TIGTA suggested that putting accepted offers online would provide a meaningful method for making offers public. To my knowledge nothing has been done to implement TIGTA’s suggestion even though it would potentially save the IRS money while granting the public access. Perhaps if the IRS had accepted TIGTA’s proposal, the case discussed in this post would not exist.
If you want to know more about accepted offers and are unwilling to seek to visit the public reading rooms, a better path may exist as suggested by a recent case. This better path, if that accurately describes multi-year litigation, is not better than TIGTA’s suggestion to put this information online but may be better than cross-country travel to the well-hidden reading rooms. Read on.
The recent case of EPIC v. IRS, 128 AFTR 2d 2021-6808 (DDC 2021) provides another way to learn about offers in compromise – the Freedom of Information Act (FOIA). EPIC is an acronym for Electronic Privacy Information Center. It sent a FOIA request to the IRS seeking, inter alia, certain tax records related to offers in compromise (OICs) involving former President Donald Trump and business entities associated with him. As you might expect, the IRS opposed this request but before it opposed the request in court it failed to respond to the FOIA request, causing EPIC to bring a suit in order to seek to have a district court order the IRS to turn over this information, some of which might have been available in the OIC reading room in Buffalo, N.Y. based on the discussion in the prior blog post and where the former President lived.
((1)) All accepted offers-in-compromise relating to any past or present tax liability of Donald John Trump, the current President of the United States.
((2)) All other “return information…necessary to permit inspection of [the] accepted offer[s]-in-compromise” described in Category 1 of this request. Records responsive to Category 2 include, but are not limited to, “income, excess profits, declared value excess profits, capital stock, and estate or gift tax returns for any taxable year,” as applicable.
Similarly, with respect to the records of business entities associated with the former President, EPIC requested:
((3)) All accepted offers-in-compromise relating to any past or present tax liability of any entity identified in Appendix A [a fifteen-page list of the business entities associated with President Trump] of this request.
((4)) All other “return information…necessary to permit inspection of [the] accepted offer[s]-in-compromise” described in Category 3 of this request. Records responsive to Category 4 include, but are not limited to, “income, excess profits, declared value excess profits, capital stock, and estate or gift tax returns for any taxable year,” as applicable.
The IRS seeks to dismiss the suit, arguing that the FOIA request fails because it falls within Exemption 3 which “allows an agency to withhold records `specifically exempted from disclosure by statute’ if the statute meets certain criteria.” The court notes that the parties agree that the requested records would fall within the ambit of FOIA but for the exception. It states:
Thus, whether EPIC has stated a claim turns on whether the records at issue are covered by any of the thirteen exceptions such that the IRS must disclose them, which would in turn subject them to EPIC’s FOIA request. EPIC relies on § 6103(k)(1), which provides that “[r]eturn information shall be disclosed to members of the general public to the extent necessary to permit inspection of any accepted offer-in-compromise under section 7122 relating to the liability for a tax imposed by this title.” 26 U.S.C. §§ 6103(k)(1).
The IRS argues that the exception applies because EPIC lacks the taxpayer’s consent to receive these records and has no qualifying material interest in the records as described in § 6103(e). EPIC says it doesn’t need consent or a qualifying material interest because of the requirement to make OICs public. The court states:
There is no basis in the statute’s text or structure to import these requirements into § 6103(k)(1), which, after all, permits disclosure to “members of the general public.”
So, the IRS next argues that (k)(1) does not create a disclosure obligation to produce records to EPIC but the court quotes from the statute that Section 6103(k)(1) states that return information “shall be disclosed to the extent necessary to permit inspection of any accepted offer-in-compromise.”
Next the IRS argues:
that the phrase “to the extent necessary to permit inspection” gives it discretion to decide both the records it must disclose and the means necessary to disclose them. The Court agrees that phrase limits the records the IRS must disclose to those necessary to permit inspection of any accepted offer-in-compromise. But the IRS’s interpretation goes further. In its view, because the Secretary of the Treasury has by regulation established Public Inspection Files and a related non-FOIA in person inspection process—and determined that nothing more is “necessary” under § 6103(k)(1)—the exception does not afford EPIC any disclosure rights under FOIA.
The court disagrees. It sees nothing in the statute that prohibits disclosure to EPIC and finds also that case law does not support the position that the IRS has no disclosure obligations to EPIC under (k)(1). It finds that the IRS must disclose information to EPIC “to the extent that information is necessary to permit inspection of an accepted offer-in-compromise.” The court does, however, make it clear that EPIC cannot receive former President Trump’s tax returns as part of this request.
I don’t know if EPIC received anything in the end. I would think that if it did we would have learned about it in the popular press. The case is not important to me as a way to learn the former President’s tax information but as a way of opening a window to offers in compromise generally. The court does not seem to limit the time frame of the requirement to respond to the request. So, FOIA might allow a party to obtain offer information beyond the information for only one year provided in the remote and relatively inaccessible reading rooms. It might allow targeted requests for OIC information regarding individuals or entities but also might allow for broad based information requests that could save someone the time and effort of getting to one of the reading rooms.
I do not have any projects going where I want to learn about offers the IRS has accepted. If I did, EPIC seems to have laid out a path for using FOIA to bypass the remote and inaccessible reading rooms. Hope springs eternal that the IRS might adopt TIGTA’s suggestion to put this information online, but until it does FOIA seems a better path than frequent flier miles.