Mayer Brown is fighting to force the Internal Revenue Service to turn over what one partner called “garden variety” legal analysis that was redacted from settlement guidelines tied to the prosecution of certain tax shelters.
Thomas Durham, a tax controversy specialist in Mayer Brown’s Chicago headquarters, argued today in the U.S. Court of Appeals for the D.C. Circuit that the IRS has not proven that the information sought by the firm is exempt from disclosure under the Freedom of Information Act.
The firm wants further detail on IRS settlement guidelines for lease-in/lease-out (LILO) transactions. The dispute goes back to 2004, when the IRS released its settlement guidelines.
Durham argued the IRS is withholding information that contradicts its public positions on LILO transactions. “These are simply legal guidelines, garden-variety analysis,” Durham told Judges Thomas Griffith, Karen LeCraft Henderson, and Janice Rogers Brown.
The FOIA dispute began over 30,000 documents but has narrowed down to a mere two dozen or so. If the documents reveal IRS analysis of legitimate, nontax reasons to set up LILO transactions, Mayer Brown could better defend clients in settlement negotiations. Mayer Brown’s clients are not identified in briefs.
Jonathan Cohen, a lawyer in the Tax Division’s appellate section, argued Mayer Brown is not entitled to the information because FOIA exempts documents that, if released, could lead to circumventions of the law—such as the setting up of bogus tax shelters. “This is not—repeat, not—agency secret law,” Cohen said. “These are guidelines. That’s all they are.”
Judge Griffith noted at one point that circumventing the law had already occurred and questioned the extent to which the unredacted documents would lead to additional evasion. Durham called it “extremely speculative” that a taxpayer would devise a new plan to evade the IRS after reading unredacted settlement guidelines.