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Taking Full Advantage of Discovery in Tax Court
"Discovery" is the process by which parties to a law suit exchange information. Each party is required to provide any relevant information requested by his opponent.
To many people this is a pretty exciting idea. For anyone who has tried to get honest information from the IRS, an opportunity to ask questions that the Commissioner is obliged to answer is a dream come true. The reality, however, is that the IRS employs highly trained legal professionals to slyly evade, craftily misstate, or simply ignore your questions. Their job is to make sure you get nothing from them that could help your case. With the Court’s help, they are generally successful, but not if you plan your discovery carefully and keep it focused.
To take full advantage of discovery in tax court you have to know the rules. Discovery is covered in Title VII of the Tax Court Rules. Rules 70, 71, and 72 are usually all a pro se petitioner needs to know about Interrogatories and Requests for Production. Rule 90 covers Requests for Admissions. Depositions are rare in Tax Court, and just as well, because they are also complex, full of pitfalls for the untrained, and expensive.
The first rule you need to know is that in Tax Court the parties are expected to exchange information voluntarily without using formal discovery procedures. It is only if your opponent has refused, evaded, or ignored your informal inquiries that you may begin formal discovery. This is a rule peculiar to Tax Court. In most law suits the parties can commence formal discovery as soon as the case is filed.
Inexperienced petitioners frequently try to begin formal discovery either too early, (you have to wait 30 days after the Answer) or too late, discovery must be completed 45 days before trial. In both circumstances the Respondent on receipt of formal inquiry will object that the Petitioner did not attempt informal discovery first. The Court will agree and allow R to ignore your questions.
If you have waited too long and are looking for information that R would rather not or cannot provide (which is usually the case), R’s attorney will drag his feet and jerk you around with evasions long enough so that you will run up against the discovery deadline.
Formal discovery must be completed no later than 45 days before the trial date. For practical purposes that means you must submit formal discovery at least 75 days before trial to allow 30 days for a response. If you are inside those deadlines, and R ignores your formal requests, you will not be able to file a Motion to Compel answers because the Court will not entertain discovery motions after the 45 day deadline.
A well prepared Petitioner plans his discovery when he is composing his petition, focusing on the question, “What facts do I have to prove to make my case?” He then pursues his questions informally as soon as possible after receiving an Answer to the petition. If the petition was well crafted, it will open the door to follow-up questions when the Petition’s statements of fact and error are denied in the Answer.
The object of discovery is to establish the facts on which the parties agree, and to isolate and identify the facts that are in dispute for which evidence will be presented at trial. If all the facts can be settled in discovery, a trial is not necessary.
Start your study of discovery by downloading Title VII of the Tax Court Rules of Practice and Procedure. Move on from there to Rule 90 concerning Admissions.
You can also find more information on discovery HERE.