Employers are required to file a W-2 for every paid employee. The W-2 lists the identities of the employer and the employee, the amount that an employee has been paid, and the taxes that have been withheld by the employer. The Social Security Administration (SSA) processes Forms W-2 for the IRS. On occasion, the employee's name and Social Security number as listed on a Form W-2 do not match the SSA's database. When that happens to a sufficient number of employees, the SSA sends the employer a "no-match" letter.
In 2006, Judicial Watch filed a Freedom of Information Act (FOIA) request with the SSA, seeking the names of the 100 U.S. employers that generated the most no-matches from 2001 through 2006. The agency declined to produce such records, concluding that they were exempt under FOIA Exemption 3. The District Court agreed with the agency, and the D.C. Circuit Court of Appeals affirmed that decision.
FOIA Exemption 3 exempts records that are protected from disclosure by another statute. In this case, the Tax Code protects the confidentiality of "return information." Return information is defined to include any "data" that is "furnished to" the IRS "with respect to a return or with respect to the determination" of tax liability "of any person."
An employer's identity is "data" furnished to the IRS on the Form W-2 with respect to the determination of its employees' taxes, so the records sought by Judicial Watch would disclose "return information." Since return information is protected from disclosure by the Tax Code, the records that Judicial Watch sought are exempt under FOIA.
Judicial Watch argued that the records fell within an exception known as the Haskell Amendment, which provides that return information "does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer." Here, the D.C. Circuit disagreed, concluding that the Haskell Amendment did not apply because Judicial Watch sought employer names, which can be associated with a particular taxpayer.
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