Smart-Tek Automated Services Inc. v. IRS, No. 15-0453, 2017 WL 3085950 (S.D. Cal. July 20, 2017) (Moskowitz, J.)

Smart-Tek Automated Services Inc. v. IRS, No. 15-0453, 2017 WL 3085950 (S.D. Cal.  July 20, 2017) (Moskowitz, J.)

Re:  Request for certain tax records concerning plaintiff

Disposition:  Granting in part and denying in part defendant's motion for summary judgment

• Litigation Considerations, Adequacy of Search:  "[T]he Court finds the IRS has failed to carry its burden to demonstrate the adequacy of its search."  The court holds that, "in key respects, [defendant's] declaration is too conclusory to suffice."  "First, the IRS has not explained how it interpreted Plaintiff's FOIA request (as initially submitted, or as subsequently clarified), nor does it explain what scope of documents it determined were responsive to the request."  "Without knowing what documents the IRS was searching for in response to Plaintiff's request, the Court has no context for evaluating the reasonableness of the IRS's search methods."  "Second, [defendant's] declaration fails to provide sufficient information about the process by which the IRS reviewed [potentially responsive] documents."  "[T]he Court needs to know what the search of [these documents] entailed to determine whether it was reasonable."
   
• Exemptions 3 and 7(C):  "At this stage, ["until the record has been more fully developed,"] the Court will reserve ruling on the validity of the IRS's withholding of information under Exemptions 3 (in conjunction with § 6103(a)) and 7(C)."  However, "[t]he Court finds the IRS's evidence sufficient to show disclosure of the withheld information access would impair tax administration, such that it is subject to withholding under § 6103(e)(7)."  The court relates that "[defendant] indicates the withheld information would, if disclosed, give plaintiff an unfair advantage 'in the midst of an ongoing investigation' and allow it to prematurely craft explanations and defenses based on the information, which would 'reasonably be expected to impair the Service's ability to determine the correct application of the Federal tax laws.'"
   
• Exemption 5, Attorney-Client Privilege:  "[T]he Court cannot determine whether the withheld information fell within the attorney-client privilege or Exemption 5."  "[Defendant's] declaration contains no indication who the 'counsel' providing the advice was, including whether the attorney was employed by the IRS Office of Chief Counsel, or any other agency, so as to make it an inter-agency or intra-agency communication covered by Exemption 5."  "There is also no representation that the communications reflected in the notes were confidential."
   
• Exemption 5, Deliberative Process Privilege:  "The Court finds [defendant's] declaration insufficient to support the IRS's privilege claim."  "In particular, although he describes deliberative materials in the abstract, [defendant] fails to indicate in non-conclusory fashion how the withheld information was 'actually related' to the IRS's effort to decide how to proceed with the collection action in this case."
   
• Exemption 6:  "The Court finds ["'home addresses and social security numbers of individuals[,]'" . . . portions of documents containing the social security numbers, email addresses, and phone numbers of individuals[,] . . . and copies of checks written to plaintiff by third-party individuals] [were] properly withheld under Exemption 6, because it consists of personal information of individuals that falls within the ambit of information typically subject to privacy protection, and the privacy interests of the individuals involved outweigh any public interest that might be served by disclosure."
   
• Exemption 7(A):  "The Court finds the IRS's evidence sufficient to show disclosure of the referenced information would interfere with its enforcement proceedings pursuant to Exemption 7(A)[.]"  The court relates that defendant explains that "disclosure of the withheld information would give plaintiff the opportunity to tamper with or conceal evidence, or construct explanations and defenses to the IRS's theories, thus interfering with the IRS's law enforcement proceedings."
   
• Exemption 7(D):  "The Court finds [defendant's] declaration insufficient to carry the burden of demonstrating the withheld information is exempted from disclosure."  The court explains that "[defendant] says only that the source received an 'implicit assurance of confidentiality,' . . . and since [defendant] does not explain what he means by an 'implicit assurance of confidentiality' the Court cannot determine whether the circumstance he is referring to was one 'from which such an assurance could be reasonably inferred.'"