Attorney-at-Law

DISCOVERY IN LIEU OF TRIAL – PART DEUX

In Uncategorized on 05/22/2019 at 15:11

Cross Refined Coal, LLC, USA Refined Coal, LLC, Tax Matters Partner, Docket No. 19502-17, filed 5/22/19, once again pits the Cross Colliers’ squad of lawyers against IRS, but that Obliging Jurist, Judge David Gustafson, isn’t playing.

The Cross Colliers apparently weren’t minded to play nice; neither was IRS, despite Judge Gustafson’s objurgation set forth in my blogpost “Discovery In Lieu of Trial,” 4/18/19.

The Cross Colliers want to depose and gain admissions from IRS about a certain Chief Counsel Memo (CCM) that has something to do with Section 45, whereunder the Cross Colliers claim all manner of tax breaks for their alleged partners.

Judge Gustafson is a trial judge in a court with limited discovery and a long history of “play nice” pretrial stuff.

Besides, Judge Gustafson is trying this case about these facts, these parties, the law and the regs.

“Cross’s entitlement to the credits at issue in this case will be decided by applying the law to the facts about Cross and its transactions. All of the facts that the Commissioner knows about Cross he learned from Cross. Cross makes no allegation that, in responding to discovery, the Commissioner has withheld any facts about Cross. Rather, the principal dispute now before us concerns facts about other entities and their transactions. But such facts will have no bearing on the outcome of this case.

The Court will not adjudicate the correctness of the CCM. Neither party argues that the CCM has precedential value nor that we should defer to it in any way. We do not expect to attempt to distinguish Cross’s facts from those in the CCM. We do not expect to evaluate the CCM’s conclusions as to other taxpayers nor to determine whether, in issuing the CCM, the Office of Chief Counsel had an adequate factual or legal predicate for those conclusions. If the CCM was factually unsupported and legally without merit, that would not help Cross; and if instead the CCM was factually impeccable and legally brilliant, that fact would not help the Commissioner. Consequently, Cross’s efforts in discovery to learn more about the background of the CCM are misdirected.” Order, at p. 3.

The Cross Colliers want Judge Gustafson to require IRS to dish on the CCM per FOIA, but Judge Gustafson isn’t playing USDCJ, whether or not IRS bargained away a relevance objection on that material. “We will not use the resources and authority of the Tax Court to compel disclosures extraneous to our proper business.” Order, at p. 4.

And if the Cross Colliers are sweating that IRS might be smuggling in evidence about other taxpayers, then Judge Gustafson will call them on it. “In the unlikely event that the Court were to be forgetful or inattentive on this point at trial, we would expect petitioner’s counsel to remind us of the ruling we make in this order.” Order, at p. 4.

Trial is August 5, 2019. Get with it.

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