T. Keith Fogg v. Internal Revenue Service ( 2022 )

United States Court of Appeals
For the Eighth Circuit
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No. 21-2502
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Nicholas Xanthopoulos
Plaintiff
T. Keith Fogg
Plaintiff - Appellant
v.
Internal Revenue Service
Defendant - Appellee
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Appeal from United States District Court
for the District of Minnesota
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Submitted: March 16, 2022
Filed: June 3, 2022
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Before GRASZ, STRAS, and KOBES, Circuit Judges.
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GRASZ, Circuit Judge.
T. Keith Fogg seeks to compel disclosure under the Freedom of Information
Act (“FOIA”) of the terms of a tax professional authentication process contained
within the Internal Revenue Manual (“IRM”). See 5 U.S.C. § 552. The district court
granted summary judgment in favor of the Internal Revenue Service (“IRS”) after
concluding the requested material was properly withheld pursuant to 5 U.S.C.
§ 552(b)(7)(E) (hereinafter “Exemption 7(E)”). In doing so, the district court denied
Fogg’s request for in camera inspection of the withheld IRM material. We reverse
and remand for in camera inspection.
I. Background
Under IRM § 21.1.3.3, IRS employees must authenticate the identities of
third-party representatives who contact the IRS on behalf of a taxpayer requesting
sensitive taxpayer information. IRM § 21.1.3.3 (June 21, 2021), available at
https://www.irs.gov/irm/part21/irm_21-001-003. In January 2018, the IRS changed
its authentication procedures, requiring third-party representatives to provide their
Social Security Numbers to IRS employees before the IRS releases sensitive
taxpayer information.
Prior to Fogg’s FOIA request, the IRS publicly published part of IRM
§ 21.1.3.3. However, the IRS redacted portions of § 21.1.3.3 allegedly relating to
“specialty situations” in which the IRS uses “unique” authentication procedures to
combat unauthorized disclosure of sensitive taxpayer information, identity theft, and
criminal fraud.
In June 2019, Fogg and Nicholas Xanthopoulos1 submitted a FOIA request to
the IRS seeking disclosure of the terms of a third-party authentication process set
forth within IRM § 21.1.3.3. Fogg sought disclosure of the withheld IRM material,
in part, to understand how the IRS used or retained tax professionals’ data collected
under the new procedures.
In August 2019, the IRS denied Fogg’s request, stating it would continue to
withhold the redacted portions of IRM § 21.1.3.3 pursuant to Exemption 7(E) on the
1
Xanthopoulos is not a party on appeal.
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basis the materials were investigative or prosecutorial law enforcement techniques
or procedures. Fogg and Xanthopoulos filed an administrative appeal, again seeking
disclosure. The IRS affirmed the denial on appeal.
Fogg and Xanthopoulos then sued the IRS in federal court, pursuant to 5
U.S.C. § 552(a)(4)(B). The IRS moved for summary judgment and attached a
declaration from IRS attorney Kilsy Barnes (“Barnes Declaration”) contending
Exemption 7(E) authorized the IRS to continue withholding the IRM material. Fogg
and Xanthopoulos cross-moved for summary judgment, arguing the withheld
portions were not investigative or prosecutorial law enforcement techniques or
procedures within the meaning of Exemption 7(E). Fogg requested that the district
court conduct an in camera inspection of the redacted material.
While Fogg’s suit was pending in district court, the IRS revised IRM
§ 21.1.3.3 and voluntarily disclosed two previously withheld portions to the public.
The litigation continued over the remaining redactions.
The district court granted the IRS’s motion for summary judgment and denied
both Fogg’s cross-motion for summary judgment and his request for in camera
inspection. Fogg appeals from the judgment.
II. Analysis
We review the district court’s grant of summary judgment de novo. Missouri
Coal. for Env’t Found. v. U.S. Army Corps of Eng’rs, 542 F.3d 1204, 1209 (8th Cir.
2008). In the FOIA context, summary judgment is available to the agency where it
“proves that it has fully discharged its obligations under FOIA, after the underlying
facts and inferences to be drawn from them are construed in the light most favorable
to the FOIA requester.” Id. (quoting Miller v. U.S. Dep’t of State, 779 F.2d 1378,
1382 (8th Cir. 1985)). We review the district court’s denial of in camera inspection
for abuse of discretion. Peltier v. F.B.I., 563 F.3d 754, 759 (8th Cir. 2009).
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The purpose of FOIA is “to provide wide-ranging public access to government
documents.” Missouri Coal., 542 F.3d at 1208 (quoting Miller v. U.S. Dep’t of
Agric., 13 F.3d 260, 262 (8th Cir. 1993)). FOIA favors disclosure of “official
information long shielded unnecessarily from public view,” save for certain
circumstances arising under an enumerated exemption. Id. (quoting EPA v. Mink,
410 U.S. 73, 80 (1973)).
This appeal arises under Exemption 7(E), one of nine statutory exemptions to
disclosure pursuant to a FOIA request. See 5 U.S.C. § 552(b). These exemptions
are limited and “do not obscure the basic policy that disclosure, not secrecy, is the
dominant objective of [FOIA].” Miller, 13 F.3d at 262 (quoting Dep’t of Air Force
v. Rose, 425 U.S. 352, 361 (1976)). Therefore, we narrowly construe the
exemptions. Milner v. Dep’t of Navy, 562 U.S. 562, 565 (2011). Furthermore, “the
burden is on the agency to sustain its action.” 5 U.S.C. § 552(a)(4)(B).
To meet its burden under Exemption 7(E), the IRS must, as a threshold matter,
show the withheld IRM material was “compiled for law enforcement purposes.” 5
U.S.C. § 552(b)(7)(E). This determination should be made according to the
“ordinary, contemporary, common meaning” of those terms when FOIA was
enacted. Food Mktg. Institute v. Argus Leader Media, 139 S. Ct. 2356, 2362 (2019)
(quoting Perrin v. United States, 444 U.S. 37, 42 (1979)). A court cannot expand or
constrict the exemption beyond what its terms permit. Id. at 2366.
Courts determine whether the agency met its burden by “review[ing] the
adequacy of the affidavits and other evidence presented by the Government in
support of its position, utilizing an in camera examination of the manual itself as an
aid in determining whether the Government’s affidavits are accurate and made in
good faith.” Cox v. Dep’t of Just., 576 F.2d 1302, 1311 (8th Cir. 1978). If the
agency’s description of the withheld material “adequately states its grounds for
nondisclosure, and if those grounds are reasonable and consistent with the applicable
law, the district court should uphold the Government’s position.” Id.-4-
The district court did not conduct an in camera inspection here. We are
therefore limited to reviewing the adequacy of the IRS’s evidence and affidavit. See
Missouri Coal., 542 F.3d at 1210.
Although we find no evidence of bad faith by the IRS, the Barnes Declaration
contains a legal error in at least one respect: it states “the I.R.M. generally” is
“compiled for law enforcement purposes because the I.R.M. is an internal manual
for the IRS, a law enforcement agency.”
The Barnes Declaration erroneously characterizes the IRS as only a law
enforcement agency. The IRS is instead a federal agency with mixed law
enforcement and administrative functions. Tax Analysts v. IRS, 294 F.3d 71, 77
(D.C. Cir. 2002). The IRS cannot be characterized solely as a law enforcement
agency, and neither was the entire IRM “compiled for law enforcement purposes.”
We have said the “distinction between law enforcement matters and administrative
matters is not easily drawn,” Cox, 576 F.2d at 1307, but the IRM contains several
sections relating to solely administrative matters. See, e.g., IRM § 1.2 (relating to
delegation of authority among IRS divisions), § 1.4 (containing resource guides for
managers), and § 6 (relating to internal human resources processes), available at
https://www.irs.gov/irm. Given that the Barnes affidavit fails to recognize that the
IRS is both an administrative and law-enforcement agency, and that the IRM reflects
that fact, we cannot be sure that this misunderstanding did not color the affidavit’s
conclusions. We cannot be certain, in other words, that the IRS “fairly described”
the withheld material and adequately stated “the reason for nondisclosure . . . without
in camera inspection.” Missouri Coal., 542 F.3d at 1210 (citing Barney v. IRS, 618
F.2d 1268, 1272 (8th Cir. 1980)).
Keep in mind the Barnes Declaration was the sole affidavit the IRS submitted
in support of its motion for summary judgment. Although we have said in camera
inspection “should be limited” because “it is contrary to the traditional judicial role
of deciding issues in an adversarial context upon evidence produced openly in
court,” this is such a case where in camera inspection is appropriate to determine
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“whether the government’s affidavits are accurate[.]” Peltier, 563 F.3d at 759(quoting Cox, 576 F.2d at 1311–12). Where, as here, the IRS’s success in sustaining
its action rests primarily on the adequacy of a single affidavit containing a legal
error, the district court is well served to use in camera inspection “as an aid” in
determining whether the agency met its burden in establishing the exemption
applies. Cox, 576 F.3d at 1312. Under these circumstances, we conclude the denial
of Fogg’s request for in camera inspection was an abuse of discretion.
III. Conclusion
We therefore reverse the district court’s grant of summary judgment and
remand for proceedings consistent with this opinion.
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