Smart-Tek Serv. Sols. Corp. v. IRS, Nos. 15-0452, 15-0453, 2018 WL 6181472 (S.D. Cal. Nov. 26, 2018) (Moskowitz, C. D. J.)
Re: Request for certain tax records concerning plaintiff
Disposition: Granting defendant's motion for summary judgment; denying plaintiff's motion for summary judgment
- Litigation Considerations, Adequacy of Search: The court relates that "Plaintiff argues that the IRS's search was unreasonable because documents containing Plaintiff's taxpayer information were commingled with documents containing other taxpayers' information and the IRS 'mark[ed] any document as non-responsive merely because it did not contain Plaintiff's taxpayer information.'" "The Court finds the IRS's approach of marking documents as non-responsive if they did not contain Plaintiff's taxpayer information to be reasonable because Plaintiff's FOIA request only requested its own, and not any other taxpayers' administrative file.
More generally, the court finds that "[t]he IRS has conducted an adequate search in response to Plaintiff's FOIA request." The court explains that "[t]he IRS has submitted "'reasonably detailed, nonconclusory' affidavits that show 'what records were searched, by whom, and through what process.'" "The IRS's declarations indicate how the IRS interpreted Plaintiff's FOIA request and its criteria to determine which documents from the 65 boxes were responsive to Plaintiff's request."
- Exemption 3: The court holds that "the IRS's motion for summary judgment is granted as to Exemption 3." The court relates that "26 U.S.C. § 6103 specifically protects a taxpayer's identity as confidential 'return information.'" "'Return information' also encompasses 'whether the taxpayer's return was, is being, or will be examined or subject to other investigation.'" "IRS regulations require that requests for another taxpayer's return information, which includes their identity, be accompanied by 'a properly executed power of attorney, Privacy Act consent, or tax information authorization, as appropriate.'" The court finds that "Plaintiff failed to obtain such consent here, despite its receipt of a tax lien listing nineteen alleged alter egos." Responding to plaintiff's argument, the court finds that "[t]hat the IRS named other taxpayers publicly in connection with Plaintiff does not entitle Plaintiff to those taxpayers' undisclosed, non-public documents through the FOIA." The court also finds that "Plaintiff's alter ego argument is also unavailing." "The Internal Revenue Code treats taxpayers as separate entities for tax assessment purposes irrespective of whether they are designated alter egos for collection purposes."
- Exemption 6: "The Court finds the referenced information[, "'taxpayer identification numbers (social security numbers, entity identification numbers, and return preparer identification numbers), credit card or bank account numbers, home addresses, personal phone numbers, or other similar information which would identify an individual taxpayer and could be used to compromise that individual's identity,'"] was 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." "The Court also finds that the IRS complied with its duty to reasonably segregate and produce all non-exempt information."
- Exemption 7(E): "The Court finds the IRS's evidence sufficient to show that disclosure of the referenced information[, "'discussions of several techniques and procedures typically used by examiners to gather evidence about taxpayers, and to identify the relationships among various entities,'"] would disclose techniques and procedures for law enforcement investigations that could reasonably be expected to risk circumvention of the law." "The Court also finds that the IRS complied with its duty to reasonably segregate and produce all non-exempt information."