In Uncategorized on 03/30/2013 at 00:57

Runs Hard Aground

A reprise, but not our friend Erik McBride Thompson, the Truker who found Tax Court habit-forming (see my blogpost of that name, 12/20/11), but rather Joe Insinga, who recently graced my blogposts “Did Nothing”, 3/13/13, and “Perpetual Discovery”, 3/23/13, and who comes back yet again before The Obliging Judge, David Gustafson, in yet another designated hitter, Docket No. 004609-12W, filed 3/29/13.

Joe is at it again; dropping his Rule 81 motion to depose Robert B. Gardner, outgoing Whistleblower Program Operations Manager, as Judge Gustafson suggested he do back on March 23, Joe couples his motion for leave to withdraw same with a motion to request production of documents.

This is a triple-barrel no-no. First, Rule 54(b) requires motions be separately stated. Unlike most courts where, in my experience, omnibus motions, or motions seeking alternative forms of relief, are generally made to speed things up, in Tax Court it’s “one size fits one”.

Second, Tax Court discovery is informal, repeat, informal. See Branerton v. Com’r, 61 T. C. 691 (1974), one of the most, if not actually the-most, cited cases in Tax Court lore. Before anything, you have to play show-and-tell. Motions are only acceptable where “play nice” has failed.

Judge Gustafson: “Petitioner’s motions make no allegation of any prior attempt at informal consultation but rather appear to indicate that the motions are Petitioner’s initial attempts. The Court instructs respondent to treat petitioner’s application filed March 18, 2013, and petitioner’s motion for leave filed March 25, 2013, as informal requests for information and to respond with reasonable promptness. Treated as informal requests, these documents may be an adequate informal predicate for later formal document requests or interrogatories. But until the informal process has been attempted, we cannot tell whether any formal discovery must be attempted or compelled. (Petitioner should also note that Rule 74(c) requires first the service (not the filing) of a notice and an objection, and only then the filing of a motion for an order compelling the deposition.).” Order, pp. 1-2.

Third, a deposition of a non-party witness, like WPOM Bob G., is, as Rule 74(c)(1)(B) instructs us,  “an extraordinary method of discovery and may be used only where . . . a nonparty witness . . . can give testimony . . . which [is] discoverable within the meaning of Rule 70(b) and where such testimony . . . cannot be obtained through informal consultation or communication (Rule 70(a)(1)), [or through] interrogatories (Rule 71) ….” Cited in Order, at p. 2.

So since WPOM Bob G is still at IRS, and as Judge Gustafson says he told the parties in a phonecon on March 25, IRS will consider letting Joe’s counsel talk informally with WPOM Bob G, let’s see what happens. But even if IRS tells WPOM Bob G to clam up, there are still interrogatories; if IRS remains callous and obdurate, there are Rule 104(c) sanctions. And Judge Gustafson’s pretrial memo requires the parties to state what witnesses they propose to call and a detailed summary of such witness’ testimony on jurisdictional issues. Absent good cause, an unidentified witness will be barred.

So, that’s Tax Court discovery. It’s more like a New York State special proceeding, where most forms of discovery, absent special circumstances, are not allowed. And counsel unused to Tax Court rules, and who moreover appear not to have taken the trouble to read them and the cases construing them, will run swiftly hard aground. And perhaps they will encounter a judge less obliging than Judge Gustafson to kedge them off.


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