Silver v. Internal Revenue Service

                            UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA

MONTE SILVER, et al.,                     )
      Plaintiffs,                         )
             v.                           )                  Civil No. 19-cv-247 (APM)
      Defendants.                         )
_________________________________________ )

                         MEMORANDUM OPINION AND ORDER

        Before the court is Plaintiffs’ Motion for Relief Under Fed. R. Civ. P. 5.2, ECF No. 59

[hereinafter Pls.’ Mot.]. Plaintiffs seek an order from the court that Appendix 3 to Defendants’

Cross-Motion for Summary Judgment, ECF No. 57-3—an appendix of exhibits containing

Plaintiff Monte Silver’s tax return information—be placed under seal, and for associated relief.

See Pls.’ Mot., P. & A. in Supp. of Pls.’ Mot. for Relief Under FRCP 5.2, ECF No. 59-1 [hereinafter

Pls.’ Br.], at 10. Plaintiffs contend that Defendants’ disclosure of Silver’s tax information was an

“abusive tactic[]” done in violation of the Internal Revenue Code (“IRC”), Pls.’ Br. at 3–8, and

that Silver and his wife have suffered significant damage as a result of their financial and tax

information being “exposed to the world,”

id. at 9.

For their part, Defendants maintain that

publicly filing Silver’s tax return information was both lawful under the IRC and necessary for

resolving key legal issues in dispute, and that Plaintiffs have failed to overcome the strong

presumption against sealing court records. See Defs.’ Opp’n to Pls.’ Mot. to Seal or Compel

Redactions, ECF No. 60 [hereinafter Defs.’ Opp’n.], at 2–11. The court agrees with Defendants

in large part.
       Section 6103 of the IRC authorizes the disclosure of confidential tax return information in

certain circumstances. See 26 U.S.C. § 6103. Two provisions are relevant here: (1) subsection

(h)(2) governs disclosure to the Department of Justice (“DOJ”), and (2) subsection (h)(4) governs

disclosure in judicial and administrative tax proceedings. Plaintiffs argue that Defendants violated

the law at both junctures. See Pls.’ Br. at 3–6. The parties agree that the standards under the latter

provision are the narrower of the two, see Defs.’ Opp’n. at 7; Pls.’ Br. at 5, such that if disclosure

to the court is proper, so too was disclosure to DOJ. The court thus need only address whether

disclosure of Silver’s tax information to the court was proper.

       Section 6103(h)(4) provides that “[a] return . . . may be disclosed in a Federal or State

judicial . . . proceeding pertaining to tax administration,” if, among other things, “the taxpayer is

a party to the proceeding” or “the treatment of an item reflected on such return is directly related

to the resolution of an issue in the proceeding.” 26 U.S.C. §§ 6103(h)(4)(A)–(B). There is no

question that Silver is a “taxpayer . . . party to [this] proceeding,” so that condition is satisfied.

The disclosure of Silver’s tax return information also “is directly related to the resolution of an

issue in the proceeding”: whether the court has jurisdiction over the matter and other key issues

in dispute.

Id. § 6103(h)(4)(B). The

parties’ briefing on their cross-motions for summary

judgment, see ECF Nos. 47-1, 57-1, 61, and 65, make clear the direct relevance of, among other

things, whether Silver owed any transition tax under IRC section 965 and how he elected to pay

it, and his relationship with Silver Limited.

       The parties disagree on the antecedent question of whether this is a proceeding “pertaining

to tax administration,” 26 U.S.C. § 6103(h)(4)(A). See Pls.’ Br. at 4–5; Defs.’ Opp’n. at 3–5. The

D.C. Circuit has explained that the IRC “defines ‘tax administration’ fairly broadly, to include ‘the

administration, management, conduct, direction, and supervision of the execution and application

of the internal revenue laws or related statutes.’” Gardner v. United States, 

213 F.3d 735

, 738

(D.C. Cir. 2000) (quoting 26 U.S.C. § 6104(b)(4)(A)(i)). This case easily satisfies that definition.

Plaintiffs filed this lawsuit to challenge the process by which Defendants issued regulations

governing the calculation, reporting, and payment of the so-called “transition tax” under section

965 of the IRC. See First Am. Compl., ECF No. 5 [hereinafter First Am. Compl.]; 84 Fed. Reg.

1,838 (Feb. 5, 2019) (the final regulations implementing section 965); see also 26 U.S.C. § 965(o)

(mandating promulgation of the regulations). Plaintiffs’ challenge, at a minimum, “pertains to”

the “administration . . . of the execution and application” of the tax laws.

        Plaintiffs contend that because their challenge is specific to the process, and not the

substance of “internal revenue laws or federal tax policy,” this is not a “tax administration” case.

Pls.’ Br. at 5; see

id. at 4–5.

But such a narrow interpretation of the definition is contrary to case

law, see 

Gardner, 213 F.3d at 738

; see also United States v. Mangan, 

575 F.2d 32

, 40 (2d Cir.

1978) (“[T]he definition of ‘tax administration’ in s[ection] 6103(b)(4) is so sweeping as to compel

rejection of a restrictive interpretation.”), and would read the term “pertaining to” out of the statute.

To “pertain” to something means “to have reference” to it, 1 or to be connected to it in some way.

See Am. Civil Liberties Union v. CIA, 

109 F. Supp. 3d 220

, 236 (D.D.C. 2015) (defining “pertain”).

One need look no further than the relief Plaintiffs seek—a “stay [of] the enforcement of the Final

Regulations” and the tax law itself, sections 965 and 962, “against Plaintiffs and other small

businesses,” see First Am. Compl. at 19—to see that this case “pertains to” the “administration”

of tax law.

        Section 6103 does not mandate disclosure, so the court still must address whether

Plaintiffs’ sealing request is appropriate. The court operates from the starting point that there is

 See Pertain, MERRIAM-WEBSTER’S DICTIONARY, (last visited
Mar. 25, 2021).

“a ‘strong presumption in favor of public access to judicial proceedings.’” EEOC v. Nat’l

Children’s Ctr., Inc., 

98 F.3d 1406

, 1409 (D.C. Cir. 1996). And “‘[i]n cases where the government

is a party . . . [t]he appropriateness of making court files accessible’ is enhanced.” Friedman v.


672 F. Supp. 2d 54

, 58 (D.D.C. 2009) (quoting Nat’l Children’s 

Ctr., 98 F.3d at 1409


The D.C. Circuit has identified six factors for courts to consider in determining whether the strong

presumption against sealing has been overcome: (1) the need for public access to the documents

at issue; (2) the extent of previous public access to the documents at issue; (3) the fact that someone

has objected to disclosure, and the identity of that person; (4) the strength of any property and

privacy interests asserted; (5) the possibility of prejudice to those opposing disclosure; and (6) the

purposes for which the documents were introduced during the judicial proceedings.                Nat’l


Ctr., 98 F.3d at 1409

(citing United States v. Hubbard, 

650 F.2d 293

, 317–22 (D.C.

Cir. 1980)).

       Plaintiffs make no attempt to show that sealing is warranted under the Hubbard factors.

See Pls.’ Reply at 5 (declining to engage in Hubbard analysis). That fact alone requires denial of

Plaintiffs’ motion, as they have the “burden of showing that [their] privacy interests outweigh the

public’s presumptive and substantial interest in knowing the details of judicial litigation.” John

Doe Co. v. CFPB, 

321 F.R.D. 31

, 34 (D.D.C. 2017). The court nevertheless has considered the

parties’ submissions in light of the relevant factors, and finds that sealing Silver’s tax return

information in its entirety is not warranted.

       To be sure, these are records to which the public would not otherwise have access. But the

weight of that factor, and any accompanying privacy interest Silver has in them, is diminished

greatly by the fact that Silver voluntarily filed this lawsuit and the IRC sanctions public disclosure.

That Defendants produced Silver’s tax return to demonstrate lack of jurisdiction and to rebut other

of Plaintiffs’ arguments was not an “abusive tactic[],” but basic lawyering. The court must give

substantial weight to the fact that Silver’s tax return information is directly related to resolving

disputed issues in this case. See 

Hubbard, 650 F.2d at 321

(explaining that the “single most

important element” for consideration is the purpose for which the documents were introduced);

see also United States ex rel. Grover v. Related Companies, LP, 

4 F. Supp. 3d 21

, 28 (D.D.C.

2013) (“The more relevant a pleading is to the central claims of the litigation, the stronger the

presumption of unsealing the pleading becomes.”). And the harm alleged by Plaintiffs does not

change the outcome. As noted by Defendants, Plaintiffs primarily allege reputational harm, see

Defs.’ Opp’n at 12; Pls.’ Br. at 9, and such harm “is not the sort of property or privacy interest that

courts have found compelling when analyzing the Hubbard factors,” Related Companies, LP, 4 F.

Supp. 3d at 27; see also Gilliard v. McWilliams, 

2019 WL 3304707

, at *4 (D.D.C. July 23, 2019)

(“Reputational harm alone is insufficient.”).

       Although the court concludes that the Hubbard factors weigh against sealing the records

in their entirety, it is sensitive to Silver’s privacy interest in those record portions that are not

relevant to a disputed issue. For that reason, the court does not deny Plaintiffs’ motion in its

entirety. The court orders as follows. It denies Plaintiffs’ motion in so far as it seeks a complete

sealing of Appendix 3. The parties shall meet and confer and file on or before April 30, 2021,

proposed redactions to the tax records, as well as agreed-upon public versions of their filings at

ECF Nos. 59, 60, and 64. If the parties cannot reach agreement, they shall file memoranda of no

more than ten pages describing their disputes and the support for their respective positions.

Dated: March 28, 2021                                         Amit P. Mehta
                                                       United States District Court Judge


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