In Uncategorized on 04/22/2019 at 13:55

I intentionally number this blogpost, as it is the first of what will doubtless be a series. Discovery jousting has been the flavor du millennium, and shows no sign of losing that appellation.

Here’s Judge Gale playing supervising magistrate in Adrian D. Smith & Nancy W. Smith, et al., Docket No. 13382-17, filed 4/22/19.

First, responses to interrogatories.

IRS claims A&N failed to state what they paid someone for something. But they did state the date and Bates stamp number of the documents they’d already given IRS. That’s enough for Rule 71(c).

A&N claim they don’t know what their preparer charged to prepare their Form 2065 (sic; of course they meant Form 1065, Partnership Return), as all the preparer invoiced for was “tax return preparation.” Judge Gale is not amused. “We believe a reasonable interpretation of a request for the costs of preparing a Form 1065 would treat the subsidiary forms required to be attached thereto as included. A good-faith response could easily have said: ‘Petitioners do not have a break-out of the amount paid for the Form 1065 standing alone, but the amount paid to [preparer] for the preparation of the Form 1065 and the additional Federal income tax forms required to be attached thereto was $__.’ In any event, the point isn’t worth arguing. Petitioners will be directed to respond with a statement concerning the amount paid for the preparation of…Form 1065, plus the forms and exhibits attached thereto….” Order, at p. 3.

Second, document production. IRS claims they got a “document dump,” a couple USB flash drives (hi, Judge Holmes) with 29.2 gigs, requiring poor IRS to “…sort through a proverbial ‘document dump’ to extract the responsive documents.” Order, at p. 3.

Except this isn’t the case where irrelevant materials are interspersed with the real stuff, in the hope that one’s opponent will miss the trees for the cliché.

A&N claim this is how they keep their records in the ordinary course of business.

Judge Gale points to Rule 73(b)(3)(A), son of FRCP 34(b). Ordinary course of business works fine, and IRS’ sole bœuf is that they got a lot of documents.

“Respondent has not alleged that petitioners have deliberately mingled responsive documents with nonresponsive documents or simply produced a mass of responsive documents with no internal logic reflecting business use. Rather, respondent alleges only that petitioners have produced a lot of documents and that those documents are not organized or labeled in the manner he prefers.

“We believe the screenshot provided by petitioners adequately supports their contention that the documents were produced as they were kept in the usual course of business. The folders are organized in a manner that suggests an internal logic reflecting business use. ‘When a party produces documents “as they are kept in the usual course of business,” it has no duty to organize and label the documents to correspond to each request.’” Order, at p. 4 (Citations omitted)(Emphasis by the Court.).

Discovery geeks, please copy.

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