FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

WILLIAM P. SHANNAHAN, 

Plaintiff-Appellant,

No. 10-35204

v.  D.C. No.

INTERNAL REVENUE SERVICE, a 2:08-cv-00560-JLR

federal agency,

Defendant-Appellee. 

WILLIAM P. SHANNAHAN, 

Plaintiff-Appellant, No. 10-35244

v. D.C. No.  2:08-cv-00452-JLR INTERNAL REVENUE SERVICE, a

federal agency, OPINION

Defendant-Appellee. 

Appeal from the United States District Court

for the Western District of Washington

James L. Robart, District Judge, Presiding

Argued and Submitted

June 9, 2011—Seattle, Washington

Filed March 13, 2012

Before: Stephen Reinhardt, William A. Fletcher, and

Johnnie B. Rawlinson, Circuit Judges.

Opinion by Judge William A. Fletcher

2955
COUNSEL

Samuel Ryan Castic, David John Lenci, Michael K. Ryan,

K&L GATES LLP, Seattle, Washington, for the appellant.

Randolph Lyons Hutter, Carmen M. Banerjee, Jonathan S.

Cohen, Nicole Maria Elliott, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., Robert P. BrouilSHANNAHAN v. INTERNAL REVENUE SERVICE 2957
lard, OFFICE OF THE UNITED STATES ATTORNEY,

Seattle, Washington, for the appellee.

OPINION

W. FLETCHER, Circuit Judge:

We are asked to decide whether appellants are entitled

under the Freedom of Information Act (“FOIA”) to disclosure

of tax-related documents held by the Internal Revenue Service

(“IRS”). The government resisted the disclosure of the documents on two grounds. First, it contended that disclosure of

the documents would “seriously impair Federal tax administration” within the meaning of 26 U.S.C. § 6103(e)(7) and

Exemption 3 of FOIA, 5 U.S.C. § 552(b)(3), and “could reasonably be expected to interfere with enforcement proceedings” within the meaning of Exception 7(A) of FOIA. Id.

§ 552(b)(7)(A). Second, it contended under the fugitive disentitlement doctrine that the Cheungs have no right to disclosure

under FOIA, whether or not the documents qualify under an

exemption. 

The district court held that the documents are protected

from disclosure under Exemptions 3 and 7(A). It did not reach

the fugitive disentitlement question. We affirm, based on

Exemptions 3 and 7(A). Like the district court, we do not

reach the fugitive disentitlement question.

I. Background

On January 28, 2003, Steven Cheung and Linda Su

Cheung, husband and wife, were indicted on one count of

conspiracy to defraud the United States. The Cheungs are

United States citizens. The indictment charged that the

Cheungs concealed their ownership of, and millions of dollars

of income derived from, businesses owning commercial park2958 SHANNAHAN v. INTERNAL REVENUE SERVICE
ing lots in Hong Kong. Steven Cheung was charged in the

same indictment with six counts of filing false or fraudulent

income tax returns, five counts of filing false foreign bank

account reports, and one count of failing to file a foreign bank

account report. The indictment alleges that the Cheungs

engaged in financial transactions in the United States, Hong

Kong, the Marshall Islands, and the British Virgin Islands and

“utilized a web of corporations and other entities” in those

countries. When they lived in the United States, their principal residence was in Seattle, Washington.

Summonses were issued to the Cheungs in Seattle and

Hong Kong and to their defense attorneys in Seattle. The

Cheungs did not appear at their February 20, 2003, arraignment in district court. The court then issued warrants for their

arrest. According to newspaper reports, Steven Cheung held

a press conference in Hong Kong in which he “denounced”

the indictment and the investigation. The United States Attorney’s office in Seattle has reason to believe that the Cheungs

are in Shanghai, China, and that they plan to stay in China

indefinitely. China has no extradition treaty with the United

States. 

When the criminal proceeding stalled because of the

Cheungs’ fugitive status, the IRS initiated a civil examination

of the Cheungs’ income tax liability. The IRS does not ordinarily perform a civil examination while criminal proceedings

are pending, but the IRS deviated from its standard practice

because the Cheungs are fugitives. IRS Revenue Agent Ev

Stone sent Form 4549-A Income Tax Discrepancy Adjustments to the Cheungs, assessing Steven Cheung about $9.5

million and Linda Cheung almost $8 million in back taxes,

including penalties and interest. Form 4549-A is commonly

referred to as a “Revenue Agent Report,” or an “RAR.” 

Plaintiff William Shannahan is an attorney who represents

the Cheungs, as well as two companies allegedly owned by

the Cheungs, West Coast International Limited and West

SHANNAHAN v. INTERNAL REVENUE SERVICE 2959
Coast International (Parking) Limited (“the Entities”). Shannahan filed timely protest letters with the IRS on behalf of the

Cheungs and the Entities. Shannahan asked for the documents

on which the assessments were based “[i]n order to allow the

Taxpayer[s] the opportunity to refute the adjustments in the

RAR and to provide the Taxpayer[s] with fundamental due

process.” IRS Supervisory Agent Blake Becker responded in

a letter in which he declined to provide the documents.

Becker requested in his letter that the Cheungs “appear personally” and “testify under oath” in an interview at the IRS

office in Seattle. The Cheungs did not appear for the interview.

Shannahan sent FOIA requests to the IRS on behalf of the

Cheungs and the Entities. As to the request on behalf of the

Cheungs, the IRS informed Shannahan that it had located

2,932 pages of responsive documents but denied his request

based on FOIA Exemptions 3, 5, 7(A), 7(D), and 7(E). As to

the request on behalf of the Entities, the IRS informed Shannahan that it located 40 boxes of responsive documents but

denied his request based on FOIA Exemptions 3, 5, 7(A), and

7(D). Shannahan appealed the denial to the IRS appeals division. The IRS denied the appeal on the ground that the

Cheungs were “fugitives from justice.” Shannahan then filed

four separate complaints in his own name in district court,

two on behalf of the Cheungs and two on behalf of the Entities, seeking disclosure under FOIA. (The Defendants have

not made an objection that the Entities are not taxpayers under

26 U.S.C. § 6103(c).) The district court consolidated the complaints into two cases, one for the FOIA claims brought on

behalf of the Cheungs and one for the claims filed on behalf

of the Entities. After receipt of the complaints, the IRS identified 5,735 pages of documents and a 35.7 MB electronic database responsive to the complaints. On October 28, 2008, the

IRS sent Shannahan ten documents comprising 318 pages. It

withheld the remaining 5,417 pages and the electronic database. 

2960 SHANNAHAN v. INTERNAL REVENUE SERVICE
The IRS moved for summary judgment in both cases. It

argued that the withheld documents were exempt from disclosure under, inter alia, Exemptions 3 and 7(A) of FOIA. 5

U.S.C. §§ 552(b)(3), 552(b)(7)(A). Exemption 3 exempts

from disclosure documents that are “specifically exempted . . .

by statute.” The relevant statute in this case is § 6103(a) of the

Internal Revenue Code, which characterizes “returns and

return information” as “confidential,” subject to certain

exceptions. 26 U.S.C. § 6103(a). One of the exceptions to

confidentiality is disclosure to the taxpayer, but only “if the

Secretary determines that such disclosure would not seriously

impair Federal tax administration.” Id. at § 6103(e)(7). See

also Kamman v. IRS, 56 F.3d 46, 48 (9th Cir. 1995). Exemption 7(A) exempts from FOIA disclosure records or information compiled for “law enforcement purposes, but only to the

extent that the production . . . could reasonably be expected

to interfere with enforcement proceedings.” The IRS also

argued that the suits should be dismissed under the fugitive

disentitlement doctrine. See, e.g., Degen v. United States, 517

U.S. 820 (1996); Sun v. Mukasey, 555 F.3d 802 (9th Cir.

2009).

The IRS supported its motion with four declarations. The

first was by Janet Freeman, an Assistant U.S. Attorney who

had been assigned to the criminal investigation and prosecution of the Cheungs. Freeman described a number of documents responsive to Shannahan’s FOIA request that were in

the possession of the U.S. Attorney’s office. Among them

were 29 boxes of documents provided by Hong Kong to the

United States pursuant to a mutual legal assistance agreement

(“MLAA”). There is no standing tax treaty providing for

information exchanges between the United States and Hong

Kong. Instead, the United States must enter into a new agreement, specific to each criminal tax investigation, for any

exchange of information. In addition, she reported finding 42

boxes of files related to the grand jury investigation and 16

boxes of “work product connected to the criminal investigation.” 

SHANNAHAN v. INTERNAL REVENUE SERVICE 2961
The second declaration was by Deborah Neyhart, a Special

Agent for Criminal Investigations in the Seattle office of the

IRS. Neyhart described a 2,722-page Special Agent Report

(“SAR”) prepared by now-retired Special Agent Molly

Mahoney in connection with the criminal investigation of the

Cheungs. The SAR contained a description of the criminal

offenses recommended for prosecution, along with a description of the supporting evidence, a witness list, and a summary

of anticipated testimony. 

The third declaration was by Caesar White, the Supervisory

Special Agent for Criminal Investigations in the Seattle office

of the IRS. White described five categories of documents

responsive to Shannahan’s FOIA request: “examination workpapers,” “agent’s working papers,” “interview notes, third

party contacts and contact sheets,” “internal correspondence,”

and the “electronic database.” White stated that disclosure of

any documents in these categories would “seriously impair

federal tax administration” because it (1) “would allow the

Cheungs to determine the nature, direction, scope, and limits

of the criminal proceedings, and the strategies and theories

being utilized by the government”; (2) “would allow the

Cheungs earlier and greater access to information about the

proceedings than they would otherwise be entitled to receive”;

(3) “could enable the Cheungs to craft explanations or

defenses based upon the government’s analysis;” and (4)

“could enable the Cheungs to conceal or disguise income, or

take other steps to avoid having income attributed to them.”

The fourth declaration was by Meghan Mahaney, an attorney in the IRS’s Office of Chief Counsel, Procedure and

Administration. Mahaney described the search that had been

performed to locate documents responsive to Shannahan’s

request. She stated that 5,735 pages of responsive documents

had been found. These documents were described, as discussed above, by the other declarants. She stated that of the

5,735 pages, the IRS had released 318 pages to Shannahan.

The IRS had withheld the remaining 5,417 pages of docu2962 SHANNAHAN v. INTERNAL REVENUE SERVICE
ments pursuant to, inter alia, Exemptions 3 and 7(A).

Mahaney divided these documents into the five categories

described in the White declaration. She stated that the IRS

was withholding 42 pages of examination workpapers; 5,280

pages of agents’ working papers; 88 pages of interview notes,

third party contacts, and contact sheets; seven pages of internal correspondence; and the entire electronic database. 

The court denied the motion for summary judgment in both

cases. Shannahan v. IRS, 637 F. Supp. 2d 902, 908 (W.D.

Wash. 2009). It found that the IRS had failed to show that the

withheld documents qualified as “return information” within

the meaning of § 6103 and Exemption 3, id. at 916, and had

failed to show a sufficient connection between the withheld

documents and the claimed interference with enforcement

proceedings within the meaning of Exemption 7(A). Id. at

920. The court ordered the IRS to provide a Vaughn index of

a representative sampling of documents for each of the five

categories, including at least 500 pages of documents, that

would “(1) [ ] identify each document withheld; (2) state the

statutory exemption claimed; and (3) explain how disclosure

would damage the interests protected by the claimed exemption.” Id. at 923. See also Citizens Comm’n on Human Rights

v. FDA, 45 F.3d 1325, 1326 n.1 (9th Cir. 1995); Vaughn v.

Rosen, 484 F.2d 820 (D.C. Cir. 1973). The court declined to

reach the question of fugitive disentitlement. Shannahan, 637

F. Supp. 2d at 923. 

In response to the court’s order, the IRS filed a second declaration by Mahaney, 38 pages of which were a Vaughn

index. Mahaney stated that during her further review she had

discovered 24 additional pages of documents that would be

disclosed, in redacted form, to Shannahan. She then described

withheld documents falling into the five categories. She specifically described three examples of examination workpapers; 18 examples of agents’ working papers; one example

of notes of an interview with a third party; and one example

of IRS internal correspondence. She also described the elecSHANNAHAN v. INTERNAL REVENUE SERVICE 2963
tronic database. As to each specifically described document

and the database, Mahaney explained the basis for her conclusion that they were exempt from disclosure under FOIA. 

The district court then granted partial summary judgment in

both cases. With respect to documents not specifically

described by Mahaney in her Vaughn index, the court denied

summary judgment. The court held that Mahaney had not sufficiently explained how she had selected the documents she

described and had not sufficiently shown that they were representative of the rest of the documents. The court also denied

summary judgment as to the electronic database because it did

not have “adequate information upon which to identify potentially exempt files.” 

With respect to documents specifically described in the

Vaughn index, the court granted summary judgment under

Exemptions 3 and 7(A) as to all the documents that had been

prepared by the IRS or other governmental agencies. The

court held that Mahaney had shown that these documents contained “return information” within the meaning of § 1603(a)

and Exemption 3. It also held that White had provided a sufficient basis to conclude that disclosure of these documents

would cause harm within the meaning of Exemptions 3 and

7(A). Finally, it held that Mahaney had provided sufficient

information to justify the IRS’s conclusion that these documents could not reasonably be segregated from non-exempt

information. However, the court denied summary judgment as

to specifically described documents that had been prepared by

third parties, holding that there had not been a sufficient

showing that disclosure of these documents would cause

harm. 

In response, the IRS filed a third declaration from Mahaney

and a declaration from IRS Special Agent Steven Bellis.

Mahaney described the method by which she had chosen what

she deemed to be representative documents and explained

why disclosure of documents and information from third par2964 SHANNAHAN v. INTERNAL REVENUE SERVICE
ties would be harmful. She further explained why the nonexempt material could not reasonably be segregated from

exempt documents. 

Bellis described three categories of documents and information obtained from third parties. First, some documents

were provided, on a confidential basis, pursuant to the MLAA

with Hong Kong. Bellis declared that disclosure of these documents would violate the terms of the MLAA and “would

place at risk the government’s future ability to obtain information from the Hong Kong government in criminal investigations.” Second, one or more confidential informants

provided documents and information to the IRS. Bellis stated

that disclosure of information provided by confidential informants would help the Cheungs discover their identity. Disclosure would thus discourage any informants from cooperating

further and would expose them to a risk of harm. Third, some

third-party documents were provided to the IRS by nonconfidential informants pursuant to subpoenas. Bellis stated

that disclosing those documents would reveal to the Cheungs

the “scope of the government’s investigation” and might

allow the Cheungs to infer the identity of any confidential

informants. Bellis also explained the nature of the electronic

database and described the harm its disclosure would cause.

The district court then granted summary judgment in both

cases. It held that the entirety of the responsive documents, as

well as the electronic database, were properly withheld under

FOIA Exemptions 3 and 7(A). Shannahan v. IRS, 680 F.

Supp. 2d 1270, 1272 (W.D. Wash. 2010). Shannahan timely

appealed in both cases.

II. Standard of Review

We review summary judgment in a FOIA case in a twostep process. First, we decide de novo if the district court’s

ruling was supported by an adequate factual basis. Pac. Fisheries, Inc. v. United States, 539 F.3d 1143, 1149 (9th Cir.

SHANNAHAN v. INTERNAL REVENUE SERVICE 2965
2008). If so, we review “the district court’s conclusions of

fact . . . for clear error, while legal rulings, including its decision that a particular exemption applies, are reviewed de

novo.” Lane v. Dep’t of Interior, 523 F.3d 1128, 1135 (9th

Cir. 2008). We review de novo the adequacy of a Vaughn

index. Wiener v. FBI, 943 F.2d 972, 978 (9th Cir. 1991). We

review a denial of discovery for abuse of discretion. Lane,

523 F.3d at 1134.

III. Discussion

“‘[D]isclosure, not secrecy, is the dominant objective’ ” of

FOIA. Dep’t of Interior v. Klamath Water Users Protective

Ass’n, 532 U.S. 1, 7-8 (2001) (quoting Dep’t of Air Force v.

Rose, 425 U.S. 352, 361 (1976)). We construe narrowly

FOIA’s nine exemptions. Id at 8. The purpose of FOIA is to

“ensure an informed citizenry, vital to the functioning of a

democratic society, needed to check against corruption and to

hold the governors accountable to the governed.” John Doe

Agency v. John Doe Corp., 493 U.S. 146, 152 (1989) (quoting

NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 242

(1978)). The government bears the burden of demonstrating

that an exemption applies. Lahr v. Nat’l Transp. Safety Bd.,

569 F.3d 964, 973 (9th Cir. 2009). To justify withholding, the

government must provide tailored reasons in response to a

FOIA request. It may not respond with boilerplate or conclusory statements. Wiener, 943 F.2d at 978-79. We accord substantial weight to an agency’s declarations regarding the

application of a FOIA exemption. Hunt v. CIA, 981 F.2d

1116, 1119-20 (9th Cir. 1992).

[1] The question under Exemption 3 is whether the Secretary properly determined that disclosure of documents to

Shannahan, acting on behalf of the Cheungs, would “seriously

impair Federal tax administration.” 26 U.S.C. § 6103(a),

(e)(7); 5 U.S.C. § 552(b)(3). “Tax administration” is defined

broadly in the statute. It “means . . . the administration, management, conduct, direction, and supervision of the execution

2966 SHANNAHAN v. INTERNAL REVENUE SERVICE
and application of the internal revenue laws or related statutes

. . . and tax conventions to which the United States is a party,

and . . . the development and formulation of Federal tax policy . . . .” 26 U.S.C. § 6103(b)(4)(A). It “includes assessment,

collection, enforcement, [and] litigation . . . under such laws,

statutes, or conventions.” § 1603(b)(4)(B).

[2] “Seriously impair” is not defined in the statute, but it

has been construed broadly. In Lewis v. IRS, 823 F.2d 375,

377 (9th Cir. 1987), the taxpayer sought documents relevant

to a criminal tax investigation. The IRS refused to disclose the

documents, relying on Exemptions 3 and 7(A). Id. at 377 &

n.2. According to an affidavit filed by an IRS official,

[d]isclosure of the documents . . . would interfere

with the current Service investigation of the plaintiff

by prematurely revealing the evidence developed

against the plaintiff; the reliance placed by the government on that evidence; the names of witnesses

and potential witnesses; the scope and limits of the

investigation; the identities of third parties contacted;

the specific transactions being investigated; [and] the

strengths and weaknesses of the government’s case

. . . . In addition, disclosure could aid plaintiff in

tampering with potential evidence and witnesses, or

otherwise frustrat[e] the government’s ability to

present its best case in court.

Id. at 378 n.5. Addressing but not specifically citing Exemption 3, we wrote that the affidavit sufficiently showed “why

disclosure would impair the IRS’s investigation of Lewis for

criminal tax violations.” Id. at 378. 

In Chamberlain v. Kurtz, 589 F.2d 827, 841 (5th Cir.

1979), the Fifth Circuit held, similarly:

[T]he IRS has sustained its burden by demonstrating

that the release of the documents would result in

SHANNAHAN v. INTERNAL REVENUE SERVICE 2967
serious impairment of the effort to collect back taxes

and penalties from Chamberlain. Virtually all of the

documents sought discuss either the facts or law

relating to the fraud claim against Chamberlain or

the computation of tax deficiencies for the years

1962 to 1968. Release of this information would

doubtless be of benefit to him in the preparation of

his defense to the various claims against him. Subsections 6103(c) and (e)(6)1

 were designed precisely

to avoid the damage to tax collection that would

result from the untimely disclosure of the IRS’

files[.]

Finally, in Linsteadt v. IRS, 729 F.2d 998, 1003 (5th Cir.

1984), the IRS withheld portions of a memorandum of an IRS

interview with taxpayers who were the subjects of criminal

and civil tax investigations. The withheld portions “contained

only a factual summary of the Linsteadts’ statements, and did

not include any conclusions or opinions of the Special Agent

who took the statements.” Id. at 1004. IRS officials provided

affidavits describing the effect disclosure would have:

Any such disclosure would impair the Service’s ability to present its best case in court should [taxpayers]

ultimately be indicted or in any future criminal or

civil litigation involving plaintiffs . . . by prematurely revealing evidence; the reliance placed by the

government on that evidence; the nature and direction of the government’s case; and the scope and

limits of the investigation. In addition, disclosure

would aid plaintiffs in tampering with potential evidence or otherwise frustrate the continuing investigative process.

1Subsections 6103(c) and (e)(6) then contained the language that is now

contained in § 6103(e)(7)—“if the Secretary determines that such disclosure would seriously impair Federal tax administration.” See Chamberlain, 589 F.2d at 836 n.26 (emphasis added). 

2968 SHANNAHAN v. INTERNAL REVENUE SERVICE
Id. at 1004 n.10 (affidavit of Deputy Director of IRS for the

Dallas District); see also id. (affidavit of Special Agent

assigned to taxpayers’ case, stating essentially the same

thing). The court in Linsteadt affirmed the district court’s

holding that the portions had been properly withheld under

§ 6103 and Exemption 3. Id. at 1005.

[3] The question under Exemption 7(A) is whether disclosure of the documents “could reasonably be expected to interfere with enforcement proceedings.” 5 U.S.C. § 552

(b)(7)(A). In NLRB v. Robbins Tire & Rubber Company, 437

U.S. 214 (1978), the Supreme Court explained the purpose of

Exemption 7(A): 

In originally enacting Exemption 7, Congress recognized that law enforcement agencies had legitimate

needs to keep certain records confidential, lest the

agencies be hindered in their investigation or placed

at a disadvantage when it came time to present their

case. Foremost among the purposes of this Exemption was to prevent harm to the Government’s case

in court. 

Id. at 224 (emphasis added; citation and internal quotations

omitted). Robbins Tires invoked FOIA to obtain witness

statements the NLRB had collected prior to a hearing on an

unfair labor practice complaint. Id. at 216. The Court held that

the statements were properly withheld because disclosing the

statements would have given Robbins Tires advance access to

the government’s case. Id. at 236-37, 240. This access would

have allowed Robbins Tires to “coerce or intimidate employees who have given statements, in an effort to make them

change their testimony or not testify at all.” Id. at 239. It

would also have allowed a “suspected violator” to “construct

defenses which would permit violations to go unremedied.”

Id. at 241 (citation and internal quotations omitted). 

SHANNAHAN v. INTERNAL REVENUE SERVICE 2969
[4] In Lewis, we held that the IRS properly relied on

Exemption 7(A) in refusing to disclose documents connected

to its criminal tax investigation:

Under Exemption 7(A) the government is not

required to make a specific factual showing with

respect to each withheld document that disclosure

would actually interfere with a particular enforcement proceeding. The IRS need only make a general

showing that disclosure of its investigatory records

would interfere with its enforcement proceedings.

Congress intended that Exemption 7(A) would allow

the federal courts to determine that, with respect to

particular kinds of enforcement proceedings, disclosure of particular kinds of investigatory records

while a case is pending would generally interfere

with enforcement proceedings.

823 F.2d at 380 (emphasis in original; citation and internal

quotations omitted).

[2] The district court in this case properly relied on both

Exemptions 3 and 7(A) in upholding the IRS’s refusal to disclose the documents and electronic database. The court was

meticulous. It required the preparation of a Vaughn index of

representative documents. Compare Lion Raisins v. U.S.

Dep’t of Agric., 354 F.3d 1072, 1082 (9th Cir. 2004)

(“Ordinarily, the government must submit detailed public affidavits identifying the documents withheld, the FOIA exemptions claimed, and a particularized explanation of why each

document falls within the claimed exemption. This submission is commonly referred to as a ‘Vaughn’ index.” (internal

citations omitted)) with Lewis, 823 F.2d at 380 (“When, as is

the case here, a claimed FOIA exemption is based on a general exclusion, such as Exemption 7(A)’s criminal investigation exclusion, which is dependent on the category of the

requested records rather than the individual subject matters

contained within each document, a Vaughn index is futile.”).

2970 SHANNAHAN v. INTERNAL REVENUE SERVICE
It subsequently insisted on an explanation of how the documents were selected, in order to ensure that the documents in

the index were truly representative. Finally, it insisted on evidence about, and explanation of, the harm that would be

caused by the release of two kinds of documents—those prepared by the IRS and other government agencies, and those

obtained from third parties. See Chamberlain, 589 F.2d at

840-42. It insisted on an appropriate explanation for why the

exempt documents could not reasonably be segregated from

non-exempt material. See Pac. Fisheries, 539 F.3d at 1148. 

[6] FOIA is not designed “as a substitute for civil discovery.” Baldride v. Shapiro, 455 U.S. 345, 360 n.14 (1982). The

fact that the Cheungs wish to use the documents they seek in

their civil tax proceeding does not make Exemptions 3 and

7(A) inapplicable. Indeed, it is precisely because of the uses

to which the Cheungs might put the documents that the

exemptions are applicable. The district court properly denied

Shannahan’s discovery requests for information concerning

the nature and origins of documents he requested. See Lane,

523 F.3d at 1134 (holding that in FOIA cases “discovery is

limited because the underlying case revolves around the propriety of revealing certain documents”).

The Cheungs’ problem is partly of their own making. They

were indicted for tax-related crimes—conspiracy to commit

tax fraud (both Cheungs), filing fraudulent income tax returns

(Steven Cheung), filing false foreign bank account reports

(Steven Cheung), and failing to file a foreign bank account

report (Steven Cheung). Instead of defending against the

criminal charges, the Cheungs fled the United States. It

appears that they are now in China, which has no extradition

treaty with the United States. 

If the Cheungs had stayed in the United States and

defended against the charges, the IRS would likely have gone

forward with the criminal case before instituting any civil tax

proceedings, in accordance with its usual procedure. Once the

SHANNAHAN v. INTERNAL REVENUE SERVICE 2971
Cheungs’ criminal proceedings were complete, the Cheungs

would have had access to some of the documents they now

seek, either because they would have received the documents

during the criminal proceedings or because the harm of disclosing the documents would have been vitiated by the conclusion of those proceedings. But here the criminal

proceedings have not taken place because the Cheungs have

fled, and they must live with the consequences.

Conclusion

[7] For the foregoing reasons, we hold under Exemptions

3 and 7(A) that the district court was correct to uphold the

IRS’s refusal to disclose the tax-related documents sought by

the Cheungs. 

AFFIRMED.

2972 SHANNAHAN v. INTERNAL REVENUE SERVICE