On July 19, the United States Court of Appeals for the District of Columbia Circuit issued a ruling in Montgomery v. Internal Revenue Serv., a case concerning the Internal Revenue Service’s (IRS) handling of Freedom of Information Act (FOIA) requests for information about whistleblower disclosures. The Court upheld the right of the IRS to withhold any information that might reveal the existence of a whistleblower due to the role IRS whistleblowers play as confidential sources to help enforce tax laws. Additionally, the Court noted that whistleblowers can be subject to retaliation from “revenge-seeking” FOIA requesters who have been audited by the IRS.
In the early 2000s, husband and wife Thomas and Beth Montgomery allegedly undertook a fraudulent tax scheme using sham partnerships as tax shelters to artificially report business losses of over $1 billion on individual tax returns. The IRS eventually discovered the scheme, disallowed the reported losses in adjustments, and recovered back taxes from the couple.
Following a settlement which resolved the tax issues, the Montgomery’s sought to uncover how their alleged tax schemes were discovered by the IRS. They submitted to the IRS a series of FOIA requests aimed at uncovering a suspected whistleblower. Five of the FOIA requests submitted by the Montgomerys requested the IRS to produce whistleblower forms, such as award payments.
The IRS denied the five FOIA requests for whistleblower documents based on FOIA Exemption 7(D)...
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