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Powell v. Internal Revenue Service

United States District Court, District of Columbia

June 9, 2017

WILLIAM E. POWELL, Plaintiff,
v.
INTERNAL REVENUE SERVICE, Defendant. Entity/Individual Transcript Request

          MEMORANDUM OPINION

          JAMES E. BOASBERG United States District Judge.

         While Benjamin Franklin may have believed that "in this world nothing can be said to be certain, except death and taxes, " this case demonstrates that the adage does not apply to tax records. Over the years, pro se Plaintiff William Powell has tried a variety of means to get Defendant Internal Revenue Service to turn over tax records related to his grandfather, his father, himself, and his family's printing business. His limited success in this venture has spurred this lawsuit. Now, in his Amended Complaint, he asserts a basket of claims against the agency, predominantly asking that it be ordered to conduct a search for additional records, produce an index of what it finds, and turn over the documents. The IRS counters in two separate Motions that the suit should be dismissed or, alternatively, that summary judgment is warranted. As the Court concurs only in part, it will grant the Motions as to a few claims.

         I. Background

         Because this Opinion largely deals with Defendant's Motion to Dismiss, the facts presented are taken from Powell's Amended Complaint and assumed to be true. Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (providing standard). In its initial background section, though, the Court must rely on descriptions provided by the Internal Revenue Manual to figure out what records are actually at issue. This is because Plaintiff often uses acronyms in his pleadings to identify what he is seeking without explaining what these terms mean.

         As to the subsequent factual and procedural sections, by contrast, the Court relies heavily on the exhibits that he has attached to his Amended Complaint, as well as his briefs. These pleadings helpfully fill in missing details or clarify confusing statements found in the Amended Complaint. See Brown v. Whole Foods Market Gr., Inc., 789 F.3d 146, 152 (DC. Cir. 2015) (holding district court must consider all prose litigant's allegations when considering motion to dismiss, including those found in plaintiffs opposition).

         A. IRS Records

         In his prayer for relief, Powell seeks a number of tax records that the IRS maintains in different computing systems. Distinguishing among them is critical to determining whether, as Defendant contends, he has failed to submit any proper request for these documents. The Court thus offers this brief primer on the IRS record system, along with the caveat that acronyms-challenged readers may find this section heavy sledding.

         At the center of this litigation are records that can be retrieved through the IRS's Integrated Data Retrieval System. As its name implies, the IDRS can search more than one record system maintained by the agency. Hysell v. Internal Revenue Serv., 36 F.Supp.3d 58, 61 (D.D.C. 2014). The command code that an IRS employee enters into an IDRS terminal "determines which database [it] searches and the data [it] retrieves." Id. These results then appear "in a computer-created record referred to as a 'transcript' viewable either on a computer screen or in hard copy form." Id.

         One of these searchable databases is known as the Master-File system. Data is entered into the Master-File system "when[ever] the IRS receives a return from a taxpayer, makes a tax assessment, receives a payment, makes a refund, or takes other actions related to a taxpayer." Id. at 60 (internal quotation omitted). A master-file transcript thus offers a trove of tax information because it acts as "the official repository of all taxpayer data extracted from magnetic tape records, paper and electronic tax returns, payments, and related documents." ECF No. 31-2 (Declaration of Joy E. Gerdy Zogby), ¶ 9 (quoting Internal Revenue Manual 21.2.1.2). Depending on the specific type of data entered, this information "is stored in a record as either an 'account' or a'tax module.'" Hysell, 36 F.Supp.3d at 60.

         The command code of "MFTRA is used to request [this] taxpayer information in the form of hardcopy transcripts" from the IDRS. See IRM 2.3.32.1. If an IRS employee uses the command code of MFTRA "complete" for a particular tax-identification number (TIN), the computer will produce a complete master-file transcript for that taxpayer - i.e., "a transcript containing all entity and tax module data associated with th[at] TIN." Zogby Decl., ¶ 11 (quoting IRM 2.3.32.8). By definition, then, this MFTRA-complete transcript contains data from any past years relevant to that taxpayer. Id. When conducting an IDRS master-file search, though, the IRS employee may instead enter a more limited MFTRA "specific" query. See IRM 2.3.32-2. Unlike a MFTRA "complete" command, this MFTRA "specific" search may be used to retrieve tax returns that include only a particular type of tax module. Id.

         Regardless of the scope of the request, a Master File transcript for businesses is abbreviated as a "BMF" and "contains information about taxpayers filing business returns and documents related to that business." Zogby Decl., ¶ 8 (quoting IRM 4.71.2.2). Likewise, for individuals, the same sort of individual master-file transcript is called an "IMF." Id. In other words, the IDRS can be used to produced IMF-specific, IMF-complete, BMF-specific, and BMF-complete transcripts, depending on what command is initially entered.

         Although rare, it sometimes happens that "certain types of tax assessments cannot be implemented by [this] Master File processing" system. See Zogby Decl., ¶ 18 (quoting IRM 21.2.1.5). In such a circumstance, the assessments are housed instead on the IRS's "non-master file" system, which is also accessible through the Integrated Data Retrieval System. Id., ¶ 19. The results of such a search are known as NMF transcripts, and IRS employees retrieve them using command codes specific to the year they were filed. Id.

         Finally, as relevant here, the IDRS can also be used to retrieve Taxpayer Information Files for certain taxpayers. See IRM 2.3.2.2.2. A TIF "includes information regarding active taxpayer accounts, meaning that the taxpayer's liability for that year has not been resolved or was recently resolved." Hysell, 36 F.Supp.3d at 61 (internal quotations omitted). To retrieve this file, a command code of TXMOD(A) entered into the IDRS can be used to display most of the tax-module information that a TIF contains. See IRM 2.3.11.3.

         B. Factual

         Turning to the facts of this case, Plaintiff is the son of William A. Powell, a metallurgist who inherited a successful thirty-year-old printing business in Detroit, Mchigan, after the sudden death of his own father, Andrew, in 1987. See ECF No. 26 (Amended Complaint) at 2. Two years later, on December 11, 1989, the elder William Powell incorporated that business in Mchigan as the Powell Printing Company. Id. at 2-3. He also executed a trust involving the business around this time. Id.

         A few years later, in March 1992, he passed away, and a probate estate was opened for him in the Wayne County (Mchigan) Probate Court. LI; see also Id. at 7 n.3 (date of death). Plaintiff was named as a "nominee" in that matter, but it seems that he did not find out about this proceeding until 2011. Id. at 3. At that time, Powell reviewed the case docket and noticed that no proof of service had been filed as to the listed beneficiaries. Id.

         He has since been on a mission to uncover financial records related to Powell Printing Company, his father (William A. Powell), his grandfather (Andrew Powell), and certain trusts that these two men setup, at least in part because he believes that there may have been some malfeasance by the trustees in the disbursement of his family's assets. See, e.g., ECF No. 26-28 (July 5, 2016, RAIVS Request) (explaining "this requested information is needed to help me determine whether to bring action against the trustees for breach of their fiduciary duty"). To this end, he has filed approximately 89 Freedom of Information Act requests with Defendant and challenged the adequacy of the agency's response to at least some of these inquiries three separate times in federal court in the Eastern District of Michigan. See Powell v. IRS, No. 15-11033, 2016 WL 7473446 (E.D. Mich. Dec. 29, 2016); Powell v. IRS, No. 15-11616, 2016 WL 5539777 (E.D. Mich. Sept. 30, 2016); Powell v. IRS, No. 14-12626, 2015 WL 4617182 (E.D. Mich. July 31, 2015); ECF No. 34-2 (Declaration of William J. White), ¶ 3 (explaining Powell has made 89 requests).

         This case fortunately has a more limited scope. At issue here is a series of requests for records that Powell made between June and July 2016. First, on June 15, he submitted a general FOIA request to Defendant, in which he predominantly sought: 1) master-file transcripts for his relatives, their trusts, and the printing business from 1989 through 1992, and 2) TXMOD(A) transcripts for the same entities and time period. See Am. Compl. at 6-8.

         The IRS has since responded in ways that he believes were either incomplete or incorrect. Id. In particular, after his initial request, the Service sent him two letters in late June 2016, explaining that it could not process his requests for either of the tax-return transcripts that he sought because those records were exempt from its FOIA-processing requirements. Id. at 10. These letters included instructions, however, on the multiple paths he needed to pursue to obtain these records. See ECF No. 26-21 (IRS Letter on June 20, 2016); ECF No. 26-9 (IRS Letter on June 22, 2016). They also warned that he had no choice but to pursue these alternative avenues as his FOIA request would not otherwise be processed. Id.

         Powell, accordingly, followed several of these leads. First, he again submitted two separate requests for these master files, but unfortunately this time to the addresses listed in the IRS letters for non-master-file requests. See Am. Compl. at 9; June 20, 2016, IRS Letter at 2; ECF No. 26-10 (June 20 & 24 Requests). More specifically, he sent one such letter for the transcripts for himself and his relatives to the address listed for individuals' non-master-file transcripts and, in addition, sent off the same for the Powell Printing Company to the IRS location listed for business non-master-file transcripts. See Am. Compl. at 9; June 20, 2016, IRS Letter at 2; ECF No. 26-10 (June 20 & 24 Requests). He also included in these mailings several documents to verify ...


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