The Freedom of Information Act (FOIA) (1988) requires with certain enumerated exceptions that federal government records be made available to the public upon written request. Individuals seeking information do not have to show a need for the requested information; instead, the government has to justify its withholding of information. The Internal Revenue Service’s (IRS) policy regarding FOIA requests for information complies with the FOIA, and instructs employees to provide copies of government records unless there is an applicable exemption provided by the law. IRS records show that in Fiscal Year 1998, the IRS either completely or partially denied information requested under the FOIA for about 3,700 of the nearly 31,000 requests received.

The Privacy Act of 1974 (PA), among other things, establishes controls over the types of information collected by the federal government about individuals and how the information can be used. Since requests that are made under the PA should also be considered under the FOIA, we included a review of PA requests that were denied to determine if the IRS appropriately considered whether the information could be provided under the FOIA prior to denying the request.

In May 1997, the Attorney General of the United States issued a memorandum to all heads of agencies urging them to adhere to the following principles:

• Apply customer service attitudes toward FOIA requesters.
• Follow the spirit, as well as the letter, of the law when deciding what information to provide.
• Presume that information can be provided whenever it is possible to do so without violating another law.

The IRS Restructuring and Reform Act of 1998 (RRA 98) § 1102 (d)(3)(a) requires the Treasury Inspector General for Tax Administration (TIGTA) to perform periodic audits of a statistically valid sample of requests for information that were denied on the basis of the FOIA § 552(b)(7) and Internal Revenue Code (I.R.C.) § 6103. The objective of the audit was to determine whether the IRS properly applied FOIA exemptions to deny written requests for information. We broadened our statistical sample to include all denied FOIA requests because the IRS’ system used to control FOIA requests does not specifically identify requests denied pursuant to I.R.C. § 6103. We also selected a statistical sample of denied PA requests since the PA requires agencies to consider whether information that is exempt under the PA should be disclosed to the requester under the FOIA. In addition, we selected a statistical sample of FOIA and PA requests that the IRS considered to be imperfect to determine whether the requests should have been processed under the FOIA and the information provided.

During this review, we identified IRS processes for controlling requests for information made under both the FOIA and the PA; however, due to time constraints, we did not verify whether the processes were working effectively. We did not conduct an evaluation of the internal control system over FOIA and PA requests and did not evaluate whether the IRS control system we used to select our sample cases contained complete and accurate information. This will be covered in a future TIGTA Office of Audit review. In addition, we did not review the requested information that was provided to requesters to determine whether the IRS provided only responsive, non-exempt information.

Based on our statistical samples, we found that the IRS improperly withheld information from requesters for 12.1 percent of the denied or partially denied FOIA requests and 7.6 percent of the denied or partially denied PA requests. In each of these instances, the IRS did not correctly apply the FOIA, which requires the IRS to provide the requested information. For the requests that the IRS considered imperfect, we concluded that in the vast majority of them the IRS correctly determined that the requests were imperfect and informed the requester that additional information was needed to perfect the request.

We also found that the IRS did not always follow the FOIA and IRS procedural guidelines in processing FOIA and PA requests. As a result, the IRS did not always provide timely responses on fully or partially denied requests and did not research or transfer cases between IRS offices in a uniform manner.

In addition, the IRS can provide better customer service to requesters by taking additional actions beyond what is required in the law to try to provide information similar to what was requested when the information specifically requested is not available. We identified an additional 2.4 percent of the requests in our sample of FOIA denials and an additional 19.3 percent of the requests in our sample of PA denials in which the IRS could have taken additional steps to better meet the requesters’ needs. This improved service could reduce the number of subsequent requests and administrative appeals when requesters are denied information.

The IRS should consider the following areas for improvement to ensure that it does not improperly withhold information, complies with the FOIA statute and IRS procedures, and improves the customer service provided to requesters.

The Internal Revenue Service Needs to Improve Compliance with the Freedom of Information Act Statute and Internal Revenue Service Procedures to Avoid Improperly Withholding Information

The following table shows the results of our review of statistical samples of FOIA requests and PA requests that were processed and denied (either completely or partially) under the FOIA during the period July 22, 1998 to December 31, 1998.

The requested information was improperly withheld primarily for two reasons:

• The IRS did not timely implement the RRA 98 § 6019 (c) changes that increased the information available under the FOIA. For example, the IRS must now provide attorneys who are representing requesters with the names of individuals who, along with the requester, have been assessed a Trust Fund Recovery Penalty. The IRS incorrectly informed attorneys that it could not provide this information.
• The IRS did not comply with procedures outlined in their internal handbook. For example, one request asked the IRS for a copy of a notice and demand for tax. Normally, the IRS does not retain these notices. IRS procedures require that the requester should be informed that the IRS does not routinely maintain hard copies of these notices, but the IRS does provide an accompanying tax account transcript that shows when the notice was issued. The IRS did not provide the highlighted transcript as required, and instead, responded that there were "No responsive records."

The IRS did not always ensure that the FOIA and IRS disclosure procedures were appropriately followed or ensure that the procedures were consistently applied throughout the field disclosure offices. The following describes the areas requiring additional attention by IRS management:

The IRS did not ensure that requesters received timely responses

The IRS did not always timely respond to FOIA and PA requesters. For example, from our sample of 340 denied or partially denied FOIA requests, we found that 160 (47.1 percent) of the requests were untimely. For each of these requests, the IRS had taken 30 or more calendar days to process the request for information after the cases were controlled on disclosure’s inventory control system. These requests took an average of 116 days to process. We further analyzed the untimely cases and determined that there were long periods (at least 30 days) of inactivity during case processing, which contributed to the IRS’ untimely responses. There was no explanation in the case files for the periods of inactivity.

The IRS is inconsistent in the amount of research it performs and does not ensure that consistent responses are provided on similar requests

The IRS does not research or transfer cases between IRS offices in a uniform manner. We identified many instances where the disclosure office receiving the request should have followed procedures and taken additional actions to locate the requested records and/or transfer the request to the IRS office with jurisdiction. Additionally, some disclosure offices handled requests for the same type of information differently from other disclosure offices. As a result, requesters receive different treatment depending on which IRS office has jurisdiction over the request. The IRS could improve the consistency of its responses by developing minimum standards for processing similar types of requests.

Improving the current disclosure inventory control system could also assist the IRS in providing more consistent responses. The inventory system does not provide disclosure employees with instant access to national information about cases being worked. As a result, IRS employees cannot readily determine whether similar requests from the same individual are being worked in other IRS offices or whether another office sent a different response to the requester. Disclosure management told us that enhancements planned for the current inventory control system will enable them to provide more consistent responses. We did not perform any work to evaluate the planned enhancements during this review.

The Internal Revenue Service Can Improve Its Customer Service to Requesters When Processing Freedom of Information Act Requests

Our limited survey of the processes used in 10 disclosure offices to comply with the FOIA and the PA and the results of our case reviews showed that there are several opportunities for the IRS to improve its customer service to requesters.

In our samples of denied or partially denied FOIA or PA requests, we identified some cases where the specific document requested was not available, but the IRS could have provided information from similar files or sources. Disclosure management stated that there could be several reasons for this, including the fact that they have a decentralized operation that could result in different disclosure offices working requests differently. In addition, some disclosure offices have learned over a period of time that certain knowledgeable requesters want only what they ask for in their request, not similar documents. However, when the request is received from a less knowledgeable requester who more broadly describes the information needed, the IRS will interpret the request and provide the documentation it believes is responsive to the request.

For example, one request specifically stated, "send my Individual Masterfile (IMF) Specific" for Tax Years 1981 through 1983. The IMF is a nationwide central database of tax accounts for individuals. In this instance, transcripts for the requested tax years were not available on the IMF because the IRS routinely moves old data from the IMF to a retention register. The IRS did not send the information because the data were on the retention register and not on the IMF, which was the system specified in the FOIA request.

The IRS’ disclosure organizational structure does not always ensure consistent customer service

Disclosure management from the various IRS field offices, with minimal direction and oversight from the National Office, are responsible for providing timely, consistent, and high-quality processing of FOIA and PA requests. Disclosure management advised us that this has resulted in different priorities and resources for working FOIA and PA requests. As a result, variations exist in the customer service provided to requesters of FOIA and PA information.

The Office of Governmental Liaison and Disclosure could have researched additional sources of information when working cases

We identified several instances where the Office of Governmental Liaison and Disclosure could have taken additional actions to locate the requested records and/or transfer the requests. Instead, it informed the requester that no records were available or the requester would have to submit a request at another disclosure office that could research the IRS’ taxpayer account system. Disclosure management told us that the National Office does not have access to this information for FOIA requests because they are concerned that the system could be misused by disclosure employees.

The IRS should ensure that requests for information are processed in accordance with the FOIA and IRS procedures to reduce the number of requests where information is improperly withheld and to ensure cases are appropriately researched and timely processed. In addition, the IRS should consider expanding its efforts beyond its statutory obligations imposed by the FOIA and the PA to respond to FOIA and PA requests to provide better customer service. Also, the IRS should enable the National Office to obtain controlled access to the IRS’ tax account information, modify the disclosure organization structure to have more national oversight, and develop minimum standards for documenting case actions.

Management’s Response: A draft of this report was provided to the IRS for review and comment on February 16, 2000. We requested management’s written comments by March 17, 2000. However, although we received a draft version of their comments, we had not received the official response as of March 24, 2000.