In Uncategorized on 07/18/2018 at 17:05

400 Second Street, NW, is posted: off limits, no fishing. Judge Albert G (“Scholar Al”) Lauber has nailed up the sign in Trust u/w/o BH and MW Namm f/b/o Andrew I. Namm, Andrew I. Namm and James Doran, Trustees,  Transferee, et al., Docket No. 8485-17, filed 7/18/18. There are nine (count ‘em, nine) docket numbers involved, and a trip down Memory Lane, as this is a Section 6901 romp through an exploded Son-of-Boss, another Diversified Group, Inc.- James (“Little Jim”) Haber production.

Y’all remember Little Jim, the famous immunologist? No? He’s shown up about a dozen times in this my blog over the last six years. I won’t chronicle them all, for want of time and space, but might find some of them.

Howbeit, Little Jim is out of the picture, but the Namms want to escape penalties by claiming reliance on the white-slippered corps de ballet that Little Jim assembled to window-dress his mix-and-match.

IRS claims that they handed over everything they had that bears upon the Namms’ cases.

The Namms, nowise satiated with IRS’ averments, want “…a vast universe of information that may be contained in IRS files as a result of possible prior or ongoing IRS examinations or investigations of the third parties….” Order, at p. 2.

Had IRS ever examined any of the ballerinas in connection with their dealings with Little Jim & Co.? If IRS has, hand over the entire file. That founders on Section 6103; information produced on audit vel non (that’s “if any,” as classical scholars like Judge Lauber say) is protected, except for the transactional relationship in Section 6103(h)(4)(c). But the Namms “…have failed to show that such information ‘directly relates to a transactional relationship’ between the third parties and them.” Order, at p. 4.

The Namms try an “it might be, it could be” that the sought-after material might show IRS couldn’t discern what was going on, and therefore the Namms didn’t have constructive knowledge of Little Jim’s skullduggery. Too big a stretch, says Judge Scholar Al. “We find this chain of hypotheses and inferences too thin a reed on which to hang a discovery request of this magnitude. Indeed, the ultimate target of petitioners’ request would seem to be the opinions and observations of the IRS officers who may have participated in whatever investigations occurred. Wholly apart from section 6103, those opinions and observations would appear to be immune from discovery under the deliberative process privilege.” Order, at p. 4. Greenberg’s Express, anyone? Whatever IRS thought, the issue is what they did.

“Finally, even if the information petitioners seek would otherwise be discoverable, we would deny their motion to compel because the scope of their request is disproportionate to the potential utility of the information. We have discretion to limit the scope of discovery if we determine that: (1) ‘[t]he discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive’; or (2) ‘the discovery is unduly burdensome or expensive, taking into account the needs of the case, the amount in controversy, limitations on the parties’ resources, and the importance of the issues at stake in the litigation.’ Tax Court Rule 70(c)(1)(A) and (C).

“Petitioners have requested 18 years of IRS examination material possibly involving as many as six separate taxpayers, including two tax-shelter promoters and one of the largest accounting firms in the world. Most if not all of this information will have no bearing on the transactions that are actually at issue in these cases. Through informal discovery, respondent has already provided petitioners with all documents it has obtained from the third parties relating to the transactions at issue in these cases.” Order, at p. 5.

Nothing stops the Namms from asking the six third parties for info. They apparently haven’t.

Judge Scholar Al puts it simply: “Petitioners’ discovery request strikes us as a classic ‘fishing expedition.’” Order, at p. 3.

I wish Judge Lauber had designated this order. It’s really too good to relegate it to the mine run of orders.

And I wish the order had been better paginated. The pagination on the website is unworkable, so I used my own.

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