Judge Emin  (“Eminent”) Toro seems to echo Kurt Vonnegut’s famous quip, “‘To be is to do’-Socrates. ‘To do is to be’ — Jean-Paul Sartre.  ‘Do be do be do be do’ — Frank Sinatra.’” Once again, he’s confronted with the discovery maneuvers of the celebrated “Attorney/Professor/Author” and Tactician Daniel S. Jacobs, Docket No. 7118-19, filed 12/18/23.

Again, we’re reminded of 9 Cir’s take on the “substantially justified” rubric. It means justified to a degree that would satisfy a reasonable person. Of course, that’s more than just enough to slide under the Section 6673 frivolity tag. But Rule 33(b)’s “reasonable inquiry” requirement is a different pair of shoes.

“… the [Tax] Court expressed reservations concerning petitioner’s view that Rule 33(b)’s requirement that parties make ‘reasonable inquiry’ when preparing their pleadings affects the analysis with respect to the ‘substantially justified’ standard under section 7430. The former is directed towards the parties’ conduct during the litigation before our Court, and violations of the rule may cause the Court, in its discretion, to apply appropriate sanctions. The latter is a statutory rule that entitles a prevailing party to attorney’s fees as a matter of law if, among other things, the government’s position (as opposed to its conduct) is not substantially justified. Given that petitioner has moved for fees under the latter, the Court fails to see why respondent’s obligations under Rule 33(b) affect the analysis in these proceedings.” Order, at p. 2. (Emphasis by the Court).

Again, the issue is whether what IRS actually learned in the administrative proceedings, or would have learned if considered by a reasonable person (that quintessential legal fiction), would have altered, if at all, IRS’ answer to the petition.

“But our task does not include determining whether the administrative proceedings should have been conducted differently than they were. Nor does our task include deciding what the Commissioner might or might not have learned if the administrative proceeding had been conducted differently. The focus of the remand proceedings, based on the Ninth Circuit’s direction, is on the information Mr. Jacobs had already provided and the Commissioner had already received at the time the Commissioner filed the Answer.” Order, at p. 2.

So Judge Toro goes through interrogatories and document requests, and Dan goes 5 for 17, getting IRS to come up with more.

This is a useful template for seekers after admins and legals.