In Uncategorized on 03/12/2020 at 16:41

How often have we seen those words in an order fairly directed to a wit, wag or wiseacre who is dodging a direct answer to a Rule 71 interrog. But today IRS is on the receiving end of that admonition, albeit it administered by Judge Gale “discreetly, reverently, advisedly and soberly,” as a much more exalted source puts it, in Adrian D. Smith & Nancy W. Smith, et al., Docket No. 11382-17, filed 3/12/20.

AD & Nancy want IRS to tell them the legal and factual bases why IRS is bouncing their Section 41 researching deductions.When they asked why and wherefore, IRS tells AD & Nancy to RTFS, namely, Read the SNOD (the “F” is for emphasis).

No no, says Judge Gale.

“In Estate of Allensworth v. Commissioner, 66 T.C. at 39, the Court required the Commissioner to advise the taxpayer of the contentions maintained by him, including his construction of State law, noting that the Commissioner’s responses to the taxpayer’s requested admissions ‘should serve the purposes of Rule 90 by narrowing the issues to be litigated.’ See also Zaentz v. Commissioner, 73 T.C. 469, 478 (1979) (“The notice of deficiency serves to establish the issues which the petitioner must face in the case, and Allensworth makes clear that admissions and requests for discovery may be used by a petitioner to seek clarification of the Commissioner’s position or contentions.”). In Owens-Illinois, Inc. v. Commissioner, 76 T.C. at 499, the Court required the taxpayer to advise the Commissioner of the contentions maintained by it, including its construction of foreign law, in order ‘to proceed with the stipulation process and to get to the merits of the case.’ In doing so, the Court stated that while a party ‘should not have to fully disclose its litigating position before trial’, ‘a party cannot play games with the other party and refuse to disclose the contentions which he, at the time of the request, plans to present in the case. Id. at 498. See also Rule 70(b) (‘If the information or response sought [in a discovery request] is otherwise proper, it is not objectionable merely because the information or response involves an opinion or contention that relates to fact or to the application of law to fact.’). In sum, the Court has been clear that ‘to prepare properly for a trial, it is necessary for each party to know the position of the other party, and discovery may be used to clarify that position.’ Zaentz v. Commissioner, 73 T.C. at 478.” Order, at pp. 3-4 (Footnote omitted, but it says there’s no difference in this case between a Rule 71 interrog and a Rule 90 admission).

And if IRS is objecting that AD & Nancy are trying to shift the BoP or trying to derail Greenberg’s Express by going behind the SNOD, those objections are overruled.

Takeaway- I quoted Judge Gale’s order in extenso so you can crib the whole thing and cut-and-paste it in your declaration in support of your motion to get IRS to pony up and come clean when they try to dodge your well-crafted interrogs or requests for admission.

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