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Public.Resource.org v. United States Internal Revenue Service

United States District Court, N.D. California

June 20, 2014

PUBLIC.RESOURCE.ORG, Plaintiff,
v.
UNITED STATES INTERNAL REVENUE SERVICE, Defendant

Re: Dkt. No. 14.

For Public.Resource.org, a California non-profit organization, Plaintiff: Thomas R. Burke, LEAD ATTORNEY, Ronald G. London, PRO HAC VICE, Davis Wright Tremaine LLP, San Francisco, CA; Daniel A. Laidman, Davis Wright Tremaine LLP, Los Angeles, CA; David E Halperin, PRO HAC VICE, Washington, DC.

For United States Internal Revenue Service, Defendant: Christopher Sanders, Yonatan Gelblum, LEAD ATTORNEYS, United States Department of Justice, Tax Division, Washington, DC.

Page 1213

ORDER DENYING DEFENDANT'S MOTION TO DISMISS

WILLIAM H. ORRICK, United States District Judge.

INTRODUCTION

This motion to dismiss presents the question of whether the Freedom of Information Act (" FOIA" ) is superseded by section 6104 of the Internal Revenue Code, a previously enacted disclosure statute concerning Form 990 filings. Public.Resource.org

Page 1214

(" PRO" ) seeks the tax return data of several nonprofit organizations in " machine-readable format." The United States Internal Revenue Service (" IRS" ) refuses because it contends that FOIA is superseded by section 6104 and its internal rules for releasing the requested data. Because of the breadth of FOIA's disclosure requirements, which has been repeatedly upheld by the courts, and the inapplicability of the cases on which the IRS relies, there is no basis to conclude that FOIA is superseded by section 6104. The IRS's motion is DENIED.

BACKGROUND

On March 11, 2013, PRO submitted a request for tax return data to the IRS pursuant to FOIA, 5 U.S.C. § 552. PRO requested the Form 990 filings of nine tax-exempt organizations from 2011, specifically in Modernized e-File (MeF) format or " any other machine-readable format." Complaint, Ex. F. The IRS uses the MeF format for all Forms 990 filed electronically.

The IRS responded to PRO on March 19, 2013, indicating that data are " excluded from disclosure in response to a written FOIA request" if such data are otherwise available through an established agency procedure. Compl., Ex. G at 1. The IRS directed PRO to Form 4506-A, which the IRS developed exclusively for requesting copies of tax-exempt organizations' annual Form 990 filings. Id. Form 4506-A allows the public to request digital copies of tax information on either CDs or DVDs, and in either " Alchemy" or " raw" format. Id. at 2-3. Discs with Alchemy-formatted data contain image files that are searchable in a database using Alchemy software. Discs with raw data contain image files in Tagged Image File (" TIF" ) format.

PRO contends that neither format satisfies its request for " machine-readable" data, and that Form 4506-A is therefore " inadequate" to satisfy PRO's FOIA request. Compl., Ex. H at 1. On April 12, 2013, PRO's counsel wrote to the IRS to request that it reconsider its position. In response, the IRS stated in a letter dated May 1, 2013, that it was unable to comply with PRO's FOIA request because Forms 990 in MeF format contain data that are protected from disclosure by section 6103(a) of the Internal Revenue Code, and because the existing process for releasing electronically filed Forms 990 is to convert MeF data into a Portable Document Format (" PDF" ) replica of the paper form, then redact the protected information. Compl., Ex. I.

PRO then filed this action on June 18, 2013, seeking declaratory and injunctive relief under both FOIA and the Administrative Procedure Act (" APA" ), 5 U.S.C. § 703. Compl. ¶ ¶ 61- 62, 67-68. I heard argument on the IRS's motion to dismiss on June 18, 2014.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege " enough facts to state a claim to relief that is plausible on its face." Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). This " facial plausibility" standard requires the plaintiff to allege facts that add up to " more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). While courts do not require " heightened fact pleading of specifics," a plaintiff must allege facts sufficient to " raise a right to relief above the speculative level." Twombly, 550 U.S. at 555.

Page 1215

In deciding whether the plaintiff has stated a claim upon which relief can be granted, the court must assume that the plaintiff's allegations are true and must draw all reasonable inferences in the plaintiff's favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court is not required to accept as true " allegations that are merely conclusory, unwarranted deductions of fact, ...


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