Behind The Story: Investigating The Faults In The IRS's FOIA System

Forbes

22-04-2025

In this episode of Tax Notes Talk, Tax Notes chief correspondent Amanda Athanasiou discusses her recent investigation into the IRS's handling of Freedom of Information Act requests and trends from two decades of agency data.
Tax Notes Talk is a podcast produced by Tax Notes. This transcript has been edited for clarity.
David D. Stewart: Welcome to the podcast. I'm David Stewart, editor in chief of Tax Notes Today International. This week: The waiting is the hardest part.
The Freedom of Information Act grants individuals the right to request access to federal records, a transparency tool that has long been used by reporters and lawyers. But what happens when response times get longer and the appeals function works more like a rubber stamp on the initial responses?
A recent Tax Notes investigation explored flaws practitioners have identified in the IRS's FOIA disclosure and appeals systems, which have led to taxpayer frustration and a growing backlog.
Here to talk more about what was uncovered is Tax Notes chief correspondent Amanda Athanasiou. Amanda, welcome back to the podcast.
Amanda Athanasiou: Thanks for having me, Dave.
David D. Stewart: So why don't we start off with a background on what FOIA requests are and how they usually function, specifically at the IRS?
Amanda Athanasiou: Sure. So as you said, the Freedom of Information Act is a federal law that enables individuals to obtain records from government agencies as long as those records don't fall into specific exemptions for things like individual privacy, national security, proprietary interest, things like that.
In the tax context, taxpayers who are, say, engaged in disputes with the IRS will often use FOIA to gain access to what's in their file or records on their own investigations by the IRS or the DOJ. But it's also used often by journalists and members of the public to uncover agency records on a whole variety of things. In the IRS context, that can include requests that are targeting information on rulings or the agency's positions on certain matters. It could be training materials, historical data. The sky is really the limit, as long as the requester is asking for records that do actually exist and that are not exempt from disclosure.
Reporters at Tax Notes have used FOIA to inform some of our investigations into litigation that we're following or to gather information for topics that we're looking into for stories. We generally do receive requests for extensions after we've filed those FOIAs, so we can relate to some of what our sources said and what the data shows about response times.
David D. Stewart: So how did you uncover the information you've reported about in this series, and what did you find in your investigation?
Amanda Athanasiou: So I got a tip from one of our sources for this story that initial FOIA disclosures from the IRS are upheld on appeal at a rate that is kind of surprisingly high historically. So to back up, when a taxpayer receives a response to their initial FOIA request that doesn't seem quite right — maybe they feel that the agency is claiming they don't have records that they should, or maybe they're improperly withholding them by citing various exemptions that don't seem to fit — taxpayers can generally appeal that response through what's called an administrative appeal. But this high sustension rate means that the appeals function is affirming the vast majority of responses at the disclosure level. So taxpayers are now really unlikely to get anywhere by filing that appeal, which basically leaves them with the options of litigating, filing more requests and trying to get at the information other ways, or basically giving up.
Lauren Loricchio, our investigations editor, and I did some digging into 20 years of FOIA data that the IRS and other federal agencies are required to keep. And we found that, yes, this tip was accurate. An average of 93 percent of those initial FOIA responses that were appealed since 2008 were fully affirmed higher up. That's a much higher rate than other agencies. And basically what it means is that either the IRS disclosure office is giving perfect answers over 90 percent of the time — in some years, the rate was 98 percent or even 100 [percent] — or the administrative appeals process has turned into a rubber stamp, which is what several practitioners told us that they have experienced.
We also found some other interesting trends while we were working through all of this data, namely that FOIA requests coming into the IRS have consistently fallen over the last 15 to 20 years. But the time it's taking the IRS to respond to those requests has gotten longer.
David D. Stewart: So what did you find in the data, and did you see any reasons behind the trends?
Amanda Athanasiou: Well, we found that on average FOIA response times for the IRS have doubled since 2008, from 24 days to about 48 days. Before 2024, they were actually on track to triple, but they came down quite a bit last year, giving us that 48-day average. So this trend is a little concerning on its own, but when it's considered in light of this two decade decline in the number of FOIA requests coming into the IRS, it's even more surprising.
The data basically raises two questions: One, why are FOIA requests falling so consistently? And two, why hasn't that led to a quicker response time, or at least not a worse one?
We did find some conclusions on the first question. The reasons offered by practitioners and the IRS itself for the drop in FOIA requests are generally that alternative ways of obtaining the needed records have been rolled out over the years. So the IRS pointed out that there are increased online and digital offerings. There's a FOIA library. There are upgraded routine access procedures. After passage of the Taxpayer First Act, there's a requirement to release administrative files for cases going to appeals that are under a certain dollar threshold. There's also a direct release mechanism, and all of this should theoretically help reduce the FOIA burden.
It was also pointed out that with less enforcement activity, fewer audits over the years, there will be fewer taxpayers pursuing FOIAs within their own dealings with the IRS. Practitioners did counter that some of these fixes are not always successful or enforceable. So some feel that they're not necessarily a good substitute for FOIA. And it's also not clear that these mechanisms explain all of the declines in FOIAs, which has been quite dramatic if you include Privacy Act and FOIA requests dating back to the early 2000s. But generally, these theories seem to make sense.
David D. Stewart: Is there any sense of why response times are going up and what sort of effect is that having?
Amanda Athanasiou: Well, on the response time side of things, the explanation isn't totally clear. But there are certainly theories that constraints with staffing and funding, training, and an increase in complexity of cases, the involvement of more subject matter experts, that kind of thing — are probably all contributors to the increased response time. More than one practitioner commented that their experience with any given FOIA request really depends on who at the IRS is handling it. So some personnel are more responsive than others, better informed, that kind of thing.
The issues that this presents is that attorneys are saying that they're not getting files they need to represent their clients in time to prepare for, say, hearings or other deadlines. So it is having real world consequences.
David D. Stewart: Now, all this data sort of dates back. Everything is looking back. But we now have a new administration in town. What are we expecting to see happen with the FOIA backlog?
Amanda Athanasiou: That's a great question. So as of 2024, staffing levels in the IRS FOIA office were about the same as they were in 2008. But as you'd expect, there are concerns going forward about funding cuts and staffing issues and freezes during the Trump administration having the effect of exacerbating an already somewhat worsening backlog.
Another logical extension of reduced funding, though, is that enforcement could decrease, which as we talked about, that could itself lead to a decline in FOIA requests as fewer taxpayers are being audited, say. So that's a factor that could actually neutralize the effect on the backlog. It was pointed out in one of the stories in the series that was an increase in FOIA requests during Trump's first term. At the IRS, the requests still gradually declined a bit during that timeframe, but both of those points are probably worth considering if we're trying to read the tea leaves on FOIA.
Between the already increasing wait times and reduced agency resources, one trend to watch out for is increased FOIA litigation. We already see a lot of examples of taxpayers going straight to court when they don't get a timely response to their FOIA requests. So these are cases in which there is no response from disclosure in the first place by the required statutory deadlines to administratively appeal. Reduced resources tend to increase wait times, so the current environment seems to be one in which we're likely to see that possibility of litigation increase.
David D. Stewart: So what's likely to happen in an environment where there are fewer resources for handling these FOIA requests and these are going to litigation? How's that going to play out in court?
Amanda Athanasiou: So the concern is, how sympathetic are the courts going to be to arguments that an agency doesn't have the personnel or the person power to get through the FOIA backlog? And there's some evidence that the answer is not very sympathetic.
We actually saw a Florida district court handle that kind of argument from the Department of Justice's tax division recently. The tax division was accused of improperly holding documents that had been FOIA'd, and it argued it had only one attorney on FOIA requests. It was under court order to respond to unrelated requests. It had asked for various extensions throughout the process of this request, and it was going on three years to complete the requested issue.
And the court said, "No dice." The agency isn't getting out of FOIA compliance based on what the court itself described as staffing challenges that amounted to a self-inflicted handicap. So the upshot is that agencies are statutorily required to comply with FOIA, and courts will likely uphold those requirements even in the face of staffing and funding objections. But as we've seen, the real world effects means that those FOIA response timelines and the lawsuits that result could creep upwards anyways, which could be costly to taxpayers.
David D. Stewart: Well, Amanda, thank you so much for being here. This series has been fantastic, and we'll have a link in the show notes so that our listeners can take a look at it for themselves. And I think that there's probably going to be a lot of issues that we need to track and see the trends in the years ahead.
Amanda Athanasiou: Certainly. I look forward to seeing what happens. And thank you again for having me.