Thursday, May 28, 2009

Offshore Tax Investigation Files Exempt from FOIA Disclosure

In a nonprecedential summary order in Radcliffe v. IRS & Geithner (2d Cir. 08-1513-cv), issued May 27, 2009, the Second Circuit affirmed the denial Radcliffe's FOIA request for documents related to the IRS's investigation of U.S. taxpayers using offshore credit card accounts. The credit card initiative was launched several years ago well in advance of the current offshore initiative focusing on UBS that we have discussed here which resulted in the current voluntary disclosure initiative which we discussed here. The earlier offshore credit card initiative also used the John Doe Summons to get information and documents and also resulted in a voluntary disclosure initiative (referred to by the initialism OVCI (Offshore Voluntary Compliance Initiative), which followed with another initialisim LCCI (Last Compliance Chance Iniatitive or some such)).

The reason the court summarily affirmed was the rather obvious reason:

We have no doubt that the documents retrieved pursuant to the government's search were exempt from production as "records or information compiled for law enforcement purposes" the production of which "could reasonably be expected to interfere with enforcement proceedings," 5 U.S.C. § 552(b)(7)(A); see also 26 U.S.C. § 6103(e)(7). Radcliffe has essentially conceded as much, asserting that this FOIA suit stems from the Internal Revenue Service's ongoing investigation of whether and to what extent Radcliffe has used undeclared offshore credit card accounts to shelter his income and avoid his federal tax obligations. By letter dated July 25, 2007, Radcliffe, through counsel, stated that his "FOIA suit became necessary due to the IRS' failure to provide [information relating to the tax audit] willingly." Letter from Frank Agostino to Gary A. Nichols, Internal Revenue Service (July 25, 2007).

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