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IRS Charged $239,400|for Fighting FOIA

SAN FRANCISCO (CN) - The Internal Revenue Service must pay $239,400 in attorneys' fees after losing a lawsuit over access to digital records, a federal judge ruled Friday.

Public.Resource.org, a nonprofit that makes government records accessible to the public, sued the IRS in June 2013 for failing to comply with a Freedom of Information Act request.

Public.Resource asked for form 990s filed by nine tax-exempt charities in their original format, a modernized efile (MeF). The requested forms include details on the charities' missions, programs and finances.

The IRS said it would cost $6,200 in training and new technology to fulfill the request, which would pose an "undue burden" on an agency operating under a "sequestration level" budget.

But in January this year U.S. District Judge William Orrick ordered the IRS to disclose the files , finding that lack of funding does not excuse a government agency from complying with the FOIA.

After the ruling, the IRS said it was developing new technology to allow it to disclose redacted form 990s in their original electronic format by 2016.

In July, Public.Resource.org asked for $367,000 in attorneys' fees, 1.5 times the amount of its actual costs. The nonprofit said the fact that its lawyers worked pro bono and the lawsuit promoted the public interest justified multiplying the award.

Judge Orrick was not convinced that the multiplier was warranted.

"I am persuaded that the outcome of this case is likely to enhance the public's ability to analyze and understand information in Form 990s, and that this represents a meaningful advancement of the public interest," Orrick wrote in his 18-page ruling. "But without a more substantial showing of the specific benefits of the litigation, I cannot say that this alone justifies a multiplier."

He refused to multiply the award, and reduced by 25 percent a portion of the award for hours spent preparing the motion for attorneys' fees.

Orrick found 58.7 hours was an "excessive amount of time" for the attorneys to spend on the motion for attorneys' fees, given their familiarity with the subject and absence of any "complex or novel issues at play."

He ordered the IRS to pay $238,125 in attorneys' fees and $1,272 in costs, a total of $239,397.

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