In Uncategorized on 07/16/2015 at 16:04

Or, Trial by Ambush

The “small court” (see my blogpost “A Rant,” 3/7/13) does differ from the Big Courts (those enshrined in Article III of the Constitution) in many and diverse ways.

I’ll bet you didn’t know that IRS can issue stealth subpoenas to nonparty witnesses in Tax Court litigation, without giving the petitioners the FRCP 45(a)(4) view halloo required in the Big Courts.

I didn’t know that either, until the same was unpacked and ventilated by The Great Dissenter, a/k/a The Judge Who Writes Like a Human Being, s/a/k/a The Illustrious, Imperturbable, Irrefragable, Indefatigable, and Incomparable Foe of the Partitive Genitive, and Old China Hand, Judge Mark V. Holmes, in a designated hitter, Anthony M. Kissling & Suzanne R. Kissling, Docket No. 19857-10, filed 7/16/15.

You’ll remember that Judge Holmes was following the Kisslings’ case with interest last week. See my blogpost “Back From The Graev – Part Deux,” 7/9/15, wherein Judge Holmes probed the Section 6751(b) Boss-Hoss gambit, as the Kisslings were fighting the 40% chop on a conservation easement case.

The Kisslings found out that IRS was subpoenaing a nonparty, asking for pictures, descriptions and accounts.

“They understandably wanted to know if there were others and what, if anything, the Commissioner got in response. The Commissioner argues that if there’s no Tax Court rule that requires him to notify taxpayers about whom he is subpoenaing, he’d just as soon keep his pretrial preparation to himself.” Order, at p. 1.

So all that good jive we’ve been hearing at CPEs and CLEs about “no trial by ambush” as recently as this morning is “inoperative”?

Maybe not.

The Kisslings claim Tax Court Rule 21(a) turnover applies, but that’s only for filings with the Court, which subpoenas aren’t.

Trust Judge Holmes. Tax Court meant Rule 147 to do what FRCP 45(a)(4) does, it just diverged as the FRCP was amended, but Tax Court didn’t get around to following suit. “We do have to disagree with the Commissioner, however, that this absence of a rule creates an implication that secret subpoenas are favored. We promulgated our Court’s Rule 147, which governs subpoena practice, back in 1973. See 60 T.C. 1137 (1973). At that time, we said that our goal was a rule substantially similar to FRCP 45. Id. Back then, FRCP 45 didn’t require notice for subpoenas. Fed. R. Civ. Proc. 45 (1970). The notice requirement was added in 1991 to give parties the same opportunity to challenge nonparty subpoenas for documents that they had to challenge subpoenas for depositions (since FRCP 30 and 31 already provided notice protection in these circumstances). See Fed. R. Civ. Proc. 45 advisory committee’s note (1991). We have never publicly stated that we intended to deviate from Article III practice — it’s just an example of the two sets of rules drifting apart over time.” Order, at p.3.

So is the IRS headed for the Sin Bin? No, says Judge Holmes.

“The Court will therefore not find that the Commissioner has violated our rules. But we also think that the current federal rule is a good one; and the Kisslings’ motion seeks undoubtedly discoverable information. Their case is, moreover, a conservation-easement case, a category that is currently quite productive of hard-fought litigation. Development of one case often affects others in the pipeline. The Court will therefore adopt the notification requirement of Federal Rule 45 as a modification to the pretrial order that governs this case.” Order, at p. 3.

Hard-fought or not, practitioner, if IRS is going after nonparties, invoke FRCP 45(a)(4), and tell ‘em The Great Dissenter sent ya.

And remember, both sides have to hand over whatever FRCP 45(a)(4) requires.

  1. God bless judge Holmes. May the other Good Judges (writ large) of the USTC similarly rein-in and put paid to the asinine antics of the chief counsel’s (writ tiny) gang wrt the moribund IRS whistleblower program.


Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: