A legal battle between tax attorney Brad Waterman and the IRS Tax Exempt Bonds office returned to the courtroom on Monday in the U.S. Court of Appeals in Washington D.C. as Waterman tries to obtain pages of a report filed on him stemming from a legal case involving a student loan bond that dates to 2011.
Waterman wasn't present but was represented by David C. Vladeck of the Georgetown University Law Center. Waterman contends that the IRS should not be allowed to invoke the deliberative process privilege of Exemption 5 to the Freedom of Information Act, 5 U.S.C. § 552(b)(5). The IRS believes it has the right to withhold some information relating to allegations of Waterman's alleged misconduct due to privacy issues.
Waterman doesn't feel his career has been damaged by the case, but he does want the opportunity to answer to whatever is in the report. "I hope that the Court of Appeals will order the IRS to provide copies of the documents, so that I can respond to TEB's assertion that I misbehaved," he said.
The IRS was represented by Justice Department attorney Julie C. Avetta who argued that Waterman had full access to the factual allegations against him. She cited the agency's 6103 statute, a series of disclosure laws designed protect privacy that prohibits the agency from releasing certain documents created during the pre-decisional deliberative process.
Avetta summed up the government's position by saying, "complaints have been made against you, but we have decided not to proceed against you, and we have closed our file." Closed files thwart FOIA requests – so far.
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The IRS flagged the deal as a loan swapping arrangement that may have violated tax requirements. Waterman contended the deal was legal and proved his case before the IRS's Office of Appeals.
In March 2014, IRS revenue agent Michael Marchetti filed a suspected practitioner misconduct charge against Waterman with the agency's Office of Professional Responsibility. Waterman wasn't told about the charge until six months later. OPR then said it wasn't taking any action against Waterman but would retain a report on the incident for 25 years.
Waterman filed a Freedom of Information Act requesting the report and received one-and a-half pages while expecting 13. He sued the IRS in U.S. District Court in D.C. to get access to the missing pages.
On Jan. 24, 2018, Judge Richard Leon,
Waterman also believes the partial denial of his FOIA request is indicative of other issues within the agency. "The IRS is attempting to expand significantly a very narrow and seldom-applied exception to the rule that the deliberative process privilege doesn't encompass facts and factual allegations," said Waterman. "If the IRS succeeds, the public's access to information could be curtailed significantly. The IRS has a long history of withholding information from the public. My case is just more of the same."
As the court weighs its decision, the future remains unclear. "I would be very surprised if the court issues its decision soon," said Waterman. "My counsel and I haven't discussed what lies ahead, if anything, if we lose."
