Viewtech, Inc. v. United States

In connection with an assessment of a taxpayer for unpaid taxes, the IRS began searching for the taxpayer’s assets and issued a summons to a bank for a related third party’s account information. The taxpayer and third party argue that 26 U.S.C. § 7609 required the IRS to notify them, which would have enabled them to seek a court order quashing the summons. Applying Ip v. United States, 205 F.3d 1168 (9th Cir.2000), we conclude that under the circumstances of this case, no notice was necessary, and therefore we affirm the district court.

I

After the IRS assessed Jung Kwak for some $3 million in federal income taxes for the year ending December 31, 2007, the IRS’s efforts to locate assets to satisfy this assessment led it to Viewtech, a California Subchapter S corporation, in which Kwak had extensive involvement. The government’s investigation showed that View-tech’s finances were significantly intertwined with Kwak’s. Kwak owned 100 percent of the shares of Viewtech in 2007, and 97 percent of its shares in 2008. Kwak received almost $14 million in income, interest, expenses, and wages from Viewtech in 2007, and some $1.7 million in 2008. In addition to these payments to…