Gary L. Ryan v. Bureau of Alcohol, Tobacco and Firearms

WALD, Circuit Judge,

dissenting:

Appellant has requested from the Bureau of Alcohol, Tobacco & Firearms (BATF) a list of the names and addresses of registered liquor bottlers. These bottlers are not required to pay any liquor excise taxes and hence are not taxpayers so far as BATF is concerned. Moreover the identity of these bottlers is certainly in the public domain, obtainable probably by a perusal of telephone directories in their various communities. Nevertheless, the majority concludes that a list of their names and addresses is confidential “return information,” as defined in 26 U.S.C. § 6103 (b)(2)(A), because their names reveal “a taxpayer’s identity.” In reaching this peculiar conclusion, the majority relies on id. § 6103(b)(6), which defines “taxpayer identity” to include “the name of a person with respect to whom a return is filed, his mailing address, his taxpayer identifying number ..., or a combination thereof.” (Emphasis added.) The majority reasons that the bottler has filed an “information” return and that the bottler’s name and address therefore constitute the name and address of a person “with respect to whom” a return is filed.

I cannot accept this reading of § 6103. To begin with, the majority assumes but nowhere documents that Form 4328 is an “information return.” Although the term is nowhere defined in the Internal Revenue Code, “information return” appears to be a statutory term of art that refers to returns from the sources of a taxpayer’s income. Thus, the Code contains an entire part (ch. 61, subch. A, pt. III, 26 U.S.C. §§ 6031-6060 ) devoted to cataloguing “Information Returns.” Even if some of the reports required elsewhere in the Code, including Chapter 51 dealing with liquor excise taxes, could also be considered “information returns,” Form 4328 does not fit the genre of an information return as used by Congress over the years in the Code, or as commonly referred to by tax commentators. See, e.g., 8A J. Mertens The Law of Federal Income Tax, ch. 48 (1976) (describing “information returns” prescribed by the Internal Revenue Code). This form contains no information whatsoever dealing with money or income of any taxpayer.

What it is, I believe, is an ordinary report or document and not a “return.” If so, the information it contains would nonetheless be encompassed by the broad definition of “return information” in § 6103(b)(2) which includes “any ... data ... collected by the Secretary with respect to ... the determination of the existence, or possible existence, of liability ... of any person ... for *651 any tax.” Since Section 6103(a) provides that “returns and return information shall be confidential” and § 6103(b)(2) defines “return information” so broadly, this kind of information, unless covered by the proviso to § 6103(b)(2) discussed below, would still be confidential. Indeed this is the basis on which the district court, without considering the proviso, denied appellant’s FOIA request.

Thus, I would be content to affirm the district court were it not for the proviso in § 6103(b)(2) — known as the Haskell Amendment — that “return information” “does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer”. On its face this proviso seems to cover this case. The government appeared to concede at oral argument that there is no way to trace any particular liquor manufacturer taxpayer from the bottlers’ Form 4328. Assuming that to be so, I do not see how the list of bottlers can be withheld under § 6103(b)(2)’s definition of return information, as interpreted by our court in Neufeld v. IRS, 646 F.2d 661, 665 (D.C.Cir.1981) (“return information, properly defined, includes only information that directly or indirectly identifies a particular taxpayer as the Haskell amendment indicates”). Accord Moody v. IRS, 654 F.2d 795 (D.C.Cir.1981); Long v. IRS, 596 F.2d 362 (9th Cir.1979), cert, denied, 446 U.S. 917 , 100 S.Ct. 1851 , 64 L.Ed.2d 271 (1980). Contra King v. IRS, 688 F.2d 488, 491 (7th Cir.1982) (“highly inclusive definition of ‘return information’ guarantees privacy to a very broad spectrum of taxpayer information”; proviso only allows release of statistical compilations).

The district court did not deal with the § 6103(b)(2) proviso at all; the appellant apparently did not argue that it applied. However, since it is an intrinsic part of the definition of “return information,” I believe its application should be addressed, and would consequently remand to the district court to determine whether it applies in this case, i.e., whether in fact, any taxpayer would be identified by the form. If it does apply, then I believe § 6103 would not be implicated at all and the material would either have to be disclosed or its nondisclosure justified under some FOIA exemption other than Exemption 3.

The majority, perhaps recognizing that this straightforward analysis would probably compel disclosure, adopts a circuitous and implausible argument for withholding, based on the notion that Form 4328 is an “information return,” and the disclosure of its filer a revelation of “taxpayer’s identity.” There is always risk in generalist judges construing the intricate interrelationships of words and phrases in specialized legislation, and that danger is heightened in the case of the Internal Revenue Code. I am uneasy about unknown spillover effects of the convoluted semantics involved in the majority’s construction of § 6103. Without any pretense of expertise in this field, I see the following problems with its construction.

First, the term “taxpayer identity” used in § 6103(b)(2), which the majority construes as meaning the identity of anyone who files any informational paper at the request of the IRS, suggests rather to me that Congress intended to protect the identities of taxpayers, not all contributors of information or even all return filers. Had Congress wanted to specifically protect the identities of return filers, whether or not the filer is also a taxpayer, it could easily have said so directly.

As the majority points out, “taxpayer identity” is defined in § 6103(b)(6) as including the name of the person “with respect to whom” a return is filed. This makes eminent sense in terms of the traditional function of information returns since they contain information from an income source that is requested “with respect to” a taxpayer. See, e.g., § 6109(a)(2) (any person “with respect to whom” a return is requested to be made by another person shall furnish to such other person his identifying number). In the case where a taxpayer files his own tax or information return, requirements laid down for the person who files the return and the person “with respect to whom” the return is filed are one and the same. But there are many situations set out in the Code’s chapter on information returns where a person files an in *652 formation return bearing on the tax liability of someone else. For example, a bank must file a Form 1099 listing interest paid to its depositors. In such a case, the depositor is the taxpayer “with respect to whom” the return is filed, and his “taxpayer’s identity” is protected by § 6103. The bank is not the person with respect to whom the return is filed but merely the person who files the return. Similarly, in this case, the bottler who files Form 4328 is not a taxpayer but merely an information filer, and its identity is not a “taxpayer’s identity.” The phrase “with respect to whom” a return is filed, as referring to the taxpayer, not the return filer appears throughout the Code, see, e.g., § 6103(c) (taxpayer may designate persons to whom “return information with respect to such taxpayer” may be disclosed); § 6103(b)(3) (defining “taxpayer return information” as “return information ... furnished to the Secretary by or on behalf of the taxpayer to whom such return information relates”) (emphasis added). Indeed the majority is forced to limit its strained interpretation to situations where the information return contains information only as to the filer, not any taxpayer, recognizing that in the usual return information situation, the person “with respect to whom” the return is filed is the taxpayer.

Second, § 6103(b)(6) defines “taxpayer identity” to include two items — “the name of a person with respect to whom a return is filed” and “his taxpayer identifying numbed’ (emphasis added). This further suggests that Congress meant the term “taxpayer identity” to include only the identity of taxpayers, and not nontaxpaying information filers. See also 26 U.S.C. § 6103 (b)(2)(A) (defining “return information” to include “a taxpayer’s identity [and] the nature, source, or amount of his income”) (emphasis added).

Third, my reading of § 6103(b)(6) is consistent with § 6103(m), which prescribes the conditions under which “taxpayer identity information” may be released: “to the press ... for purposes of notifying persons entitled to tax refunds when the Secretary ... has been unable to locate such persons”; and “the mailing address of a taxpayer ... for [several specified purposes].” (Emphasis added.) These exceptions refer only to taxpayers, further suggesting that taxpayers were all Congress had in mind in drafting § 6103(b)(6).

The legislative history of § 6103 confirms to my satisfaction that Congress was primarily focused on protecting the identity of taxpayers. The Senate committee report (the House bill had no comparable provision) explains that:

The term “return information” is to include the following data pertaining to a taxpayer: his identity, the nature, source or amount of his income, [etc.] It also includes any particular of any data ... collected by the IRS with respect to a return filed by the taxpayer.

S.Rep. No. 938 (Part I), 94th Cong., 2d Sess. 318 (1976) (emphasis added), reprinted in 1976 U.S.Code Cong. & Ad.News 2897, 3439, 3748.

The majority’s odd construction of “taxpayer identity” does, however, permit it to bypass any consideration of whether the Haskell amendment proviso applies. In a dazzling display of circular logic, the majority first construes the specifically defined term “taxpayer identity” to include the identity of both taxpayers and return-filers. It then reasons that the word “taxpayer” in the proviso must include information filers as well as taxpayers lest we “needlessly give the word ‘taxpayer’ a meaning different from that used in the phrase ‘taxpayer’s identity.’” Maj. op. at 647. In effect, that means that the proviso is per se inapplicable as far as the author of any kind of informational document is concerned. This two-step argument is equivalent, of course, to a direct ipse dixit that when Congress said “taxpayer” it really meant “taxpayer or information filer.” It is also directly contrary to 26 U.S.C. § 7701 (a)(14), which defines “taxpayer” as “any person subject to any internal revenue tax.” I cannot resist the temptation to turn the majority’s argument around and point out that since we should not “needlessly give the word ‘taxpayer’ a meaning different from that used in the phrase ‘taxpayer’s identity,’ ” and since the Internal Revenue Code defines “taxpayer” to exclude nontaxpaying information filers, the majority’s construe *653 tion of “taxpayer’s identity” to include non-taxpaying information filers is all the more peculiar.

The whole exercise is not convincing to me.

I note finally that none of the tax disclosure horrors set out at the end of the majority opinion would follow from my more limited interpretation of “taxpayer identity.” “Information returns” such as partnership returns would still be exempt under § 6103(b)(1), and no return information would be disclosable if any particular taxpayer were identified. Moreover, all other relevant FOIA exemptions, including Exemptions 6 and 7, would be available in appropriate circumstances to protect the identities of or any other privileged information about non-taxpayer informants. See S.Rep. No. 938, 94th Cong., 2d Sess. 316 (1976) (“In addition to the provisions of the Internal Revenue Code, ... the Privacy Act and the Freedom of Information Act affect the disclosure of tax information.”), reprinted in 1976 U.S.Code Cong. & Ad. News 3439, 3746.

I respectfully dissent.