJeturn information’ means — a taxpayer’s identity ... or any other data ... of any person under this title....”); 26 U.S.C. § 7701(a)(1) & (14) ("The term 'person' shall be construed to mean and include an individual, a trust ... or corporation.... The term 'taxpayer' means any person subject to any internal revenue tax.”); Landmark Legal Found, v. IRS,
. "FOIA provides for two different types of exhaustion, actual and constructive. Actual exhaustion occurs when the agency denies all or part of a party’s document request. Constructive exhaustion occurs when certain statutory requirements are not met by the agency.” Taylor,
. In the past, we admit we have been less than clear on this point. In an unpublished
. The Steele court then goes on to discuss whether the plaintiffs were entitled to the benefit of the "futility exception” of the exhaustion doctrine and whether the purposes underlying the exhaustion doctrine were achieved. Doing so suggests the exhaustion doctrine is closer to a prudential consideration than a jurisdictional requirement.
. The IRS does not suggest we owe Rev. Proc. 94-62 any level of deference. Instead, the IRS simply contends Rev. Proc. 94-62 is consistent with its present litigation position and created an expectation on the part of pension plans and their sponsors that information they provided and received pursuant to the VCRP would have the confidentiality protections of Section 6103.
. The dissent takes issue with our discussion of this argument because the IRS raised it for the first time on appeal. True enough. We discuss it, nonetheless, because the IRS made it in response to the panel’s pressing the IRS for an explanation as to why it could not have looked at the requested records anyway, essentially, despite Plaintiffs’ improper request. And, despite the dissent's suggestion, there is a meaningful distinction between what the IRS has done and what it proposes the IRS should have done. By refusing to search for and confirm the existence of the requested records, the IRS has avoided saying whether US West made submissions to the IRS under the VCRP — a fact protected from disclosure for reasons explained herein.
. We do not mean to imply that if Plaintiffs had sought any and all information regarding US West in the IRS's possession that Section 6103 necessarily prevents the IRS from searching for responsive records because doing would reveal US West’s "identity.” It seems not all information about a taxpayer or person in IRS files is necessarily return information. Church of Scientology of Cal. v. IRS,
[S]tarts with a long list of specific items ... [namely] ‘a taxpayer’s identity!], and then refers to ‘other data,’ followed by a modifying clause — 'received by ... the Secretary with respect to a return or with respect to the determination of the existence, or possible existence of liability____’ The modifying clause may apply to all the preceding items, or only to 'other data.’ Under the latter reading, Congress would be understood to have thought that the specifically identified information [identities of tax-exempt organizations], if in the hands of the IRS at all, should be categorically sheltered from disclosure.
. The dissent claims "general FOIA principles” require the IRS to search for records responsive to Plaintiffs’ FOIA request. While we agree that generally an agency has a duty to search for records responsive to a FOIA request prior to claiming they are exempt, another general FOIA principle dictates an agency only has a duty to search for responsive records upon receipt of a request that complies with the agency’s rules and procedures for such requests. 5 U.S.C. § 552(a)(3)(A). The dissent says nothing to the contrary. The case it primarily cites in support of its proffered general principle, Elliott v. U.S. Dep’t of Agriculture,
In this case, IRS regulations require FOIA requests that seek third party return information, as defined by 26 U.S.C. § 6103(b)(2)(A), provide that third party's consent. It so happens that FOIA’s Exemption 3 in tandem with 26 U.S.C. § 6103(a) also exempts from disclosure third party return information in the absence of that third party’s consent. We are aware of, and not particularly enamored with, the circularity inherent in making a condition for a proper request for records dependent upon the records’ subject matter. But, Plaintiffs have not argued, let alone demonstrated, the IRS cannot do that. Other courts have allowed agencies to do so. For example, in Strunk v. Department of State,
. Taking the dissent's conclusion to its logical end would mean when Joe Smith asks for Jane Doe’s return information without providing her consent, the IRS must look for her return information, confirm it exists, but then refuse to release it because it is exempt from disclosure. One, that runs into the problem of forcing the IRS to disclose exempt return information, see our discussion in Section IV.B.3. And, two, it is pointlessly inefficient. The agency still bears the burden of proving the information a request seeks is exempt. But sometimes, as other courts have also recognized, proving that does not require looking at the requested information. Sometimes that determination can be made by considering the request and the IRS's explanations. And, a requester retains the ability to challenge those explanations in federal court. For example, in Bickel & Brewer v. IRS, No. 3-08-cv-0114,
. Although, the Landmark court noted the IRS had engaged in an inconsistency on that point because it released to the plaintiff "letters written by representatives and senators (with their names not redacted), typically enclosing a constituent's letter urging that the IRS investigate a tax-exempt organization.”
. Plaintiffs briefly assert the IRS acted in bad faith by failing to respond to their request within FOIA's mandated twenty-day window for agency response. First, we doubt that failing to respond to a request within twenty days alone constitutes bad faith; rather, it seems to go to whether Plaintiffs have constructively exhausted their administrative remedies. See infra note 4. Second, it appears the IRS did respond in twenty days.
The IRS evidently received Plaintiffs' FOIA request on April 22, 2008. Appx. at 114. FOIA provides the IRS had twenty days from April 22 “excepting Saturdays, Sundays, and legal public holidays” to respond to Plaintiffs' request. 5 U.S.C. § 552(a)(6)(A)(i). Therefore, the IRS had until May 19, 2008 to respond. The IRS actually responded on May 14,2008. Appx. at 113.
Dissenting Opinion
dissenting.
The court’s opinion allows the IRS to reject a FOIA request without first conducting a search for the requested records.
The court adopts the IRS’s position that Plaintiffs, under Treasury regulations and FOIA, were required to obtain US West Pension Plan’s (“Plan”) consent before the IRS could begin processing the request. This is because Plaintiffs sought the Plan’s “return information.” Indeed, the Treasury regulations require a requester to obtain third party consent before the IRS can process a request for third party return information. See Treas. Reg. § 601.702(c)(4)(i)(E), (c)(5)(iii)(C); id. at 601.702(c)(4)(i). But based upon general FOIA principles, I do not think that we can accept the IRS’s blanket assertion, without having conducted a search, that Plaintiffs’ request necessarily seeks only return information.
FOIA generally requires federal agencies to disclose agency records to the public upon request, subject to nine exemptions. Stewart v. U.S. Dep’t of Interior,
Thus, pursuant to Exemption 3, absent the Plan’s consent, the IRS need not turn over any of the Plaintiffs’ requested records if the IRS can establish that the request seeks only the Plan’s “return information.” But courts require agencies to conduct a search before claiming an exemption. As the D.C. Circuit recently noted, “[t]o prevail on summary judgment, [an] agency must show beyond material doubt that it has conducted a search reasonably calculated to uncover all relevant documents. Even if the protected records could be withheld under one of the FOIA exemptions, that does not absolve the agency of its duty to identify responsive documents, claim the relevant exemptions, and explain its reasoning for withholding the documents in its affidavit.” Elliott v. U.S. Dep’t of Agriculture,
What’s more, I cannot agree that the IRS has established that Plaintiffs’ request, on its face, seeks only return information. Two of the IRS employees who reviewed the request merely stated in their affidavits that the request “did not seem to be a proper, valid FOIA request because the request sought a third party’s return information but lacked authorization from [the third party].” Aplt.App. 175, 198. A third employee summarily stated that after reviewing the request, she “realized that the requests sought a third party’s return information.” Id. at 182. The IRS should not be able to leap to a legal conclusion on this general request
The court also accepts the IRS’s argument that conducting a search would be tantamount to disclosing return information. I disagree. As an initial matter, the IRS did not raise this argument in its brief before this court, but rather made the argument for the first time at oral argument. We generally do not consider such arguments. See Corder v. Lewis Palmer Sch. Dist. No. 38,
. Plaintiffs requested “a complete copy set of all documents associated with the IRS handling of US WEST's submission in 1996 re-suiting in the IRS Compliance Statement, plus all other associated records in the agency's file.” Aplt.App. 112.