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In Freedom of Information Act Dispute, Fourth Circuit Upholds Defendantís Decision to Redact and Withhold Certain Documents

Solers, Inc. v. Internal Revenue Service
No. 15-1608 (4th Cir. June 30, 2016) United States Court of Appeals for the Fourth Circuit

by Matthew S. Sarna, Summer Associate
Semmes, Bowen & Semmes (

Available at:

In Solers, Inc. v. IRS, 15-1608 (4th Cir. June 30, 2016), the Fourth Circuit affirmed the District Court’s decision, ruling in favor of the IRS’ redaction and withholding of certain documents requested by Solers, Inc. (“Solers”) under the Freedom of Information Act (“FOIA”). See 5 U.S.C. § 552. The Fourth Circuit held that each IRS decision was appropriately grounded in a specific exemption under FOIA.

Prior to this action, the IRS audited Solers, an information technology company, for its 2010 tax year, resulting in several proposed adjustments to Solers’ tax liability and potential penalties. In response, Solers submitted a FOIA request to the IRS for all documents, notes, and internal IRS correspondences relating to the audit, the proposed adjustments, Solers’ response to the adjustments, Solers’ documented protest, IRS quality control in determining the adjustments, and guidance received regarding “intentional disregard penalties.” The IRS eventually produced a total of 261 pages, ten (10) of which are at issue here; six (6) pages were withheld and four (4) pages were redacted. For these ten (10) pages, Solers brought this action, alleging that the IRS was unlawfully withholding records, seeking an order to disclose any materials not specifically exempted under FOIA.

At the outset, Solers sought to obtain a Vaughn index, a list of documents that had been withheld and redacted, providing detailed information to enable the court to rule on whether the withholdings properly fell within a FOIA exemption. See Rein v. U.S. Patent & Trademark Office, 553 F.3d 353, 357 n.6 (4th Cir. 2009); Vaughn v. Rosen, 484 F.2d 820 (D.C. Cir. 1973). A Vaughn index is “designed to enable [the court] to rule on a privilege without having to review the document itself,” functioning as “a surrogate for the production of the documents for in camera review.” Ethyl Corp. v. U.S. EPA, 25 F.3d 1241, 1249 (4th Cir. 1994). The District Court granted Solers’ motion and directed the IRS to produce the Vaughn index, detailing information regarding the ten (10) pages withheld and redacted. Subsequently, the parties cross-filed for summary judgment. Although a Vaughn index is considered a substitute for in camera review, the District Court still performed an in camera review of the un-redacted copies of the ten (10) pages at issue; thus eliminating Solers’ contention that the Vaughn index was insufficient.

The Court first examined four (4) withheld pages, consisting of handwritten notes from an IRS agent’s conversation with Solers’ accountant in April, 2013. The IRS contended that these notes fell under FOIA Exemption 5’s incorporation of the deliberative process privilege, 5 U.S.C. § 552(b)(5), maintaining that the notes consisted of the agent’s thoughts, impressions, and indicated the possible direction of the investigation. Exemption 5 shields intra/inter-agency communications that would not have been available by law to a party other than an agency in litigation with the agency. Attorney-client privilege and the deliberative process privilege are encompassed under this Exemption. See Rein, 553 F.3d at 371. In short, the deliberative process privilege relies on the public policy consideration that officials will not communicate candidly amongst themselves if each remark could wind up on the front page news. See Dep’t of Interior v. Klamath Water Users Protective Ass’n., 532 U.S. 1, 8–9 (2001). Accordingly, the privilege encourages the deliberation process, insulating against the chilling effect likely to occur if officials were judged upon their interim deliberations. See City of Virginia Beach v. U.S. Dep’t of Commerce, 995 F.2d 1247, 1252–53 (4th Cir. 1993).

To qualify under the deliberative process privilege, the IRS was required to show that the documents at issue, in the context they were used, were both predecisional, prepared in order to assist in reaching a decision, and deliberative, reflecting the consultative process. Citing substantial case law on point, the Fourth Circuit affirmed the District Court’s holding that the agent’s handwritten notes, which reflected her mental processes and thoughts on the potential direction of the investigation, squarely fell within the privilege.

The Court next moved on to examine whether an IRS summary report, graph, and “Closed Case Review Checksheet” were appropriately withheld and redacted under FOIA. The IRS contended that the withholding of these three (3) documents was justified by Exemption 3 and 26 U.S.C. §6103(a). Exemption 3 protects the disclosure of information that is expressly exempted from disclosure by statute. The statute must leave no discretion to the issue of non-disclosure and must establish particular criteria for withholding particular types of matters. 5 U.S.C. § 552(b)(3). 26 U.S.C. § 6103, which is contemplated by Exemption 3, prohibits the disclosure of returns and return information, including a taxpayer’s identity, except as authorized by § 6103(a). See Tax Analysts v. IRS, 410 F.3d 715, 717 (D.C. Cir. 2005).

Analyzing the documents in question, the Court concluded that the IRS summary report, while not specifically naming third-party individuals, whose tax returns were considered in conjunction with Solers’ audit, the individuals’ identities could easily be discerned from the report. Similarly, the graph and Checksheet specifically identified third-party individuals and entities. Accordingly, the Court held that the IRS appropriately withheld and redacted these documents.

The Court next examined the IRS activity record, which had a singly entry on one (1) page redacted. The deleted entry reflected an IRS agent’s communication with the IRS Office of Chief Counsel with respect to a specific issue of the investigation. Breezing through this analysis, the Court determined that Exemption 5’s incorporation of attorney-client privilege was properly applied. Attorney-client privilege shields from disclosure “the specific nature of the legal advice sought by [the client].” In re Grand Jury Subpoena, 341 F.3d 331, 335 (4th Cir. 2003). Accordingly, the Court concluded that attorney-client privilege justified the IRS’ redaction of the entry on the activity report.

Finally, the Court assessed whether two (2) redacted IRS emails were justified under Exemptions 6 and 7(C) of FOIA. The redactions withheld the names and contact information of certain IRS personnel who were consulted in connection with Solers’ audit. Exemption 6 shields the disclosure of personnel and similar files which would constitute a clearly unwarranted invasion of personal privacy. 5 U.S.C. § 552(b)(6). Giving “similar files” a broad meaning, courts employed a balancing test, weighing an individual’s privacy rights against the public interest in disclosure. See U.S. Dep’t of Defense v. Fed. Labor Relations Auth., 510 U.S. 487, 497 (1994). Similarly, Exemption 7(C) allows for the withholding of “records or information compiled for law enforcement purposes, but only to the extent that the production of such… records or information… could reasonably be expected to constitute an unwarranted invasion of personal privacy.” 5 U.S.C. § 552(b)(7)(C).

Applying Exemptions 6 and 7(C) to the facts at hand, the Court concluded that the District Court struck the right balance by permitting these redactions. The record failed to indicate how disclosure of the names and contact information of these individuals would serve the public interest, as opposed to providing potential for future harassment. As such, these email redactions were properly exempted under Exemption 6 and 7(C) of FOIA.

Accordingly, the Fourth Circuit affirmed the District Court’s holding in support of the IRS’ position to withhold and redact several of the requested documents.