TOPICAL INDEX TO INTERNAL REVENUE MANUAL-LISTING OF IRM NUMBERS AND
TITLES (INCLUDING HANDBOOKS)-Continued

TOPICAL INDEX TO INTERNAL REVENUE MANUAL-LISTING OF IRM NUMBERS AND
TITLES (INCLUDING HANDBOOKS)—Continued

TOPICAL INDEX TO INTERNAL REVENUE MANUAL-LISTING OF IRM NUMBERS AND
TITLES (INCLUDING HANDBOOKS)-Continued

PART XI-TECHNICAL

(11)100 Authorities and Standards
(11)200 Legislation

(11)300 Regulations

(11)400 Tax Return Forms and
Instructions

(11)500 Tax Conventions and
Foreign Assistance

(11)600 Rulings, Determination
Letters, and Closing Agreements
as to Specific Issues

*(11) 671 Exempt Organizations
Handbook

(11)700 Technical Advice to

Regional and District Offices
(11)800 Publication of Rulings

(11)900 Other Technical Programs
(11)(10)00 General Technical

Procedures and Facilities in the
National Office

*Handbook-issued separately and may or may not be filed in sequence as listed.

[From the Journal of Taxation, September 1967]

THE NEW FREEDOM OF INFORMATION ACT-WHAT IT MEANS TO TAX PRACTITIONERS

(By Jonathan Sobeloff)

The running battle between Congress and the administrative
agencies over access to information in the hands of those agencies
has now reached a climax with the new Freedom of Information Act
which became effective on July 4. Under its broad rules the IRS
will have to make available certain information heretofore kept
secret. Practitioners and taxpayers may find the climate of certain
controversies changed under the new law. This article examines the
IRS' stated position at the moment; indicates what information is
now available, what is still controversial, and how tax men may
expect to proceed to take full advantage of the new law.

The new Freedom of Information Act (the amended Section 3 of the Ad-
ministrative Procedure Act) which became effective July 4, 1967, contains at least
two potentially important new concepts for tax advisers. The law is directed
generally toward increasing the availability of records of Government agencies,
particularly to reporters and to practitioners who deal with the agencies. The
most important new concept in the law is that it provides to every person a
judicially enforceable right to see any U.S. Government agency records, subject
to nine specific exemptions. Previously, although the law provided in general
terms for the availability of some Government records, the exceptions were so
broadly phrased that it was possible for Government officials to deny access to
the great bulk of such records. In any case, there was no judicial remedy avail-

1 P.L. 89-487, 7/4/66.

able to a member of the public who was denied access to a record. Because of this feature of the new law, it now becomes important for tax practitioners to consider what records of the Government may be available and which of such records they would like to see.

The IRS regulations implementing the new law, published July 1, 1967, evidence a narrow and cautious attitude. They provide specifically for inspection upon request of one type of record not previously available-comments submitted on or after August 2, 1967 on proposed regulations, except as to any comment or portion which the commenter specifically requests be treated as confidential. The Service has yet to take a position on the applicability of its new procedures for requesting records to any other types of records, but is awaiting determination of requests on a case-by-case basis.

4

The second major innovation of the new law is the requirement that agency policy statements and interpretations, and administrative staff manuals and instructions to staff which affect any member of the public be published or made available in an agency reading room. Such matters which are issued, adopted or promulgated after July 4, 1967, must also be indexed currently by the agency' This "reading room" provision is of less immediate significance to the tax planner. It is not directly enforceable by judicial action, and IRS, which already has an extensive publication program, has determined to make available little new information under the provision. However, the Internal Revenue Manual, previously not available, has been placed (in a drastically censored version) in the reading room on the first floor of the National Office of the IRS.

While apparently there is no remedy by which a tax practitioner can force the Service to publish or place in the reading room any items, there is a potentially significant indirect sanction for the enforcement of the reading room requirements. The Act provides in general that reading room matter which is not properly made available cannot be used against anyone who does not have actual timely notice of it. The significance of this provision remains to be determined in tax matters, but it is obviously a rule to keep in mind in connection with future tax controversies.

PROVISIONS OF THE ACT

A general understanding of the provisions of the Freedom of Information Act is helpful as a basis for considering what material may be available and how to obtain it.

There are three principal categories of information which the agency is to make available, each requiring different treatment (the Act doesn't apply, however, to matters within any of nine specific exemptions).

1. Federal Register matters are those required to be published in the Federal Register. In the tax field, these are essentially the regulations (agency substantive rules, statements of general policy or interpretations "of general applicability") and include descriptions of the central and field organization, methods of making requests and obtaining decisions, and procedures.

The principal change which may prove significant in the tax field is the broadening of the sanction for noncompliance by the agency. Formerly, the sanction was that no person could "in any manner be required to resort to organization or procedure" not so published in the Federal Register. However, if the rule not published was not one of "organization or procedure," presumably the sanction could not apply. Now, the sanction as revised is applicable also to "any matter" required to be published. Moreover, no person shall in any manner be required to resort to "or be adversely affected by any matter required be published in the Federal Register and not so published" "except to the extent that . . . [he] has actual and timely notice of the terms thereof. . . ." It appears that no tax

232 Fed. Reg. 9541.

3 Reg. 601.601 (b). See TIR 916, 7/17/67.

4 Reg. 601.702(c).

See, e.g., Reg. 601.701 (b) (3).

U.S.C. Section 552 (a) (2).

7 Former Section 3(a) of the Administrative Procedure Act, 5 U.S.C. Section 1002 (a) (1964 Ed.).

8 Idem.

Under the decisions there has been a problem as to whether the fact that a person had actual notice of the terms of an item which should have been published would cure the defect so that he could be required to resort to such organization or procedure. The revision makes clear that actual and timely notice will substitute for publication.

payer can be adversely affected after July 3, 1967, by any unknown matter which should have been published in the Federal Register at any time in the past and which has not been so published.

2. Reading Room matters relates to material which is to be made available for inspection and copying in an agency reading room.' .10 It includes opinions and orders made in the adjudication of cases, "statements of policy and interpretations adopted by the agency but not published in the Federal Register, and administrative staff manuals and instructions to staff that affect any member of the public." It is this requirement which accounts for the new availability of the expurgated Internal Revenue Manual and the new IRS reading rooms. There is provision for the agency to delete "identifying details," fully explaining the justification for the deletion in writing.12 Deletion is required "to the extent necessary to prevent a clearly unwarranted invasion of personal privacy." The agency is also to maintain for public inspection and copying a current index providing identifying information as to any matter which is issued, adopted or promulgated after July 4, 1967, and which is required to be placed in the reading room or published under this subsection.

The sanction is that no material of this type that affects any member of the public may be "relied upon, used or cited as precedent by any agency against any private party" unless it has been indexed and either made available or published as provided above or unless that private party has actual and timely notice of its terms.

3. Other records available upon request is a catchall for all identifiable records not made available under (1) and (2); it is largely new.13 It replaces a provision that matters of "official record" shall be available to persons properly and directly concerned, except as to information held confidential for good cause. Now, agency records are to be available upon request to any person regardless of whether or not he has any proper or direct concern. Thus, newspaper reporters, technical publishers, lawyers and accountants, as well as other curious members of the public, can request records and see them. The House Report makes clear, however, that the cost of searching for and making available such records shall be borne by the applicant for the record.

If the agency refuses to produce the record upon request, a judicial action is provided wherein the burden is upon the agency to sustain its refusal." The various agency regulations provide for an administrative review within the agency prior to the judicial action. As the IRS provision (Reg. 601.702(c) (10)) requires a 30-day waiting period for review within the agency, this will tend to slow down contested requests and make it more difficult to obtain information. No specific provision for such administrative review is found in the Act but an implication thereof may be found in the statement that the court is to determine the matter de novo.

If the court decides that the applicant is entitled to production of the record, it has jurisdiction to enjoin the agency from withholding and to order the production of any agency records improperly withheld. In the event of noncompliance with its order, the court may punish the responsible employee for contempt. The House Report indicates that it is assumed that the agencies will ordinarily comply without judicial action and certainly without the necessity of a contempt citation. This seems a reasonable assumption, at least after initial litigation establishes some of the ground rules to the satisfaction of the agency. The court proceedings to compel production of records under the Act, are to "take precedence on the docket over all other causes and be assigned for hearing and trial at the earliest practicable date and expedited in every way."

Under this provision any identifiable record is available upon request unless it is covered by one of the exemptions. The term "record" is interpreted very broadly by the Attorney General under the new legislation.15 It includes virtually every piece of paper and anything else that one might be interested in seeing. Furthermore, although the Act requires that the request must be for "identifiable" records, it is the author's opinion that the identification requirement will not be used as a method for withholding.1

16

10 IRS Manual Supplement No. 1 (19) G 32; Reg. 601.702(b) (1).

115 U.S.C. Section 552 (a) (2). An agency is permitted to promptly publish and offer copies of such material for sale instead of placing it in the reading room. Normally the agency would place such material in the reading room too.

1 The deletion of identifying details does not apply to "orders" made in the adjudication of cases.

13 5 U.S.C. Section 552 (a) (3).

14 5 U.S.C. Section 552 (a) (3).

15 Attorney General's Memo on the public information section of the A.P.A., 1967, p. 23. 16 Reg. 601.702(c) (4).