Berger v. Internal Revenue Service

The Internal Revenue Service (IRS) (defendant) undertook civil and criminal investigations into whether Lawrence Berger and Berger’s company, Realty Research Corporation (collectively, Berger) (plaintiffs), complied with their tax obligations. No charges were ever brought against Berger. Pursuant to the Freedom of Information Act (FOIA), Berger requested documents from the IRS regarding the civil and criminal investigations. The IRS produced documents to Berger but fully withheld the criminal-investigation file and redacted a number of pages from Berger’s civil-investigation file. The IRS asserted that the withheld information, including currency-transaction reports (CTRs) and summary information from the Currency and Banking Retrieval System (CBRS), was filed or derived from filings under the Bank Secrecy Act of 1970 (BSA) and thus was exempt from production under FOIA Exemption 3 (codified at 31 U.S.C. § 5319). Berger sued the IRS and others, seeking production of the withheld information. Per Berger, Exemption 3 applied only to information over which the IRS had no discretion whether to disclose, but the IRS’s Internal Revenue Manual (internal manual) allegedly indicated that the IRS had discretion to disclose CBRS information in other contexts. Additionally, Berger claimed to be entitled to the withheld information under the Privacy Act of 1974 (Privacy Act) even if the IRS was correct about Exemption 3 because the Privacy Act applied even to information that FOIA exempted from disclosure. In response to Berger’s suit, the IRS provided Berger with some additional information that the IRS determined was not directly derived from BSA reports but refused to produce the remainder of the disputed records. The IRS then moved for summary judgment.