FOIA Failures at the IRS Are Leaving Taxpayers in the Dark

If President Donald Trump’s nominee for IRS commissioner, Billy Long, takes the helm, there will be no shortage of problems waiting for him: rushed rulemakings, reduced taxpayer appeal rights, outdated processing systems, and diminished frontline service, to name a few.

But fixing one overlooked issue—the agency’s broken Freedom of Information Act process—could go far in restoring public trust.

Once a vital tool for public accountability, FOIA at the IRS has quietly deteriorated into dysfunction, delaying access to records and undermining confidence in the agency’s fairness. Designed to promote transparency and open government, FOIA gives taxpayers, journalists, and legal advocates the right to access federal records.

This system has fallen into disrepair at the IRS. And that failure is no longer a bureaucratic inconvenience—it’s a direct threat to due process and taxpayer rights.

The state of the IRS’s FOIA process is alarming. Since 2008, the agency has affirmed its initial decisions to deny FOIA requests at an average rate of 93% on appeal. And average response time has doubled.

That’s not transparency; that’s institutional stonewalling. These appeals are supposed to provide an impartial review mechanism—a backstop for when the agency makes a mistake. Instead, they’ve become what many attorneys now describe as a rubber stamp.

And now, a federal court case is casting a harsh spotlight on the real-world consequences of this dysfunction.

Three companies—Arden Row Assets, Basswood Aggregates, and Delwood Resources—sued the IRS in 2023, alleging it backdated documents to improperly impose penalties related to syndicated conservation-based tax deductions (a longstanding area of concern over government enforcement tactics).

The companies filed FOIA requests to try to obtain records that could support their case. Two years later, they’re still fighting for access. Disturbingly, past investigations have found the IRS to have backdated documents in similar instances.

The case has drawn the attention of a federal judge who appears skeptical of the IRS’s justifications for withholding the documents. Now, the US District Court for the District of Columbia is reviewing whether the agency improperly applied FOIA exemptions or redactions.

This case is a warning sign, not an anomaly. When taxpayers can’t obtain timely access to records that affect their legal and financial standing, the FOIA process becomes meaningless. It undermines confidence in the fairness of our tax system and erodes the essential principle that government must operate in the light of day.

Some may argue that the IRS lacks the resources or personnel to keep up with FOIA demands, but federal courts have consistently rejected that excuse. In a recent decision, a Florida district judge rebuked the Department of Justice’s tax division for trying to use staffing shortages to justify a years-long delay in responding to a FOIA request.

The law is clear that government entities aren’t excused from FOIA compliance because of internal mismanagement or poor resource allocation. That includes the IRS.

Organizations such as the National Taxpayers Union have long supported efforts to modernize the IRS and improve its customer service, and FOIA reform can set an example for both.

Technology should facilitate fast and complete retrieval of records, while more timely procedures for delivering them can demonstrate better responsiveness to public needs. These goals can be achieved in several ways, such as:

• Boosting the number of caseworkers at the IRS Independent Office of Appeals, which handles denied FOIA requests.
• Prioritizing modernization funding to make taxpayer access to documents easier.
• Upgrading the Alternative Dispute Resolution process to quickly handle FOIA disagreements between taxpayers and the government before a formal appeal is filed.
• Passing the Taxpayer Assistance and Service Act, which has bipartisan Senate support, to strengthen taxpayer access to appeals and allow for more neutral and timely consideration of denied FOIA requests.

The IRS’s FOIA policies and appeals procedures also merit independent review. A key question is whether the IRS could more effectively apply the “direct release” process, which occasionally allows some lucky taxpayers to obtain their records without the hassle of a FOIA request.

Congress must exercise meaningful oversight to ensure the IRS is complying with the law, not hiding behind exemptions to shield itself from scrutiny. And within the agency itself, leadership must commit to a culture where transparency is the default rather than the exception.

Above all, we need to recognize that FOIA is not just about documents—it’s about power. Exercising that power behind closed doors creates a two-tiered system where only the most well-resourced taxpayers can afford to challenge the government.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Pete Sepp is president of the National Taxpayers Union, a taxpayer advocacy organization based in Alexandria, Va.

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