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05/27/86 Church of Scientology of v. Revenue Service

May 27, 1986







Opinion of the Court filed by Circuit Judge SCALIA.

Concurring opinion filed by Circuit Judge SILBERMAN.

Dissenting opinion filed by Circuit Judge WALD, with whom Chief Judge ROBINSON and Circuit Judge MIKVA join.

SCALIA, Circuit Judge : This is an appeal from the District Court's grant of summary judgment in favor of the Internal Revenue Service, in a Freedom of Information Act suit brought by the Church of Scientology under 5 U.S.C.§ 552(a)(4)(1982). The only issue addressed by this en banc opinion is the meaning of the so-called Haskell Amendment, which excepts from the Internal Revenue Code's definition of nondisclosable "return information" "data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer." 26 U.S.C. § 6103(b)(2) (1982). Specifically, we consider whether to adhere to a 1981 panel decision of this court which held that that provision removes from the defined category of protected information all material which, either in its original form or as redacted in response to a FOIA request, does not disclose the identity of the taxpayer to whom it pertains. I

The facts of the present case are set forth in the panel opinion issued simultaneously with this opinion. For present purposes, it suffices to recite that the central issue in the appeal is the adequacy of the IRS's search for requested records; that one of the principal points bearing upon that issue is whether certain files could reasonably be excluded from the search as containing only "return information"; and that the latter point depends to a considerable extent upon whether redaction (specifically, elimination of portions of documents that would disclose the taxpayer's identity) removes the material from the protected category.

After the case had been briefed and argued before the assigned panel, the court en banc, on its own motion, requested supplemental briefing and, on December 5, 1985, heard oral argument limited to the following issue: *fn1

Should the Court adhere to the interpretation of 26 U.S.C. § 6103(b)(2) adopted by the panel opinion in Neufeld v. IRS, 207 U.S. App. D.C. 326, 646 F.2d 661, 665 (D.C. Cir. 1981), or should it adopt a different interpretation, in particular that announced by the Seventh Circuit in King v. IRS, 688 F.2d 488, 490-94 (7th Cir. 1982)?

Briefs amicus curiae were received from the American Civil Liberties Union Foundation of Washington and from Professor John L. Neufeld and the Freedom of Information Clearinghouse. II In relevant part, 26 U.S.C. § 6103(a) provides as follows:

Returns and return information shall be confidential, and except as authorized by this title --

(1) no officer or employee of the United States, . . . . shall disclose any return or return information obtained by him in any manner in connection with his service as such an officer or an employee or otherwise or under the provisions of this section. . . .

Willful violation of this provision is a felony. 26 U.S.C. § 7213(a)(1).

"Return information" is defined in the statute as follows:

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, and

any part of any written determination or any background file document relating to such written determination (as such terms are defined in section 6110(b)) which is not open to public inspection under section 6110,

but such term does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer.

26 U.S. § 6103(b)(2) (emphasis added).

The last clause in the defining paragraph is the Haskell Amendment, so called because it was inserted into the committee-proposed bill through a floor amendment introduced by that Senator. On the basis of that clause, the Ninth Circuit held in 1979 that data that do not identify a particular taxpayer because names, identifying numbers and other similar information have been deleted are not return information. Long v. IRS, 596 F.2d 362 (9th Cir. 1979), cert. denied, 446 U.S. 917, 100 S. Ct. 1851, 64 L. Ed. 2d 271 (1980). In a later case before the court in which the IRS had not briefed the question, the panel found it necessary to reach the issue and, without analysis of its own, followed what was at the time the only court of appeals precedent. Neufeld v. IRS, 207 U.S. App. D.C. 326, 646 F.2d 661, 665 (D.C. Cir. 1981). In so doing, the panel observed that "while the IRS wishes to reserve the question of the proper statutory definition of return information for another day, it appears to concede, for this case only, that [no harmful error occurred] if in fact [the district court] employed the definition of return information articulated in Long." Id. (footnote omitted). Subsequently, the Seventh Circuit reached a conclusion different from Long, holding that the statute "protects from disclosure all non-amalgamated items listed in subsection (b)(2), and that the Haskell Amendment provides only for the disclosure of statistical tabulations which are not associated with or do not identify particular taxpayers." King v. IRS, 688 F.2d 488, 493 (7th Cir. 1982). The newly emerged circuit conflict has induced us to reconsider the position stated in our 1981 panel decision.

The starting point of analysis, of course, is the text of the provision at issue, which, we agree with the Seventh Circuit, is ill suited to achieve the result pronounced in Long. It would be most peculiar to catalogue in such detail, in subparagraph of the body of the definition, the specific items that constitute "return information" (e.g., "income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, over-assessments, or tax payments, . . . or any other data, received by, recorded by, prepared by, furnished to, or collected by the Secretary with respect to a return") while leaving to an afterthought the major qualification that none of those items counts unless it identifies the taxpayer. Such an intent would more naturally have been expressed not in an exclusion ("but such term does not include . . .") but in the body of the definition -- by stating, for example, that "the term 'return information' means the following information that can be associated with or identify a particular taxpayer: . . . ." If the intended scope of the exclusion is as broad as Long holds, the structure of the provision is akin to defining mankind as "all mammals in the world, but excluding those that are not relatively hairless bipeds with the power of abstract reasoning." While such a form of definition is conceivable, it would constitute "everyday language" (as the dissent characterizes it, Dissent at 5) only for one of Lewis Carroll's characters, and it hardly takes "Talmudic dissection " "microscopic scrutiny," id., to reject it as implausible.

The Long interpretation produces a similarly mindless consequence in subparagraph of the definition of return information. That subparagraph includes within the definition of return information IRS-written determinations and related background files that are not

open to public inspection under § 6110. The latter section excludes from the public inspection requirement not only identifying data, 6110(c)(1), but many other matters, such as trade secrets, § 6110(c)(4), information prepared for the use of an agency regulating financial institutions, § 6110(c)(6), and (with respect to most written determinations) material relating to a taxpayer's change of annual accounting period, § 6110(g)(5)(ii). It would be absurd to incorporate these exclusions so precisely into the body of the definition of return information, and then, in the immediately following clause, to write all of them back out -- except the identifying data exclusion (§ 6110(c)(1)), which is not deleted by the Haskell exclusion but merely rendered entirely redundant.

We also agreed with the Seventh Circuit that the formulation of the Haskell provision itself suggests something other than merely the absence of identifying information. It would be strange to express the latter thought by excluding "data in a form which cannot be associated with, or otherwise identify . . . a particular taxpayer" (emphasis added). The emphasized phrase would be superfluous for that purpose, as reading the provision without it will demonstrate. A more natural formulation for the purposes which Long assigns would be similar to that contained in the provision of FOIA that "an agency may delete identifying details," 5 U.S.C. § 552(a)(2) (emphasis added); or similar to the formulation used elsewhere in this same Subchapter of the Internal Revenue Code, that no publication shall "permit . . . information . . . to be associated with, or otherwise identify, directly or indirectly, a particular taxpayer," 26 U.S.C. § 6108(c). Moreover, it is curious usage to describe an item of return information (a particular taxpayer's tax "payments," for example) as having one "form" when made public in a document that includes the taxpayer's name, and taking a different "form" when made public in the very same document with only the name deleted.

What is suggested by the language of the provision itself is strongly confirmed by other provisions of § 6103. Subsections 6103(f)(1) & (2) and subsection 6103(f)(4)permit disclosure of return information to certain committees of Congress, and subsection 6103(f)(4)to the full Senate or House; under all four provisions, however, unless the taxpayer consents in writing the disclosure must be made to the pertinent committee or house "sitting in closed executive session" when it concerns "return information which can be associated with, or otherwise identify, directly or indirectly, a particular taxpayer." If Long's interpretation of the Haskell Amendment is adopted, the exception in these provisions completely consumes the rule. That is to say, if return information consists as Long says, of nothing but identifying data, then whenever it is provided under these provisions the receiving committee or house must sit in executive session. Quite plainly, these provisions contemplate return information that is non-identifying. *fn2

In addition to clear textual indications, rejection of the Long interpretation is suggested by assessment of plausible legislative intent. It is of course true, as two of the amici have asserted, that there is no reason "why Congress would have wanted to forbid the disclosure of information which would not threaten the privacy of individual taxpayers." Brief of Neufeld and Freedom of Information Clearinghouse at 5. But it is also true that the threat of privacy is not entirely eliminated by agency and (ultimately) judicial assessment that certain deletions in response to a FOIA request will suffice to conceal the taxpayer's identity. The protection afforded by such assessment is always problematic, not only because of the risk of human error, but also because the assessment depends to a large extent upon uninformed estimations as to what data the requester possesses. Consider, for example, a FOIA request for the amounts and beneficiaries of all charitable deductions claimed by taxpayers within a particular postal ZIP code area during a particular tax year. That information would normally not identify the charitable gift of any particular taxpayer; but it would do so if the requester had been told by his neighbor that the latter made a charitable gift last year of $2,775.

For most information possessed by the government, Congress has determined that the risk of occasional unknowing disclosure of facts entitled to be withheld under FOIA is outweighed by the benefits of openness. But it has not made that judgment for all information. See, e.g., 50 U.S.C.A. § 431 (West Supp. 1985) (exempting Central Intelligence Agency operational files from FOIA). It is significant that FOIA's nonidentification protection has not been considered adequate for the other major category of personal information that the government directs all its citizens to provide: Under the same Exemption 3 at issue her, 5 U.S.C. § 552(b)(3), all census data are protected from disclosure, whether or not they identify the individual to whom they pertain. See Baldrige v. Shapiro, 455 U.S. 345, 71 L. Ed. 2d 199, 102 S. Ct. 1103 (1982). We think similarly heightened protection was intended with regard to tax information, in order to encourage the full, voluntary self-assessment of taxes upon which our internal revenue system largely depends.

The intent to provide this increased assurance of confidentiality is conveyed by the detailed provisions of § 6103 rigidly restricting the use of tax information within the government itself, and by the severe criminal penalty (up to five years imprisonment) for unlawful disclosure. See 26 U.S.C. § 7213(a)(1). It is particularly apparent, however -- and the incompatibility of the Long interpretation is particularly clear -- from the provisions of § 6110, which set forth procedures for public inspection of IRS written determinations and related background files. Unlike most governmental information obtainable under the Freedom of Information Act, which one or more members of the public may be interested in for reasons that amount to no more than curiosity, there is special reason for making written determinations public, since without such a requirement agencies could develop "secret law." Thus, FOIA requires such determinations not merely to be provided upon written request, but to be made available in the agency's reading room, and to be reflected in a current index that is publicly distributed. 5 U.S.C. § 552(a)(2). Yet in the case of tax information, § 6110 provides greater protection against improper disclosure of this publicly essential information than FOIA provides against disclosure of data in which there is no reason to posit any public need to know. Specifically, the subject of the written determination is given a right to prior written notice to the Secretary's intention to disclose, an administrative remedy to prevent the disclosure, a cause of action in the Tax Court if that remedy is unsuccessful, a right to intervene in any action seeking disclosure, and even a cause of action for damages in the Claims Court for improper disclosure. 26 U.S.C. § 6110(f), (i). In the judicial proceedings to restrain disclosure or to require further disclosure, there is no requirement similar to the provision of FOIA that "the burden is on the agency to sustain" the withholding. See 5 U.S.C. § 552 (a)(4). It would be absurd to provide such guarantees against disclosure of identifying information in the context of written determinations while relying upon no more than the FOIA protections (through Long's interpretation of the Haskell Amendment) when a request for less publicly important return information is received.

The dissent criticizes our use of standard textual analysis on the ground that, while it may be appropriate where Congress "labored arduously over each choice of word and each comma," it is improper "when the legislative history shows that a provision was injected into the bill at the tail end of the process." Dissent at 5. We need not pause to consider the theoretical deficiencies of such an approach to statutory construction, since it is in any case not properly applicable here. The (ill-considered) Haskell Amendment was not adopted separately and distinctly from the other provisions that we seek to reconcile with it. As we noted earlier, it was not an amendment to a pre-existing law, but an amendment to the bill as originally presented on the floor. Congress did not pass into law the Haskell amendment by itself, but as part and parcel of an exceedingly detailed and complex legislative scheme, on which it had "labored arduously over each ...

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