Opinion
13967-22
10-06-2023
MARC FORSCHINO, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
David Gustafson Judge.
Now before the Court is the Commissioner's motion (Doc. 35) to compel response to an interrogatory. We will grant the motion.
Background
The dispute
During the years 2015 and 2016, petitioner Marc Forschino worked as a bail bondsman. He filed timely returns for those years in April 2016 and April 2017. The IRS examined those returns and, using an indirect method of proof based on information it obtained from third parties, determined that Mr. Forschino had received bail bond income that he did not report. On March 24, 2022, the IRS issued a Notice of Deficiency ("NOD") with respect to tax years 2015 and 2016. In June 2022 Mr. Forschino filed a petition in the Tax Court challenging the NOD. The petition alleges (in paras. 4(a)(ii) and 4(h)(iii)) that the Commissioner made errors in computing his gross receipts from his bail bond business. (See Doc. 1.) The answer (Doc. 8, para. 4) "[d]enies [that] the Commissioner erred as alleged."
The interrogatory
On February 2, 2023--i.e., about 8 months after Mr. Forschino filed his petition alleging that the IRS's computation of his income was erroneous--the Commissioner served on Mr. Forschino an interrogatory (Doc. 38, Ex. C) pursuant to Rule 71, which requested that he quantify his bail bond business income, as follows:
1. Indicate whether it is Petitioner's position that he accurately reported his income from the bail bond business for each of the 2015 and 2016 tax years.
a. If it is Petitioner's position that the 2015 and 2016 returns were accurate as filed with regard to Petitioner's income from his bail bond business, provide the computation used to arrive at the reported amounts, along with a description and location of each of the underlying source documents that support the computation of this income.
b. If it is Petitioner's position that the 2015 and 2016 returns were not accurate as filed with regard to Petitioner's income from his bail bond business, please indicate the correct amount of income he received from this activity for each of the years 2015 and 2016, including a computation of the correct amount of income and a description and location of each of the underlying source documents that support the computation of this income.
Petitioner's non-response
On March 26, 2023, Mr. Forschino, through counsel, served a purported response (Doc. 40, Ex. 1, Attachment B) that did not answer the interrogatory. On April 18, 2023, he provided commentary on his answer (see Doc. 35 at pdf 34),which he characterizes as a "supplement" (see Ex. 40, para. 27), but it still did not provide amounts or computations. On May 4, 2023, the Commissioner filed a motion (Doc. 35) asking the Court to compel petitioner to answer the interrogatory.
On May 11, 2023, we held a hearing with counsel for the parties, during which the Commissioner stated that he intended to make, by August 15, 2023, an analysis of certain records that petitioner has produced and to share the results with petitioner. Petitioner's counsel expressed the belief that this analysis would enable him to better respond to the Commissioner's interrogatory No. 1. We therefore ordered (see Doc. 51) that the Commissioner should complete his analysis and share it with petitioner as he stated, that petitioner should file a supplement to his response, and that the Commissioner should file a reply.
After being granted an extension of time, petitioner filed his response on September 15, 2023, more than seven months after service of the interrogatory. Rather than providing a response to the interrogatory that quantified his bail bond income and accounted for his contentions, petitioner simply complained about defects in the Commissioner's analysis, and his filing concluded as follows:
Despite these deficiencies, and without waiving any prior objections, Petitioner reaffirms that he seeks refunds for the 2015 and 2016 tax years based on documents currently in Respondent's possession - namely, Petitioner's bank statements, trial balances, and amended income tax returns that have been previously produced to Respondent. [Doc. 70, para. 27.]
Discussion
Mr. Forschino has filed a petition in the Tax Court in order to challenge the IRS's determination and, under section 6213(a), to forestall the assessment of the deficiency that the IRS determined. Thereafter, as petitioner, he generally bears the burden of proof, see Rule 142(a)(1); and as a litigant, he has a duty to respond to proper discovery requests, including interrogatories. Responding is mandatory. See Rule 71(b) ("answers shall be made"); Rule 71(c) ("Each interrogatory shall be answered").
When this case proceeds to trial, and once the IRS makes a showing that connects him to the alleged income at issue, Mr. Forschino will have the obligation to show what his bail bond income really was and to substantiate his contention. Merely citing his return and pointing in the direction of documents that, he says, justify his numbers will not carry the day. Complaints about supposed defects in the IRS's attempt to reconstruct his income may be a part of his case but will not carry the day. Rather, he will have to put on evidence that corroborates his contention about the amounts of his income.
In the meantime, so that his opponent may also prepare for trial, Mr. Forschino is required to provide information about his contentions. The IRS's interrogatory No. 1--asking Mr. Forschino to verify or correct his income as reported--is in the bull's-eye of relevance in this case. It seeks from Mr. Forschino information about Mr. Forschino's activities, which information should be available from sources in Mr. Forschino's control. It was not unreasonable for him to hope that the IRS's fact-finding and analysis might simplify his task, and it was not unreasonable for him to seek (with the Commissioner's assent) leave to provide his answer after that analysis had been performed. (See Doc. 56 (Transcript of Hearing, 5/11/2023) at 31-44.) But when that analysis proved unhelpful, it became incumbent on Mr. Forschino to develop his own case and show his substantiation. He has not yet done so. It is therefore
ORDERED that the Commissioner's motion to compel (Doc. 35) is granted in part in that, no later than November 3, 2023, petitioner shall serve on petitioner (and shall attach to a status report filed in this case) his full and fair response to the Commissioner's Interrogatory No. 1. It is further
ORDERED that, to the extent the Commissioner's motion requests imposition of a sanction for noncompliance, the motion is taken under advisement in part.