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D.C. Circuit Rules for IRS in Dispute with Mayer Brown
Legal Times
April 20, 2009
Mayer Brown is not entitled to certain Internal Revenue Service documents under the Freedom of Information Act because disclosing the information could allow tax cheats to one-up investigators, the U.S. Court of Appeals for the D.C. Circuit ruled Friday (pdf).
Mayer Brown partner Thomas Durham said in court in February that it's "extremely speculative" to argue that releasing the IRS records -- which include settlement guidelines for the prosecution of lease-in, lease-out transactions -- would allow a taxpayer to create a new plan to evade the IRS. Mayer Brown, which filed a FOIA request on its own behalf in 2004, says the information would be used to better defend clients in settlement negotiations with the IRS.
But Judges Janice Rogers Brown, Karen LeCraft Henderson and Thomas Griffith agreed that the information was best left in the hands of the IRS. "Though the information here does not necessarily provide a blueprint for tax shelter schemes, it could encourage decisions to violate the law or evade punishment," Brown wrote for the panel.
Brown said a potential evader who learns about the IRS's internal litigation concerns "will know how to best structure an evasion so as to avoid the maximum enforcement efforts of the IRS."
"While there may be some legitimate uses of the requested information, the potential for misuse amply supports the IRS's argument for exemption," Brown wrote. "People prepared to do the right thing would simply negotiate in good faith. Disclosure in this case would clearly be of enormous benefit to potential evaders and past violators hoping to escape punishment."
This article first appeared on The BLT: The Blog of Legal Times.
