## Facts

- Robert J. Martin and other investors held interests in three related pass-through entities: a Subchapter S corporation (WOM), a limited partnership (IEP), and a general partnership (WOJV).
- The IRS audited the entities’ information returns for 1980–1983 and proposed adjustments that flowed through to the investors’ individual tax liabilities.
- Martin left the investment group in 1983 and was later audited on his individual returns reflecting pass-through items.
- Three co-investors filed administrative protests challenging proposed adjustments to their individual returns.
- An IRS auditor indicated Martin’s audit would follow the IRS position taken in response to the co-investors’ protests.
- Martin submitted a FOIA request seeking the portions of the co-investors’ protests discussing the pass-through entities’ returns, to help him respond in his own audit.
- The IRS denied the request, asserting the protests were protected “return information” under 26 U.S.C. § 6103 and therefore exempt from FOIA disclosure.

## Issues

1. Whether administrative tax protests submitted by other taxpayers, even if discussing pass-through entities affecting multiple investors, are those taxpayers’ protected “return information” under 26 U.S.C. § 6103(b)(2).
2. If so, whether FOIA Exemption 3 bars disclosure of those materials despite requested redactions and despite Martin’s status as a former partner/shareholder in the pass-through entities.

## Decision

- The Tenth Circuit reversed the district court’s disclosure order and remanded.
- The court held the protests were “return information” of the protesting taxpayers within the meaning of § 6103(b)(2).
- Because § 6103 prohibits disclosure, FOIA Exemption 3 required withholding the requested materials.
- The court rejected disclosure through redaction where the material sought remained within the category of another taxpayer’s protected return information.

## Legal Principles

- “Return information” under 26 U.S.C. § 6103(b)(2) is defined broadly to include data furnished to or collected by the IRS with respect to a return or the determination of tax liability.
- Administrative protests filed by a taxpayer during audit proceedings are part of that taxpayer’s protected return information.
- Material exempted from disclosure by § 6103 is exempt under FOIA Exemption 3, 5 U.S.C. § 552(b)(3).
- A requester cannot use FOIA to obtain another taxpayer’s return information merely because the documents discuss pass-through entities affecting the requester’s tax position.
- When § 6103 applies, FOIA’s segregability and partial-disclosure concepts do not authorize release absent a statutory exception permitting disclosure.

## Conclusion

The court held that administrative protests filed by Martin’s co-investors were confidential return information of those taxpayers under § 6103, so FOIA Exemption 3 barred disclosure to Martin even of entity-related portions and even with redactions.


Martin v. Internal Revenue Serv., 857 F.2d 722 (10th Cir. 1988)