In Uncategorized on 10/25/2022 at 17:23

I do not wish anyone to suppose that I am seeking to supplant The Great Chieftain of The Jersey Boys, whose prep course for The Biennial Slaughter of the Innocents, a/k/a The United States Tax Court Admission Examination, is justifiably celebrated by those who took the course and studied diligently, and who made it.

No, I just want to drop the odd hint of the wrinkled corners of FRE, where might lurk a question that wends its way to that exam.

We have Judge Albert G (“Scholar Al”) Lauber distinguishing between paper and electrons in Oconee Landing Property, LLC, Oconee Landing Investors, LLC, Tax Matters Partner, Docket No. 11814-19, filed 10/25/22.

The Oconees want to preclude some business records that IRS wants to put in. There are four (count ’em, four) batches, all of which are asserted to be business records, but the last is a printout of e-mail threads.

Judge Scholar Al gives FRE §803(6) a thorough workout, and I can do no better than quote him.

“A statement is hearsay if the declarant made the statement outside of the current trial or hearing and a party offers the statement to prove the truth of a matter asserted. FRE 801(c).

“One exception to the rule against hearsay is the business records exception. FRE 803(6). To qualify for this exception, the record at issue must have been made at or near the time by (or from information transmitted by) someone with knowledge; must be kept in the course of a regularly conducted activity of a business or organization; and must have been made as part of the regular practice of that activity. FRE 803(6)(A)-(C). These conditions may be established by testimony from the custodian of records or other qualified witness, or by a certification that complies with FRE 902(11). See FRE 803(6)(D). The business records exception will not apply if the opponent shows that the source of the information or the method or circumstances of its preparation are untrustworthy. FRE 803(6)(E).” Order, at p. 1.

The Oconees object that the batches are hearsay, and so they are, but the certification accompanying each complies with FRE§§803(6) and 902(11). And the objection that the certfications themselves are hearsay fares no better.

“Although petitioner does not dispute that the attesting person is a custodian of records of the organization that created or maintained the records, petitioner insists that each custodian must be called as a witness at trial and cross-examined to determine whether he or she has personal knowledge of the records’ contents and the manner in which they were maintained. Petitioner’s argument is wholly unpersuasive. The whole point of securing a declaration under penalties of perjury is to eliminate the need to call the custodian as a witness at trial. FRE 803(6)(D) would be meaningless if the custodian, having executed a proper declaration, had to be called as a witness at trial with respect to each business record he or she had already certified.” Order, at p. 3.

The certifier needn’t be familiar with each piece of paper in the batch. “In the Tax Court, taxpayers and the IRS routinely subpoena relevant business records from banks, insurance companies, brokerage houses, and other organizations. These entities may have a vast number of responsive documents in their files. An insurance company, for example, may produce its entire claim file for the taxpayer’s account; that file may contain insurance contracts, financial records, correspondence, internal memoranda, records of receipts and payments, and canceled checks. The custodian of records for the insurance company could not possibly have personal knowledge of the creation and maintenance of each and every item.” Order, at p. 3.

All the certifier attests is that these are what’s in the files, and that they were prepared in the ordinary course of business and relied upon.

The rest of the Oconees’ objections are tossed without much comment, but the cumulative evidence draws the following: “… while cumulative testimony may waste trial time, we can discern no harm or prejudice from assertedly cumulative documents appearing as attachments to a stipulation of facts.” Order, at p. 3.

But e-mail threads require the human touch.

“We will accord slightly different treatment to the exhibits consisting of emails or email chains…. We will admit these exhibits as the authentic business records of M, but only for the fact that the statements shown therein were made by the authoring persons at the times and dates shown. If a party wishes to have any email admitted for the truth of the statements appearing therein, the party will need to show it to an appropriate witness at trial.” Order, at pp. 3-4. (Name omitted, but it will be familiar to my long-term readers).

Interesting distinction. Are e-mails somehow less credible than paper letters? And how about those online business records: see my blogpost “The Forty Million,” 4/29/15.



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