Too late, alas, is Judge Morrison to exhume the dockets that were sealed by the DAWSON debacle (I mean rollout). That has since been fixed, but Judge Morrison shows us the way to bring ’em back alive in Charles G. Berwind Trust for David M. Berwind, David M.  Berwind, D. Michael Berwind, Jr.; Gail B. Warden, Linda B.  Shappy and Valerie L. Pawson, Trustees, et al., Docket No. 21268-08, filed 11/3/22.

It seems there was litigation by and among the petitioners in USDCEDPA, followed by an appeal to 3 Cir. twenty-some years ago.

The parties stiped that the 3 Cir’s disposition of the case was reported. But the relevant page in Federal Reporter Third Series is only a list of decisions without published opinions.

“These documents are apparently unobtainable on Lexis, Westlaw, or Pacer.” Order, at p. 2.

The Genius Baristas would be proud.

Judge Morrison, being “Inclined to take notice” of the facts of said documents, sends the hardlaboring clerks from the Glasshouse to the Keystone State to bring copies of decision, opinion, and remand directly from their opposite numbers in USDCEDPA and 3 Cir. And sets the same forth at length.

He wants to give petitioners and IRS a chance to comment before he takes judicial notice. Since FRE 201(e) lets parties have a hearing on request on the propriety of such judicial notice, any party objecting to such inclination can “file a memorandum, not to exceed fives [sic] pages, on why the Court should not take judicial notice of the above-referenced facts.” Order, at p. 2.

Unfortunately, when the new, improved (don’t get me started) jim-handy DAWSON website obliterated years of orders, opinions, and decisions because one (count it, one) document in the docket had been sealed, no Judge or STJ took judicial notice of the entire docket, and set every unsealed document forth at length.

I hope it wouldn’t be considered unseemly if I were to award Judge Morrison a Taishoff “Good Job.”

Administrative Remedies, That Is

I’ve styled Judge David Gustafson The Obliging Jurist. Like Geoff Chaucer’s Clerke of Oxenford, his orders are full of moral virtue, and “gladly wolde he lerne and gladly teche.”

Today he directs his teaching both to IRS and to Trace T. Watkins & Lauree L. Watkins, Docket No. 20981-18, filed 11/2/22. After an allegedly prolonged waltz around promised substantiation for Trace’s & Lauree’s indocumentado SNODs, Trace & Lauree produced “a few new documents,” at the sight of which IRS folded and settled. Order, at p. 4.

Now Trace & Lauree want Section 7430 legals & admins, and so move. IRS claims delay of the game, excessive legals & admins claimed, and failure to exhaust administrative remedies.

But Judge Gustafson needs “… additional filings, in order to determine whether a hearing is necessary or whether instead the motion can be decided on the parties’ written submissions.” Order, at p. 1.

“A taxpayer exhausts his or her administrative remedies if (1) before filing a petition, he or she participates in an IRS Appeals conference, or (2) if no IRS Appeals conference is granted, the taxpayer,  before issuance of a notice of deficiency in the case of a Tax Court petition, (a) requests an IRS Appeals conference and (b) files a written protest if a written protest is required to obtain an IRS Appeals conference. Treas. Reg. § 301.7430-1(a) and (b)(1).

“Here, we understand petitioners to argue that they met this requirement, claiming on brief that they ‘asked for a meeting with appeals which was not granted.’  (Doc. 316 at 26, 27). But petitioners do not cite any record evidence that they requested an IRS Appeals conference either orally or in writing prior to receiving an NOD. (Doc. 316 at 26). Furthermore, little information is presented about the timing of petitioners’ purported request for an IRS Appeals conference or about which tax year or years an IRS Appeals conference was requested. Petitioners’ argument is unclear and apparently fails to show that they exhausted all available administrative remedies prior to filing their Petitions. Moreover, the circumstantial evidence regarding IRS Appeals’ activity on petitioners’ … tax years seems to suggest that IRS Appeals did not review these years prior to the filing of the Petitions in Tax Court—presumably because either no IRS Appeals conference was granted (a hypothesis difficult to square with the explicit invitation in the 30-day letters), or none was requested. We will therefore require petitioners to file a supplement to their motion for costs, wherein they should provide any available evidentiary support for their allegations that (1) they requested an IRS Appeals conference for any or all the tax years at issue, and (2) they did so prior to filing their Petitions in Tax Court. A failure to make a showing of these crucial facts may result in denial of their motion for costs. See § 7430(b)(1); see also Treas. Reg. § 301.7430-1(a) and (b)(1). The facts about the nature and timing of any requests petitioners made for an Appeals conference should be established by affidavit (or an unsworn declaration made under penalty of perjury in lieu of affidavit pursuant to 28 U.S.C. §1746). No hearing would be warranted in this case without a showing that admissible evidence supporting exhaustion of remedies is available to be offered at a hearing.” Order, at p. 5.

But IRS is not faultless. IRS “… maintains that ‘[p]etitioners unreasonably protracted litigation by failing to produce all relevant documents until the eve of the third trial date’ (Doc. 312 at 32-33) and that respondent was finally provided on such date a ‘few new documents that could give some justification to lowering his settlement offer[.]’ (Doc. 312 at 16). However, respondent neither identifies the supporting documents nor explains their contents, and it would be helpful to the Court to understand precisely what documents petitioners provided pre-trial (but had not provided previously) that prompted settlement of the case, so that we may adequately evaluate whether petitioners could or should have provided them sooner and whether respondent’s position throughout the examination and litigation was substantially justified. See § 7430(b)(3), (c)(4)(B).” Order, at pp. 5-6.

I can’t close this post without noting that it’s late because Jaap van Sweden and the NY Philharmonic played a stormer tonight with the Bruckner Seventh Symphony. A performance to remember.

Nick and Vinny are the controlling shareholders of Parkway Gravel, Inc., and Subsidiaries, Docket No. 10819-21, filed 11/1/22; they are also the sole partners of V&N Partnership. V&N had an option (nature of which not stated) with respect to some DE real estate that Parkway sold six (count ’em, six) years after the option agreement. Parkway got $11.1 million, which was split between V&N (who sold its option to the purchaser) and Parkway.

IRS claims want of economic substance, and Parkway (a C Corp) should pick up the entire gain. Parkway says “…multiple bona fide business purposes existed for the agreement, including to dedicate [the Partnership] to the purpose of maximizing the value of the property…, (ii) the Partnership ‘had the time, ability, and funding necessary to help maximize the value of the property’…, and (iii) the ‘bona fide business purpose of the Option Agreement materialized into an increased value of over $4 million’.” Order, at p. 2.

How exactly this was done by V&N and not by Vinny and Nick as controlling stockholders of Parkway is what IRS wants to know. And apparently another corporation, which bears surnames identical to those of Vinny and Nick, provided services to Parkway, the precise nature of which excite IRS’ curiosity.

STJ Eunkyong (“N’Yawk”) Choi has this one.

IRS has sent interrogatories to Parkway, some of which were answered sufficiently, but the third corporation’s particulars are sufficiently obscure so Parkway is ordered to do better. STJ N’Yawk Choi dwells on Rule 71(b); “I don’t know” is not a sufficient answer unless one can state one has made reasonable inquiry and gotten hold of reasonably available information.

Parkway has offered to supplement the responses it has provided to the interrogatories if  further information becomes available. While this may be an appropriate response where the relevant information is in the hands of others, here it falls short.

“With respect to Parkway’s offer to supplement its response to Interrogatory 9 if more information becomes available, we note that the persons who provided the services to the Partnership (and who would ostensibly possess such information) are the controlling shareholders of Parkway, which would raise significant questions should more information be forthcoming at a later date.” Order, at pp. 3-4.

That means, translated from Judgespeak, “Oh yeah? You sure about that? Let me help you out.”

“We will give Parkway 14 days to provide a further supplement to its responses to Interrogatories 9 and 10, if it so wishes.” Order, at p. 4.

When you’re on both sides now, like Joni Mitchell, you’d better tell the whole story.

One could hardly exalt calendar call in fortress-like 26 Federal Plaza on this Minor Outlying Island in such Wagnerian terms, but enlightenment it did bring today. Even without my colleague Peter Reilly, CPA, in attendance, The Great Chieftain of the Jersey Boys, Sandy Freund and her Scarlet Knight LITC, and the New York County Lawyers Calendar Call Commandos brought forth cases and comments worthy of note.

Frantic Frank Agostino and I agree that Zoomgov should continue in fullest force and effect even post-COVID, at least for trials. Yes, practitioners will need to adapt their adversarial skills to a television-like approach rather than live theater. However, the need for on-the-spot help for the hapless pro se cannot always be supplied in the breakout room (what a strange designation; sounds like a screenshot from The Shawshank Redemption). So the calendar call and the in-person trial will not, nor should not, vanish. But a large part of the Tax Court roadshow should be antique. Let’s see what Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan has to say in two weeks on her update webinar.

The windfall recovery from a dead criminal’s estate brought an interesting discussion from Sandy Freund. The criminal extorted a C Corp into insolvency; what are the tax incidents of the recovery received years later on the ex-shareholders? IRS says entire amount taxable as ordinary income; Taishoff says not so fast. We’ll see who is right.

Courtroom 206 was filled to overflowing with Rutgers, Hofstra, and Cardozo law schools’ student clinicians. Great to see our successors honing their skills.

Tax Court judges appreciate the role the clinics play. Judge Elizabeth A. (“Tex”) Copeland refers Michael Crosby, Docket No. 9137-16, filed 10/31/22 to the Golden Gophers at U Minn. The SNOD Mike got from IRS alleged a deficiency greater than the $722K to which he pled in USDCDMN.

So Mike gets fraudulent failure to file Section 6651(f) chop based on the $722K, with the right to contest the additional $70K the IRS claims in the SNOD.

Of course, Mike is precluded from contesting fraudulent intent, as his plea to Section 7201 tax evasion is equivalent to conviction after trial. But intent doesn’t determine amount. See my blogpost “Not Estopped to Win,” 3/31/16 for more.

And Judge Tex Copeland thinks Mike might be maybe so able to get out of some Rule 90(c) deemed admissions, wherewith IRS seeks to nail Mike. Hence the suggestion to seek out the Golden Gophers.

I don’t know which, if any, of my readers has seen Luis-Manuel Miranda’s masterpiece, but the leitmotif sure echoes in Haridas Karunkaran, Docket No. 21878-21L, filed 10/28/22. IRS gave Hari a NFTL for two (count ’em, two) nonconsecutive years. Year One comes off an unpetitioned SNOD, Year Two from unpaid self-reporteds.

Hari petitioned the NFTL, but never filed Form 433-A or Form 656 (with deposit and fee) for the OIC he wanted. His claim is that the retirement plan draw he took was a loan which he paid back.

STJ Eunkyong (“N’Yawk”) Choi deduces that the retirement draw issue relates to Year One, as it was probably an adjustment in the SNOD.

Of course, Year One is DOA. An unpetitioned SNOD is a chance to contest that is thrown away.

“We presume that petitioner refers to taxable year [One] in referencing money he received from his retirement account because taxable year [One] is the year for which petitioner received a Notice of Deficiency. The underlying liability for taxable year [Two] stems from the amount petitioner himself reported he owed in his [Year Two] income tax return, not from a Notice of Deficiency. It therefore follows that that the retirement payment was an adjustment to income included in the Notice of Deficiency for taxable year [One]. Petitioner was precluded from raising at the CDP hearing the issue of liability for taxable year [One] and is likewise precluded from raising the issue before this Court. See Secs. 6330(c)(2)(B), 6320(c).” Order, at p. 5.

And Hari doesn’t do so good with Year Two.

“Petitioner does not appear to challenge the underlying liability for taxable year [Two], but nevertheless is precluded from doing so. Petitioner was not statutorily precluded from challenging the underlying liability for taxable year [Two] during the CDP proceedings. See Shaddix v. Commissioner, T.C. Memo. 2022-11 (a taxpayer has not had a prior opportunity to dispute the underlying liability where the tax owed was self-reported, the taxpayer’s return was not audited, and taxpayer was not issued a notice of deficiency). However, because petitioner did not raise the issue of the underlying liability for taxable year [Two] during the CDP proceedings, he may not now raise the issue before this Court.” Order, at p. 5.

For the Shaddix story, see my blogpost “A  Bad Day for Appeals,” 2/28/22.

Oh, and btw, Hari didn’t file at all for three (count ’em, three) subsequent years, which doesn’t help his application for an OIC, or to lift the lien.

Even worse is Bey Newton Wilson d.b.a. Chedrick Adrekis Neal, Docket No. 28362-21P, filed 10/28/22. Bey responds to the passport yank, and Judge Mary Ann (S. E. C. = “She Eschews Cognomens”) Cohen is not amused.

IRS moves to toss for failure to state a claim, and Bey responds.

“As set forth in respondent’s Motion to Dismiss, the Petition contains frivolous, misguided, irrelevant, and non-justiciable claims. Lacking is any allegation that would show that the certification was erroneous. Petitioner’s Objection to the Motion to Dismiss is based on the erroneous arguments in the Motion for Default Judgment and in a supporting affidavit that repeats frivolous claims. Petitioner still does not identify any factual or legal basis for an action under section 7545; considering the total lack of merit in petitioner’s filings, we conclude that there is no error to be adjudicated. It would be an imposition on respondent and on the Court to require an answer, to detail the many errors in petitioner’s arguments, or otherwise to allow this action to proceed.” Order, at pp. 1-2.

No “somber reasoning and copious citation of precedent” from Judge S. E. C.

So, petitioner, take your cue from Luis-Manuel and the man on the Tenspot: Don’t throw away your shot.

I really could not let Richard J. O’Neill Trust, Anthony R. Moiso, Trustee, T. C.  Memo. 2022-108, filed 10/27/22, pass without a further shot into dead TEFRA. The late O’Neill put his assets into the trust before he became the late O’Neill. Key asset was his 86.12% membership interest in RMV, an LLC.

In year of death and next succeeding year, RMV realized healthy capital gains, which flowed through RMV to the trust. In year of death, O’Neill’s estate borrowed from RMV at 9% (which IRS challenged, and the parties settled at 6%; they also agreed that the worth of the trust’s investment in RMV was increased by $10 million). Of course, the 9% interest the trust paid RMV flowed right back to the trust, and the note for the borrowing was adjusted to drop the interest rate to 6%.

The trust got a refund four (count ’em, four) years after they paid the taxes on the flowthrough capital gain. IRS gave the trust a SNOD, claiming the trust had no right to the refund.

Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan finds the trust’s and RMV’s paperwork defective, and that sinks the refund.

“RMV did not file an amended partnership income tax return for 2009, 2010, 2014, or 2015. The trust did not file Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR), with respect to RMV for 2009, 2010, 2014, or 2015.” T. C. Memo. 2022-108, at p. 3.

First, the trust says claim of right.

“Section 1341 addresses instances in which a taxpayer includes an item in gross income for a prior taxable year because it appeared that the taxpayer had an unrestricted right to the item of income. A deduction is allowed after the close of the prior taxable year if it is established that the taxpayer did not have an unrestricted right to that item. § 1341(a). Pursuant to section 1341 a taxpayer may be eligible for a refund.” T. C. Memo. 2022-108, at p. 4.

Problem here is right goods, wrong customer. RMV treated the items (capital gain and interest) as income in the amount of $X. The trust wants to treat them differently. But these are partnership items, and must be determined if disputed at partnership level; RMV never amended its returns for the years at issue. Neither did the trust file the inconsistency paperwork.

The trust’s bœuf with RMV is that RMV understated its basis in the capital assets sold, so the trust’s gain was overstated. But the proceeds RMV distributed to the trust were never questioned or disputed; the trust’s right to the proceeds was never restricted.

And the renegotiation of the interest rate on the note was voluntary. Neither RMV nor the trust was under any challenge as to the payment, only what IRS allowed the estate to deduct.

The trust claims mitigation, but Section 1314 requires a mitigation claim to be filed for the years in which the challenged determination was made. The trust is filing in the wrong year.

How about equitable recoupment?

“As with its claim of right and mitigation provision arguments, the trust’s reliance on the doctrine of equitable recoupment fails in part because the trust is not the appropriate party to seek a refund in this case. The deficiency upon which the trust bases its claim for recoupment arises from deficiencies directly related to the estate’s taxes, not the trust’s.

“Furthermore, the requirements of equitable recoupment are not met. Respondent’s determination is based on the disallowance of the trust’s claimed reduction of tax liability pursuant to section 1341. This determination is not inconsistent with the trust’s time-barred income tax liabilities for tax years 2009 and 2010. The liabilities for 2009 and 2010 have no transactional connection with respondent’s denial under the claim of right.” T. C. Memo. 2022-108, at p. 7.

Now TEFRA is history, and I didn’t mourn its passing. I’m sure the trustee and his trusty attorneys (who get a deserved Taishoff “Good Try”) are even less unhappy at the demise of TEFRA.

But before we rejoice too loudly, are we so sure that the Bipartisan Budget Act solved the problem of partnership-partner inconsistency any better? Are we so sure that the partnership representative under the new régime, who may not even be a fiduciary, much less a partner, is any better than the old TMP?

Here’s a new one for the CLE merchants, from an off-the-bencher by Judge Mark V. Holmes. When it comes sending a statute sideways, Judge Holmes has few equals, although “a decent respect for the opinion of mankind” compels me to credit Judge Emin (“Eminent”) Toro for his role in my blogpost “Eminently Evidentiary,” 4/26/22.

Pia O. Bacigalupi, Docket No. 20480-21, filed 10/27/22, wants innocent spousery, after deadbeat loved-once divorced her and left her with $300K of unpaid self-reporteds.

Well, Pia is post-Taxpayer First, so Section 6015(e)(7) says that all Tax Court review must be de novo, but all Tax Court can consider is the administrative record. How one can have a trial de novo when all the evidence has been admitted and all facts found is beyond me. Of course, there are the exceptions for newly-discovered evidence or previously unavailable evidence.

Pia has a sad tale to tell. Loved-once concealed his stockbrokering income, Pia only made money designing jewelry and a part-time salesclerk job. She testifies to some equity splitting in the marital domicile with loved-once, wherein she still lives; Judge Holmes appears to discount the value thereof with no very extensive evidence.

Son’s $50K per year college bill, which got paid from marital assets, likewise gets de novo treatment, as Judge Holmes discards the other cases as decided under abuse-of-discretion standard. “I’m not sure that paying college tuition is this day and age is a lavish lifestyle.” Transcript, at p. 15.

Anyway, the bottom line is that Pia tells her sad tale on the trial in Tax Court, on the stand, under oath. And maybe that’s newly-discovered evidence.

“However, in this particular case, I will assume the testimony given under oath and subject to cross-examination, like the testimony given by Mrs. Bacigalupi, is this newly-discovered evidence, because when she applied for innocent spouse relief, she wasn’t able to give sworn testimony and was not subject to cross-examination.” Transcript, at p. 5.

Taishoff says, so now every Appeals hearing from a denial of innocent spousery means a full-dress trial at Appeals, with counsel for IRS, sworn direct testimony, rebuttal testimony, cross-examination of witnesses, and evidentiary rulings? And all that must be part of the administrative record? Btw, since when did AOs get the right to swear witnesses and make evidentiary rulings? And where will the court reporters come from? Do innocent spouse hearings now get Administrative Law Judges?

Not so fast.

“As I said, I’m not deciding this for all cases in the future.” Transcript, at p. 5.

It’s been a wee while since Judge Holmes last slid a spanner into a Congressional gearjammer. See my blogpost “Judge, He Didn’t Mean It,” 5/17/12.

Even though this is a small-claimer don’t-quote-me, I can see some of my colleagues giving this gambit a try.

Stipulations are the bedrock of Tax Court practice. So stated the late (now electronically-immortalized) Judge Dawson in Branerton v. Com’r, 61 T. C. 691 (1974), at p. 692.

Excelsior Aggregates, LLC, Big Escambia Ventures, LLC, Tax Matters Partner, et al., Docket No. 20608-18, filed 10/27/22, are true exemplars of that sacred pronouncement. They were working with IRS on Stipulation of Agreed Facts No. 5 (count ’em, five), when IRS moved for an OSC to deem same admitted per Rule 91(f).

Before my sophisticated readers place hands on hips and call for an off-side whistle, Judge Albert G (“Scholar Al”) Lauber has it covered.

“Respondent appears to have filed his Motion protectively because of an impending deadline of October 7, 2022, set forth in the Pretrial Order (docket entry #97), for filing Rule 91(f) Motions.” Order, at p. 1.

Well, after the Big Scambies respond, Judge Scholar Al holds a phoneathon, and it looks like the Big Scambies and IRS can sort out Stip Five, so motion for OSC denied without prejudice. And Judge Scholar Al amends the Pretrial Order to allow more time for filing stips, even up to the morning of trial.

Because during the phoneathon, the parties said they were negotiating yet another Stip of Agreed Facts.

Takeaway- If you need more time, ask. Stipulate, don’t anticipate.

I’ve often proclaimed the death of Section 7623 since DC Cir sent off Mandy Mobley Li. There have been so few whistleblower cases showing up on the Tax Court website that I’d thought the species had gone extinct.

But today we have the resurrection of an antique, Jason Douglas Strader & Taunya Sylvia Strader, Docket No. 13069-14W, filed 10/26/22. Back eight (count ’em, eight) years ago, the Ogden Sunseteers bounced the Straders’ Form 211, but the bounce only went to JD; no record of a bounce to Taunya. JD & Taunya petitioned the bounce, but the OS withdrew the bounce, stating it was a mistake.

There followed sixteen (count ’em, sixteen) status reports over the last eight years. Finally IRS moves to bounce Taunya, but the parties tell Ch J Kathleen (“TBS = The Big Shillelagh”) Kerrigan that they want a remand to Ogden. Ch J TBS is down with that, providing she doesn’t retain jurisdiction.

“In Whistleblower 769-16W v. Commissioner of Internal Revenue, 159 T.C. No. 2, 2022 WL 3106645 (Aug. 4, 2022), the Court held that we have discretion to remand a petitioner’s claims to the Whistleblower Office for further consideration without retaining jurisdiction.” Order, at p. 1.

So Ch J TBS sends all hands back to Ogden. Maybe IRS actually collected money off the Straders’ tip.

Oh, and for the story on 769-16W, see my blogpost “Remand and Retreat,” 8/4/22.

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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