The U.S. Court of Appeals for the Fourth Circuit today affirmed a federal district court’s grant of summary judgment for the IRS, in a case concerning a taxpayer’s Freedom of Information Act (FOIA) request for pages withheld or redacted by the IRS.
The case is: Solers, Inc. v. IRS, No. 15-1608 (4th Cir. June 30, 2016). Read the Fourth Circuit’s decision [PDF 44 KB]
After the IRS closed its audit of the taxpayer (an information technology company) and proposed adjustments to its tax liability and potential penalties, the taxpayer submitted a FOIA request to the IRS for all documents in the IRS administrative file pertaining to the taxpayer’s tax liabilities and penalties. The IRS provided all but 26 pages of 261 pages located, and redacted 32 pages.
The taxpayer initiated this action, and eventually it was determined that the IRS would withhold six pages and redact four pages. Of these, there were six types of documents that were withheld or redacted, including handwritten notes prepared by the IRS revenue agent, a summary report, a graph, a checksheet, an activity record, and two emails.
The district court found that four pages of handwritten notes represented the IRS revenue agent’s mental processes and thoughts about the investigation, and could be withheld in their entirety because there were no segregable portions that could be produced. The Fourth Circuit agreed and affirmed.
With respect to certain other documents, the Fourth Circuit concluded that the attorney-client privilege justified the limited redaction by the IRS so as to keep confidential the specific issues on which the revenue agent sought legal advice while working on the tax audit.
Concerning the emails, the appeals court concluded that the district court did not err in holding that the IRS employees’ interest in maintaining the privacy of their names and contact information outweighed the public interest in the disclosure of this information.
© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.