## Facts

- The Internal Revenue Service (IRS) conducted civil and criminal investigations into whether Lawrence Berger and his company, Realty Research Corporation (collectively, Berger), complied with federal tax laws.
- The investigations ended without criminal charges.
- Berger submitted Freedom of Information Act (FOIA) requests seeking records about both the civil examination and the criminal investigation.
- The IRS produced some responsive records but withheld the criminal-investigation file in full and released the civil file with redactions.
- The IRS asserted multiple FOIA exemptions, including Exemption 3 (statutory nondisclosure), Exemption 5 (privileges for predecisional and litigation-related material), and Exemption 7(C) (privacy in law-enforcement records).
- Some withheld material included currency-transaction reports (CTRs) and Currency and Banking Retrieval System (CBRS) summary information that the IRS stated was filed under, or derived from filings under, the Bank Secrecy Act (BSA) and protected from disclosure by statute.
- Berger argued that Exemption 3 should not apply if the IRS had discretion to disclose certain CBRS information, pointing to provisions in the Internal Revenue Manual.
- Berger also claimed that the Privacy Act entitled him to access records about himself even if FOIA exemptions applied.
- During the litigation, the IRS made additional disclosures of information it concluded was not directly derived from protected BSA reports, but it maintained its remaining withholdings and redactions.
- The IRS moved for summary judgment and supported its position with sworn declarations and a Vaughn index describing the searches performed and the bases for withholding.

## Issues

1. Did the IRS conduct a search reasonably calculated to locate all records responsive to Berger’s FOIA requests?
2. Did FOIA Exemption 3 permit the IRS to withhold protected information under federal nondisclosure statutes, including tax-return confidentiality provisions and statutes protecting BSA reports and information derived from them?
3. Did FOIA Exemption 5 permit the IRS to withhold predecisional deliberative material and attorney work product from the investigative files?
4. Did FOIA Exemption 7(C) permit the IRS to redact identifying information about third parties and personnel in law-enforcement records where privacy interests outweighed any public interest in disclosure?
5. Did the IRS release all reasonably segregable non-exempt portions of the records, and was in camera review necessary?
6. Could Berger use the Privacy Act to obtain records that the IRS withheld under FOIA and nondisclosure statutes?

## Decision

- The court granted summary judgment for the IRS.
- The court held the IRS’s search efforts were adequate because the agency described, in sworn submissions, where it searched and how it searched, and Berger offered no evidence beyond speculation to show additional responsive records existed.
- The court upheld the IRS’s withholdings and redactions under the asserted FOIA exemptions, including Exemption 3 for information barred from disclosure by statute (including protected tax-return information and BSA-derived material), Exemption 5 for privileged internal analysis and litigation-related work product, and Exemption 7(C) for personal privacy in law-enforcement files.
- The court found the IRS satisfied FOIA’s segregability requirement by releasing non-exempt information where feasible and withholding only what could not reasonably be separated from exempt material.
- The court declined to conduct in camera review, finding the agency’s declarations and Vaughn materials sufficiently detailed and submitted in good faith.
- The court rejected Berger’s reliance on internal IRS manual provisions to defeat Exemption 3, reasoning that internal guidance does not override a statutory prohibition on disclosure.
- The court also rejected Berger’s attempt to obtain the withheld material through the Privacy Act where disclosure was barred by statute or properly withheld under FOIA.

## Legal Principles

- FOIA requires an agency to conduct a search reasonably calculated to uncover responsive records; detailed agency affidavits are given a presumption of good faith, and speculation is not enough to defeat summary judgment.
- FOIA Exemption 3 applies when another federal statute specifically bars disclosure of identified categories of information; statutes protecting tax-return information (e.g., 26 U.S.C. § 6103) and statutes protecting BSA reports and derivative information (e.g., 31 U.S.C. § 5319) may qualify.
- Agency manuals and internal policies do not expand FOIA disclosure duties or narrow statutory confidentiality rules for purposes of Exemption 3.
- FOIA Exemption 5 protects privileged intra-agency material, including predecisional deliberative communications and attorney work product prepared in anticipation of litigation.
- FOIA Exemption 7(C) permits withholding of identifying details in law-enforcement records when disclosure would cause an unwarranted invasion of personal privacy and the requester shows no public interest that outweighs those privacy interests.
- FOIA requires release of reasonably segregable, non-exempt information, but agencies need not disclose fragments that would be meaningless or that would still reveal exempt content by context.
- In camera review is discretionary and generally unnecessary when the agency provides sufficiently specific justifications through declarations and a Vaughn index.
- The Privacy Act does not provide a backdoor to obtain records that Congress has made confidential by statute or that are properly withheld under FOIA.

## Conclusion

Berger v. Internal Revenue Service held that the IRS’s FOIA search for records of civil and criminal tax investigations was adequate and that the IRS properly withheld or redacted responsive materials under FOIA Exemptions 3, 5, and 7(C), including information protected by statutory confidentiality rules for tax-return data and BSA-derived reports; the court also found segregability satisfied, declined in camera review, and rejected the claim that the Privacy Act required disclosure of the withheld records.


Berger v. Internal Revenue Service, 487 F. Supp. 2d 482 (2007)