Opinion
24344-17 11352-18 25268-18
04-01-2022
SUNIL S. PATEL & LAURIE MCANALLY PATEL, ET. AL., Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Courtney D. Jones Judge
I. Background
A. Respondent's Second Requests for Admissions and Petitioners' Response
On January 24, 2022, respondent filed a Second Request for Admissions (Second RFA) in which he asked petitioners to admit (or deny) that for the 2013, 2014, and 2015 tax years:
(1) they did not attach Form 8886, Reportable Transaction Disclosure Statement (Form 8886), or any other reportable transaction disclosure statement, to their original U.S. Individual Income Tax Returns, filed with respondent;
(2) Magellan Insurance did not attach Form 8886, or any other reportable transaction disclosure statement, to its U.S. Property and Casualty Insurance Income Tax Return, filed with respondent; and
(3) Neither petitioners nor Magellan Insurance timely filed a copy of Form 8886 with respondent's Office of Tax Shelter Analysis.
On February 21, 2022, petitioners filed a Response in which they objected, on various grounds, to respondent's Second RFA.
B. Respondent's Motion and Petitioners' Objection
On February 24, 2022, respondent filed a Motion to Review the Sufficiency of Answers or Objections to Request for Admissions (Motion). In his Motion, respondent 1 represents that in accordance with this Court's Rules, he has attempted to obtain responses to his requests for admissions, both formally and informally, to no avail. He further represents that during the exchange of revisions to the proposed stipulation of facts, petitioners informed respondent that they would not stipulate to the requests. Near the end of his Motion, he represents that his requests are relevant to the penalties at issue in this case. See Patel v. Commissioner, T.C. Memo. 2020-133.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, all regulatory references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
On March 3, 2022, petitioners filed an Objection to the Motion. Though they do not dispute respondent's representations as to his efforts to obtain responses formally and informally or that they refused to stipulate to the requests, they appear to challenge respondent's assertion that his requests are relevant to the penalties at issue.
We appreciate that petitioners made additional arguments, including that respondent's requests were made in an effort to retroactively penalize petitioners for not filing Forms 8886; and that Notice 2016-66 is procedurally invalid under the Administrative Procedure Act. Because respondent agrees that the penalties under section 6662A (reportable transaction penalties) are not at issue in this case - and represents that his requests are relevant to the penalties at issue - we will not address those arguments at this time.
II. Tax Court Rules 90 and 91
In relevant part, Tax Court Rule 90(c) provides, "An objection [to a request for an admission] on the ground of relevance may be noted by any party but it is not to be regarded as just cause for refusal to admit or deny."
Tax Court Rule 91(a)(1) provides in relevant part, "Where the truth or authenticity of facts or evidence claimed to be relevant by one party is not disputed, an objection on the ground of materiality or relevance may be noted by any other party but is not to be regarded as just cause for refusal to stipulate." Rule 91(a)(2) further provides, "The fact that any matter may have been obtained through discovery or requests for admission or through any other authorized procedure is not grounds for omitting such matter from the stipulation."
Upon due consideration and in light of Tax Court Rules 90 and 91, it is
ORDERED that, respondent's Motion to Review the Sufficiency of Answers or Objections to Request for Admissions, filed February 24, 2022, is granted in that, on or before April 8, 2022, petitioners shall serve upon respondent an answer to each request in respondent's Second Requests for Admissions, filed January 24, 2022. Upon answering each request, petitioners may reserve a relevancy objection if 2 petitioners deem it appropriate to do so. 3