Source: https://law.justia.com/cases/federal/appellate-courts/cadc/99-5284/99-5284a-2011-03-24.html
Timestamp: 2019-04-18 22:57:08+00:00

Document:
J. William Koegel, Jr. argued the cause for appellee Chris- tian Broadcast Network, Inc. With him on the brief was Bruce C. Bishop.
Sentelle, Circuit Judge: Tax Analysts, a publisher of tax material, sued the Internal Revenue Service (IRS) and the Christian Broadcasting Network (CBN) under the Freedom of Information Act (FOIA), 5 U.S.C. s 552 (1994), and Inter- nal Revenue Code (I.R.C.) s 6104, 26 U.S.C. s 6104 (1994), respectively, in an effort to obtain copies of a closing agree- ment reached between the IRS and CBN in conjunction with CBN's filing for tax exempt status under I.R.C. s 501(a) and (c)(3), 26 U.S.C. s 501(a), (c)(3) (1994). The IRS filed a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c), and CBN filed a motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). The district court granted both motions. Tax Analysts appealed. While we affirm the dis- trict court's dismissal of the action against CBN, we find the present record inadequate to resolve Tax Analysts' claim against the IRS, and remand for further proceedings.
CBN has been an organization exempt from taxation under I.R.C. s 501(a) and (c)(3) since 1961. In 1985 and 1986, CBN allegedly engaged in political activities inconsistent with its status as a tax exempt organization, prompting the IRS to audit CBN and to examine CBN's continued eligibility for tax exempt status.
CBN's tax exemption for 1986 and 1987, the relinquishment of exempt status for three CBN affiliates, a "significant payment" by CBN to the IRS, and various other promises and modifications to CBN operations.
On April 6, 1998, Tax Analysts sent a FOIA request to the IRS seeking a copy of the agreement between the IRS and CBN referred to in the press release; any closing agreement relating to the issues described in the press release; any written correspondence or memoranda of meetings or conver- sations between the IRS and CBN pertaining to those agree- ments or the press release; and any renewal, revocation, or modification of any ruling granting tax exempt status to CBN. A few months later, on June 29, 1998, the IRS responded and, citing FOIA Exemption 3, 5 U.S.C. s 552(b)(3), and I.R.C. s 6103, declined to disclose any of the requested information except the Form 1023 filed on Febru- ary 2, 1998, and the March 13, 1998 determination letter from the IRS to CBN granting exempt status.
On July 20, 1998, Tax Analysts sent a letter to CBN seeking the same information as requested from the IRS, citing I.R.C. s 6104 as the basis for its request. Like the IRS, CBN declined to make available any documents other than the Form 1023 and letter from the IRS granting exempt status. Shortly thereafter, Tax Analysts filed this action against the IRS and CBN seeking access to the requested records.
As a general matter, FOIA provides for the disclosure upon request of government-held records and documents. See 5 U.S.C. s 552. FOIA's general disclosure rule is subject to nine statutory exceptions, however. See id. s 552(b). The government bears the burden of proving that any requested documents it withholds fall within one of the nine exceptions. See id. s 552(a)(4)(B); Petroleum Info. Corp. v. United States Dep't of the Interior, 976 F.2d 1429, 1433 (D.C. Cir. 1992).
from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld...." 5 U.S.C. s 552(b)(3). The I.R.C. explicitly provides for the confidentiality of tax returns and "return information." I.R.C. s 6103(a), 26 U.S.C. s 6103(a). This court and others have recognized consistently that I.R.C. s 6103(a) is a non- disclosure statute falling within the scope of FOIA Exemption 3. See, e.g., Church of Scientology v. IRS, 484 U.S. 9, 11 (1987); Lehrfeld v. Richardson, 132 F.3d 1463, 1466 (D.C. Cir. 1998); Tax Analysts v. IRS, 117 F.3d 607, 611 (D.C. Cir. 1997); Aronson v. IRS, 973 F.2d 962, 964 (1st Cir. 1992).
copy of its application for exemption, "together with a copy of any papers submitted in support of such application and any letter or other document issued by the Internal Revenue Service with respect to such application." 26 U.S.C. s 6104(e)(2)(A)(ii) (Supp. III 1997).2 We recognized in Lehr- feld that documents disclosable under I.R.C. s 6104 may contain material that otherwise constitutes "return informa- tion" protected from disclosure by I.R.C. s 6103. Lehrfeld, 132 F.3d at 1467. I.R.C. s 6104 therefore may be character- ized as an exception to the exception from the general disclosure rule offered by FOIA Exemption 3 and I.R.C. s 6103. The parties in this case agree that s 6104, where it applies, controls s 6103; and we will assume as much for the purpose of this case.
__________ United States Code only serve as "prima facie" evidence of the law unless they are enacted as "positive law," in which case they too serve as legal evidence of the laws. 1 U.S.C. s 204(a) (1994); see also Stephan v. United States, 319 U.S. 423, 426 (1943) (per curiam) (Statutes at Large prevail over prima facie portions of U.S.C.). The I.R.C. has been enacted as a separate code and is therefore positive law. See Internal Revenue Code of 1954, ch. 736, 68A Stat. 1 (1954). Though both the Statutes at Large and I.R.C. could be said to be authoritative here, we use the "any papers" language of the original enactment appearing in the Statutes at Large. The difference is irrelevant to the outcome of the case, and we will thus disregard an apparent scrivener's error made by a codifier without congressional direction. Cf. United States v. Welden, 377 U.S. 95, 98 n.4 (1964) (holding that a "change of arrangement" by a codifier to a section not enacted as positive law "should be given no weight").
2 Legislation enacted in 1998 amended s 6104, repealing former subsections (d) and (e) and inserting a new subsection (d) that includes the public inspection requirement of former s 6104(e). See Omnibus Consolidated and Emergency Supplemental Appropria- tions Act, 1999, Pub. L. No. 105-277, s 1004(b), 112 Stat. 2681, 2681-888 to 2681-889 (1998) (codified at 26 U.S.C.A. s 6104 (West Supp. 1999)). Although the amendment altered the statutory lan- guage slightly, those changes are not relevant to the issue before us. Accordingly, we need not and do not address those differences here.
The IRS has declined throughout this litigation to disclose whether a closing agreement with CBN exists, and the dis- trict court did not examine the documents in question before dismissing the complaint. Instead, the court concluded from the pleadings that the information requested by Tax Analysts represents a closing agreement as defined by I.R.C. s 7121(a), 26 U.S.C. s 7121(a) (1994), and therefore consti- tutes tax return information that as a matter of law is outside the scope of I.R.C. s 6104 and exempt from disclosure under FOIA Exemption 3 and I.R.C. s 6103. Accordingly, the district court granted judgment on the pleadings as a matter of law pursuant to Federal Rule of Civil Procedure 12(c) in favor of the IRS.
With respect to the claim against CBN, the district court also concluded that I.R.C. s 6104 does not contemplate a private right of action to enforce the obligation of an applicant for tax exempt status to make its application papers available to the public. Accordingly, the district court dismissed the action against CBN for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). Tax Analysts appeals both the judgment and dismissal.
stating that "any statement or document not described in paragraph (d) of this section that is submitted by an organiza- tion in support of its application." Treas. Reg. s 301.6104(a)- 1(e). The catch-all provision further offers a legal brief as an example of a disclosable document. See id. Despite the breadth of I.R.C. s 6104(a)(1)(A) and related regulations, however, it is also clear from the statute that not every document pertaining to an exempt organization that the IRS has on file falls within the provision's scope. See, e.g., Lehr- feld, 132 F.3d at 1465-66 (concluding that I.R.C. s 6104(a)(1)(A) does not cover papers submitted by third parties because such documents are neither submitted by the applicant nor issued by the IRS).
Beyond the obvious examples of the exemption application itself and the final determination letter issued by the IRS, the statute does not articulate exactly what constitutes a docu- ment that "supports" an exemption application or is "issued ... with respect to" an exemption application. Tax Analysts argues that an applicant might submit a closing agreement as a supporting document for an exemption application, and that both the closing agreement and documents generated in the process of negotiating the closing agreement might also be submitted by the applicant in support of or issued by the IRS concerning that application. Also, Tax Analysts asserts that the IRS may possess legal briefs, letters, memoranda, and other papers submitted by CBN's attorneys, accountants, officers, or directors presenting arguments in favor of CBN's exempt status or explaining or excusing CBN's political activ- ities. Accordingly, Tax Analysts maintains that the district court erred in concluding that there was no set of facts under which Tax Analysts could state a cause of action under FOIA.
ments and statements like the applicant's articles of incorpo- ration and bylaws, financial statements, and organizational charts, but does not mention closing agreements. See Treas. Reg. s 301.6104(a)-1(d)(2).
If IRS forms and regulations require the filing of particular types of documents as part of an application for exemption, then clearly such documents are submitted in support of the application regardless of their content. The converse, that other types of documents cannot be included in the statutory phrase "submitted in support of such application," does not necessarily follow. While I.R.C. s 6104(a)(1) explicitly re- quires disclosure of applications for exempt status and letters, the descriptions that define which documents and letters are disclosable--"in support of such application," and "with re- spect to such application"--speak to content without limita- tion as to type of document. Also, the catch-all provision of Treas. Reg. s 301.6104(a)-1(e), by its express inclusion of other documents, denies the notion that the prescribed list represents the outer bounds of disclosability. We note fur- ther that I.R.C. s 6103(b)(2), in defining "return information," similarly uses descriptions of content rather than titles and labels to articulate which taxpayer records should be held confidential.
type of documents at issue rather than their content is questionable.
In arguing against remand for further discovery, the IRS relies heavily upon another case involving closing agreements, Tax Analysts v. IRS, 53 F. Supp. 2d 449 (D.D.C. 1999). In that case, the district court granted summary judgment for the IRS on the ground that the closing agreements were not disclosable under I.R.C. s 6104(a)(1)(A) because they were not " 'issued' by the IRS," but were instead bilateral contracts between the IRS and the applicants in question. Id. at 453. Without endorsing this view of the meaning of "issued by the IRS," we note that the district court in that case conducted an in camera review of the agreements in question before concluding that they did not fall within the scope of I.R.C. s 6104(a)(1)(A). That court based its decision principally upon "the character of the closing agreements themselves," id. at 453 n.6, explicitly leaving open the question of whether a closing agreement might itself constitute an application for exempt status disclosable under I.R.C. s 6104(a)(1)(A). See id. at 453 n.7. In other words, far from supporting the IRS's argument that further discovery would be fruitless, that case better supports the conclusion that some review of the con- tent of the documents in question is necessary before the court can adequately determine whether or not I.R.C. s 6104(a)(1)(A) applies.
quate record upon which to base the discloseability determi- nation.
We turn next to Tax Analysts' claim against CBN. The district court dismissed that claim after concluding that I.R.C. s 6104 does not contemplate a private right of action to enforce the public inspection requirement imposed upon ap- plicants for tax exempt status. I.R.C. s 6104 does not ex- pressly provide for private action against exempt organiza- tions that fail to make available their exemption applications and supporting documentation. Indeed, the provision offers no language at all concerning remedies for its violation. Tax Analysts argues that this omission does not preclude its cause of action against CBN for allegedly violating that statute's public inspection requirement, and that Congress intended a private remedy to effectuate the public inspection require- ment. CBN, unsurprisingly, maintains that I.R.C. s 6104 does not support an implied private right of action.
Although violation of a federal statute alone is inadequate to support a private cause of action, see, e.g., Touche Ross & Co. v. Redington, 442 U.S. 560, 568 (1979) (quoting Cannon v. University of Chicago, 441 U.S. 677, 688 (1979)), the Supreme Court has repeatedly recognized that, in some cases, the courts may infer such a remedy from the language or struc- ture of a statute or the circumstances of its enactment. See, e.g., Karahalios v. National Fed'n of Fed. Employees, Local 1263, 489 U.S. 527, 532-33 (1989); Transamerica Mortgage Advisers, Inc. v. Lewis, 444 U.S. 11, 18 (1979). The question we must resolve is whether Congress intended to provide a private remedy for violations of the public inspection require- ment of I.R.C. s 6104. See, e.g., Thompson v. Thompson, 484 U.S. 174, 179 (1988); Transamerica, 444 U.S. at 15.
class for whose benefit the statute was enacted; (2) whether some indication exists of legislative intent, explicit or implicit, either to create or to deny a private remedy; (3) whether implying a private right of action is consistent with the underlying purposes of the legislative scheme; and (4) wheth- er the cause of action is one traditionally relegated to state law, such that it would be inappropriate for the court to infer a cause of action based solely on federal law. See id. at 78; see also Suter v. Artist M, 503 U.S. 347, 364 n.16 (1992) (recognizing the four Cort factors); Thompson, 484 U.S. at 179 (expressing reliance upon the Cort factors). Over the years, the proper application and continued vitality of Cort's four factors have been matters of great debate, as reflected in the parties' arguments. Tax Analysts contends that we should mechanically consider and weigh each of the four factors, and cites numerous Supreme Court cases as support- ing its position. CBN maintains, conversely, that the Su- preme Court has discarded step-by-step evaluation of the Cort factors, and cites as many cases sustaining its view.
Turning to our own jurisprudence in this area, in Govern- ment of Guam v. American President Lines, 28 F.3d 142 (D.C. Cir. 1994), we reviewed Cort and its progeny and concluded that, in assessing whether Congress intended an expressly provided remedy to be the only remedy, "the central analysis is directed at discovering legislative intent by means of 'the language of the statute, the statutory structure, or some other source.' " Id. at 145 (quoting Karahalios, 489 U.S. at 532-33). We also acknowledged that, where Congress has otherwise enacted "a comprehensive legislative scheme including an integrated system of procedures for enforce- ment," there is a strong presumption that Congress deliber- ately did not create a private cause of action. Id. at 145-46 (quoting Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147 (1985)).
complaining to the IRS about an exempt organization's failure to comply with s 6104. See 26 C.F.R. s 301.6104(d)-1(g). Although these regulations did not take effect until after Tax Analysts filed suit, we note that the IRS has long accepted information from third parties regarding taxpayers' failure to comply with the tax laws, even in the absence of a specific regulatory mechanism for doing so. If ever a case demon- strated a "comprehensive legislative scheme including an integrated system of procedures for enforcement," Govern- ment of Guam, 28 F.3d at 145-46, it would be this one.
Moreover, we note that the exempt organization is not the only source from which an interested party can obtain copies of the organization's exemption application and supporting documents. As Tax Analysts' claim against the IRS amply demonstrates, I.R.C. s 6104 permits interested parties to gain access to the same documents from the IRS. Addition- ally, we note that I.R.C. s 6104(e) does not require an exempt organization to release for public inspection any document that the public could not otherwise procure from the IRS. In other words, Tax Analysts achieves nothing through a private right of action against CBN that cannot be obtained from the government in the alternative.
Our analysis comports with that of the only other courts to consider whether I.R.C. s 6104 creates an implied private remedy. See Schuloff v. Queens College Found., Inc., 994 F. Supp. 425, 427-28 (E.D.N.Y. 1998), aff'd, 165 F.3d 183 (2d Cir. 1999). For all of these reasons, we conclude that I.R.C. s 6104 does not provide a private right of action, and affirm the district court's dismissal of Tax Analysts' claim against CBN.
the question of how best to create an adequate record. We hold, however, that s 6104 does not provide Tax Analysts with a private right of action against CBN, and affirm the district court's dismissal of that claim.

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.