Chief Counsel Notice 2016-003
In a recently issued Chief Counsel Notice, IRS has announced a new provision in the Chief Counsel’s Directive Manual (CCDM) on the treatment of Joint Committee on Taxation (JCT) documents as congressional records.
Background—JCT. The JCT is a nonpartisan, 10-member Congressional committee that is closely involved with all aspects of the tax legislative process, including the development and analysis of legislative proposals, preparing revenue estimates of legislation under consideration, and drafting legislative histories for tax-related bills.
The JCT also monitors the operation of IRS and its administration of the tax laws and has oversight authority of certain tax refunds in excess of statutorily-prescribed amounts. (Code Sec. 8022, Code Sec. 6045)
Background—FOIA. The FOIA provides that, subject to a number of exceptions, government agencies (such as IRS) must make public information that they gather and maintain.
IRS issues a wide variety of documents every week, some of which are written for public release and others of which are for IRS’s internal use but are ultimately released under the Freedom of Information Act (FOIA). Whether written for internal or public use, IRS administrative pronouncements vary in precedential value and utility.
According to the CCN, IRS’s longstanding practice with regard to JCT documents has been to treat any incoming JCT document, as well as any documents created by IRS in connection with a response to the JCT document, as records of the JCT—segregated from IRS records and subject to JCT’s control—and not IRS records for FOIA purposes.
New provisions. The new provisions codify the longstanding treatment described above.
- The JCT is authorized under Code Sec. 8021 to obtain and inspect information, including returns and return information under Code Sec. 6103(f), for the purpose of carrying out its general oversight responsibilities.
- The JCT is authorized under Code Sec. 8023 to secure directly from IRS information for the purpose of making investigations, reports, and studies relating to internal revenue taxation, including returns and return information, as to any action taken or proposed to be taken by IRS as a result of any audit of the return.
- When the JCT corresponds with IRS under its general oversight authority, it generally includes a legend on the incoming correspondence that restricts the dissemination and use of both the inquiry and responsive records. The current version expressly states that the document on which the legend appears, as well as documents created in connection with a response to it, are records of the JCT (i.e., congressional records) and not “agency records” for FOIA purposes. However, even if a JCT document doesn’t contain a legend, IRS’s general practice is to treat the document and responses as congressional records.
- A FOIA request received by an IRS Disclosure Office that seeks access to records involving the JCT should be transferred to the IRS Privacy, Government Liaison and Disclosure’s (PGLD’s) Office of Disclosure FOIA & Program Operations for processing, personnel from which will consult with the JCT, as well as any affected IRS function(s) and Chief Counsel, before determining whether to release or withhold any IRS agency records that are the subject of a JCT oversight inquiry.
- Depending on the wording of the FOIA request, copies of records created and maintained by IRS in the normal course of its operations that are subsequently provided to the JCT in response to a general oversight inquiry may be IRS agency records subject to FOIA, but they also could be considered congressional records not subject to the FOIA. For instance, if the FOIA request specifically asks for records reviewed by the JCT, the disclosure of any records or information, or even the acknowledgement that these records exist in the context of a JCT inquiry, may confirm that the JCT had exercised its general oversight responsibilities, so these records are thus congressional records regardless of whether the inquiry letter bears a lengend restricting its dissemination, etc. However, a file with records that were generated in the normal course of operations, and were subsequently furnished to the JCT as part of its general oversight responsibilities, constitutes agency records subject to FOIA absent an exemption where neither the request acknowledgment nor release of the records reveals the existence of a JCT inquiry.
- Correspondence or other documentation reflecting the JCT’s inquiries relating to the proposed credits or refunds for which it has oversight authority under Code Sec. 6405 will be maintained separately within the administrative file of the taxpayer to whom it pertains. Although the JCT’s correspondence in this context may not contain a legend, any documents or information received from the JCT or prepared by IRS in response will not constitute IRS agency records subject to the FOIA.