In Uncategorized on 04/24/2017 at 14:14

Remember Darrell Royal

I’ve remarked often enough on the public nature of Tax Court proceedings. Beginning with the mandate of Section 7461(a) that all reports, evidence and transcripts be made public except where the Court itself orders otherwise, we get periodic Judge ‘splainin’s like this one from Judge Cohen.

The order is Shenae A. Outerbridge, Docket No. 7907-08, filed 4/24/17.

Shenae got hit back in 2009, appealed to 4th Cir. in 2010, and got her hit affirmed in an unpublished per.cur. For you civilians, a per. cur. is a by-the-Court memo, usually stating that the lower court’s decision is affirmed without need for comment.

Now Shenae wants her entire record sealed, including without in any way limiting the generality the T. C. Memo. from 2009, which has been hanging out on the Tax Court website and the public media for more than seven (count ’em, seven) years.

“In her motion, petitioner states that ‘the Court issued an opinion holding that most of the expenses claimed as business expenses were personal in nature’ and ‘In that opinion, the Court incorrectly infers that petitioner should have known better as a CPA.’ In her affidavit in support of her motion, petitioner claims that the Court’s purported inference that she was a certified public accountant ‘is grossly misleading’.

“Petitioner further claims that the ‘stigma and perception’ from her Tax Court case and the Court’s opinion has made potential employers question her ‘ability to provide sound financial management and accounting services’ and she has lost at least two employment opportunities as a result. Petitioner asserts that this situation can only be remedied by making petitioner’s Tax Court case, including the Court’s opinion, inaccessible to the public.” Order, at pp. 1-2.

Prospective and current Tax Court litigants, please mark, learn and inwardly digest Judge Cohen’s remarks, which follow.

“The determination of whether to seal evidence in a case requires a balancing of privacy interests against the probative value of the confidential information. See I.R.C. sec. 7461(b)(1); Rule 103(a), Tax Court Rules of Practice and Procedure. Pursuant to Rule 103(a), the Court may make any order ‘which justice requires’, upon a motion by a party for ‘good cause’, to protect a party or other person from “annoyance, embarrassment, oppression, or undue burden or expense”. Section 7461(b) and Rule 103(a) authorize the Court to weigh the competing interests and to grant protection that justice requires. See Willie Nelson Music Co. v. Commissioner, 85 T.C. at 920. The party seeking protection first has the burden of proving that the material is the type of information protected by the courts, e.g., patents, trade secrets, privileged documents or other confidential or sensitive information. Willie Nelson Music Co. v. Commissioner, 85 T.C. at 920-921. A showing that the information would harm a party’s reputation is generally not sufficient to overcome the strong common law presumption in favor of access to court records. Willie Nelson Music Co. v. Commissioner, 85 T.C. at 921. Secondly, the party must show that there is good cause for protection, i.e., specific harm will result if the order is not granted. Willie Nelson Music Co, v. Commissioner, 85 T.C. at 920-921.” Order, at p. 2.

I include the citations to Willie Nelson’s case to show that (a) I don’t make this stuff up, and (2) no matter what your reputation or how essential it is, you’d better have better cause than that to get sealed.

So what Shenae claims is not protectable.

If you go into Tax Court and you think you need something sealed, ask up front. And follow Rule 103, keeping within the bounds of Section 7461(b). Because once it’s public, it’s always public.

Remember, going into Tax Court is putting the football in the air.

Even though the late great Darrell Royal said he didn’t invent the phrase, it is an indelible part of his legacy: “Three things can happen when you pass, and two of them are bad.”


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