WASHINGTON (CN) - The IRS should look for more records about outside pressure from the Japanese government to revoke a controversial conservations group's tax-exempt status, a federal judge ruled.
Plaintiff Sea Shepherd Conservation Society is a nonprofit group opposed to commercial whaling operations.
Headed by Paul Watson, the group famously led direct action campaigns against Japanese whaling ships, ramming and blocking them at sea, and throwing foul-smelling acid on their decks. Animal Planet documented these actions in its television show, "Whale Wars."
The activists have been embroiled in lawsuits for years, and in 2013 the Ninth Circuit ordered Sea Shepherd to stay further than 500 yards from whaling ships.
In 2011, Wikileaks revealed that the U.S. representative for the International Whaling Commission, Monica Medina, had met with Japanese officials from Japan's Fisheries Agency.
At the 2009 meeting, Medina said "she believes the [U.S. government] can demonstrate the group does not deserve tax exempt status based on their aggressive and harmful actions," according to the leaked cable.
The IRS audited Sea Shepherd several times, but its tax exempt status has remained in place.
The group is still in court with the IRS over its Freedom of Information Act request. The IRS turned over 12,000 pages of records to Sea Shepherd, but this week a federal judge in Washington D.C. said that wasn't enough.
Sea Shepherd wants the IRS to turn over any documents related to people or groups who urged the agency to revoke its tax-exempt status.
The parties volleyed back and forth with summary judgment motions, and this week the court found that the IRS did not do a thorough enough search of its Exempt Organizations Examinations function, which is the office that receives information about tax-exempt groups.
The IRS did not adequately explain why only two employees turned up responsive records related to Sea Shepherd, the court found, nor did it explain why the employees used different search terms.
"The varying search terms call into question whether defendant implemented a rational search methodology of the Exempt Organizations Examinations function," U.S. District Judge Amy Berman Jackson wrote in her 47-page opinion, published Tuesday.
"The Court therefore finds that defendant's affidavits do not describe a search of the Exempt Organizations Examinations function that was reasonably calculated to uncover all responsive documents, and it will remand this aspect of the case to defendant for further action consistent with this opinion."
The IRS adequately searched for documents from its Whistleblower Office, but the court was not satisfied when it neither confirmed nor denied the existence of the requested records, which is known as a Glomar response.
The IRS explained its response by arguing "loss of confidence in the IRS' ability to protect whistleblowers would interfere with the Service's ability to fully and properly investigate taxpayers' compliance with the internal revenue laws."
The court was not convinced, and noted that the IRS has already made certain whistleblower records public.
"The agency has done little to explain with any specificity why the disclosure of the fact of the existence or non-existence of any records—as opposed to the records themselves-would cause harm to the interests protected by the FOIA exemptions cited, particularly given the fact that in this case, in connection with this particular taxpayer, the defendant has already publicly acknowledged that whistleblowers or confidential informants provided information to other components of the agency," Jackson wrote.
The IRS must reveal if there were any records from its whistleblower office on remand, and either turn them over to Sea Shepherd or justify withholding them, the court ruled.
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