Opinion
8820-20
09-08-2021
JEFFREY A. MILLER & PATRICIA J. MILLER, Petitioners v. Commissioner of Internal Revenue, Respondent
ORDER
RICHARD T. MORRISON, JUDGE
On May 25, 2021, respondent served on petitioners a request for production of documents. There were 22 specific requests, separated into 22 respective paragraphs.
On July 18, 2021, petitioners filed a response to the request for production of documents.
On July 19, 2021, respondent received bank statements and cancelled checks from petitioners.
On July 27, 2021, respondent filed a motion to compel production of documents asking that the Court (1) enter an order compelling petitioners to produce the documents requested in paragraphs 1 through 4, and paragraphs 8 through 22, of respondent's request for production of documents served on petitioners on May 25, 2021, and (2) order, upon failure of petitioners to completely comply with the Court's Order, that petitioners be prohibited from introducing those requested documents.
Paragraph 1
Request: "All documents that petitioners provided to their return preparers concerning their Schedule C2 for the 2015 tax year."
Served 09/08/21
Although petitioners appear to have responded to this request, they also made eight general objections to this request (and the other requests). Rule 72governs requests for production of documents. Rule 72(a) allows a party to request the other party to permit the inspection and copying of the documents in the party's "possession, custody, or control". Rule 72(b)(2) provides that the party on whom the request has been made must serve a written response to the request and that the response must state that inspection and copying will be permitted "unless the request is objected to in whole or in part, in which event the reasons for objection" must be stated. The statement that inspection and copying will be permitted must be specific to "each item or category" of documents. Id. Any objections must also be specific to "each item or category" of documents. Id. A ruling on an objection by a responding party may be obtained by the filing of a motion. Id. Respondent's July 27, 2021 motion to compel production of documents is therefore an appropriate occasion to rule on petitioners' objections.
All Rule references are to the Tax Court Rules of Practice and Procedure.
First, petitioners object that the request seeks information that is irrelevant. Petitioners have not stated why the documents they provided to the their return preparers are irrelevant. We overrule this objection.
Second, petitioners object that the request is inconsistent with the Rules. But petitioners do not explain what portion of the request is inconsistent with our Rules and why. We overrule this objection.
Third, petitioners object to the request as unduly burdensome. Yet petitioners have not estimated the cost of producing the requested information or explained if these costs could be reduced by an alternative means of discovery. We overrule this objection.
Fourth, petitioners contend that the information sought is protected by various privileges, including the attorney-client privilege. Petitioners' contention is vague. It is unclear what documents are supposedly privileged. We overrule this objection.
Fifth, petitioners object that the request seeks information already in respondent's possession or that is readily available to respondent from sources other than petitioners. But petitioners do not clarify when they gave the information to respondent (if that is how respondent came to possess the information). Nor do petitioners identify what source respondent can get the information from. We overrule this objection.
Sixth, petitioners object that the request seeks information that is unknown to them or not reasonably available to them. But the requested documents were sent by petitioners themselves to their tax return preparers. Copies of these documents should be in the files of either the petitioners or their tax return preparers. We overrule this objection.
Seventh, petitioners object to the request because they say it is designed to cause undue annoyance, harassment, or oppression. This claim is unsubstantiated. Furthermore, the request on its face seeks relevant documents. We overrule this objection.
Eighth, petitioners contend that the request seeks information that is subject to confidentiality rights of third parties. This contention is vague. It is unclear what third parties petitioners refer to and what types of documents are subject to confidentiality rights. The objection is unpersuasive. We overrule it.
In addition to these eight objections, petitioners made responses to each request.
Here is petitioners' response to paragraph 1:
Subject to and without waiving the foregoing general objections, [p]etitioners respond as follows: Petitioners have the materials in question in storage, just as the thousands of pages of bank statements were in storage. As of this [r]esponse, [p]etitioners have ordered the boxes from storage, at their own expense and expect to be able to identify and produce the documents responsive to this request in the next thirty (30) days. Petitioners will supplement their [r]esponse hereto and produce the documents responsive to this [r]equest for [p]roduction within thirty days.
Petitioners indicate that they are willing to eventually produce the "materials in question". But respondent contends--credibly--that petitioners have been promising to do this for months. We will therefore order production of the documents requested in this paragraph.
Paragraph 2
Request: "All documents that petitioners provided to their return preparers concerning their Schedule C1 for the 2015 and 2016 tax years."
Petitioners' eight general objections apply to this paragraph. But the objections are as unpersuasive against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response:
Subject to and without waiving the foregoing general objections, [p]etitioners respond as follows: Petitioners have the materials in question in storage, just as the thousands of pages of bank statements were in storage. As of this [r]esponse, [p]etitioners have ordered the boxes from storage, at their own expense and expect to be able to identify and produce the documents responsive to this request in the next thirty (30) days. Petitioners will supplement their [r]esponse hereto and produce the documents responsive to this [r]equest for [p]roduction within thirty days.
Court's ruling: Petitioners indicate that they are willing to eventually produce the "materials in question". But respondent contends--credibly--that petitioners have been promising to do this for months. We will therefore order production of the documents requested in this paragraph.
Paragraph 3
Request: "All documents that petitioners provided to their bookkeepers concerning their Schedule C2 for the 2015 tax year."
Petitioners' eight general objections apply to this paragraph. But the objections are as unpersuasive against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response:
Subject to and without waiving the foregoing general objections, [p]etitioners respond as follows: Petitioners have the materials in question in storage, just as the thousands of pages of bank statements were in storage. As of this [r]esponse, [p]etitioners have ordered the boxes from storage, at their own expense and expect to be able to identify and produce the documents responsive to this request in the next thirty (30) days. Petitioners will supplement their [r]esponse hereto and produce the documents responsive to this [r]equest for [p]roduction within thirty days.
Court's ruling: Petitioners indicate that they are willing to eventually produce the "materials in question". But respondent contends--credibly--that petitioners have been promising to do this for months. We will therefore order production of the documents requested in this paragraph.
Paragraph 4
Request: "All documents that petitioners provided to their bookkeepers concerning their Schedule C1 for the 2015 and 2016 tax years."
Petitioners' eight general objections apply to this paragraph. But the objections are as unpersuasive against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response:
Subject to and without waiving the foregoing general objections, [p]etitioners respond as follows: Petitioners have the materials in question in storage, just as the thousands of pages of bank statements were in storage. As of this [r]esponse, [p]etitioners have ordered the boxes from storage, at their own expense and expect to be able to identify and produce the documents responsive to this request in the next thirty (30) days. Petitioners will supplement their [r]esponse hereto and produce the documents responsive to this [r]equest for [p]roduction within thirty days.
Court's ruling: Petitioners indicate that they are willing to eventually produce the "materials in question". But respondent contends--credibly--that petitioners have been promising to do this for months. We will therefore order production of the documents requested in this paragraph.
Paragraph 8
Request: "All documents regarding the 'money that was passed along' to 'third party entities' as described in petitioners' facsimile dated August 11, 2019."
Petitioners' eight general objections apply to this paragraph. But the objections are as unpersuasive against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response: "Subject to and without waiving the foregoing general objections, [p]etitioners respond as follows: Petitioners have provided thousands of pages of bank statements to [r]espondent's [c]ounsel as of Friday July 16, 2021 and believe those documents are responsive in full to [r]espondent's [r]equest for [p]roduction."
Court's ruling: The bank statements alone do not satisfy the request. Petitioners did not specify which bank statements relate to this request. Furthermore, the request asks for all documents, not just bank statements. We will therefore order production of the documents requested in this paragraph.
Paragraph 9
Request: "All documents regarding the 'pass through losses for transfers to other parties' as described in petitioners' facsimile dated September 6, 2019."
Petitioners' eight general objections apply to this paragraph. But the objections are as unpersuasive against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response: "Subject to and without waiving the foregoing general objections, [p]etitioners respond as follows: Petitioners have provided thousands of pages of bank statements to [r]espondent's [c]ounsel as of Friday July 16, 2021 and believe those documents are responsive in full to [r]espondent's [r]equest for [p]roduction."
Court's ruling: The bank statements alone do not satisfy the request. Petitioners did not specify which bank statements relate to this request. Furthermore, the request asks for all documents, not just bank statements. We will therefore order production of the documents requested in this paragraph.
Paragraph 10
Request: All documents petitioners referred to as "support" and "proof" in the [table provided] that petitioners provided in their September 6, 2019 facsimile.
Petitioners' eight general objections apply to this paragraph. But the objections are as unpersuasive against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response: "Subject to and without waiving the foregoing general objections, [p]etitioners respond as follows: Petitioners have provided thousands of pages of bank statements to [r]espondent's [c]ounsel as of Friday July 16, 2021 and believe those documents are responsive in full to [r]espondent's [r]equest for [p]roduction.
Court's ruling: The bank statements alone do not satisfy the request. Petitioners did not specify which bank statements relate to this request. Furthermore, the request asks for all documents, not just bank statements. We will therefore order production of the documents requested in this paragraph.
Paragraph 11
Request: "All documents relating to petitioners' entitlement to claim Schedule C2 - Other Expenses in the amount of $6, 374.00 for the 2015 tax year."
Petitioners' eight general objections apply to this paragraph. But the objections are as unpersuasive against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response: "Subject to and without waiving the foregoing general objections, [p]etitioners respond as follows: Petitioners have provided thousands of pages of bank statements to [r]espondent's [c]ounsel as of Friday July 16, 2021 and believe those documents are responsive in full to [r]espondent's [r]equest for [p]roduction.
Court's ruling: The bank statements alone do not satisfy the request. Petitioners did not specify which bank statements relate to this request. Furthermore, the request asks for all documents, not just bank statements. We will therefore order production of the documents requested in this paragraph.
Paragraph 12
Request: "All documents relating to petitioners' entitlement to claim Schedule C1 - Other Expenses in the amount of $26, 252.00 for the 2015 tax year."
Petitioners' eight general objections apply to this paragraph. But the objections are as unpersuasive against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response:
Subject to and without waiving the foregoing general objections, [p]etitioners respond as follows: Petitioners have the materials in question in storage, just as the thousands of pages of bank statements were in storage. As of this [r]esponse, [p]etitioners have ordered the boxes from storage, at their own expense and expect to be able to identify and produce the documents responsive to this request in the next thirty (30) days. Petitioners will supplement their [r]esponse hereto and produce the documents responsive to this [r]equest for [p]roduction within thirty days.
Court's ruling: Petitioners indicate that they are willing to eventually produce the "materials in question". But respondent contends--credibly--that petitioners have been promising to do this for months. We will therefore order the production of the documents requested in this paragraph.
Paragraph 13
Request: "All documents relating to petitioners' entitlement to claim Schedule C1 - Other Expenses in the amount of $7, 465.00 for the 2016 tax year."
Petitioners' eight general objections apply to this paragraph. But the objections are as unpersuasive against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response:
Subject to and without waiving the foregoing general objections, [p]etitioners respond as follows: Petitioners have the materials in question in storage, just as the thousands of pages of bank statements were in storage. As of this [r]esponse, [p]etitioners have ordered the boxes from storage, at their own expense and expect to be able to identify and produce the documents responsive to this request in the next thirty (30) days. Petitioners will supplement their [r]esponse hereto and produce the documents responsive to this [r]equest for [p]roduction within thirty days.
Court's ruling: Petitioners indicate that they are willing to eventually produce the "materials in question". But respondent contends--credibly--that petitioners have been promising to do this for months. We will therefore order the production of the documents requested in this paragraph.
Paragraph 14
Request: "All documents showing petitioners' basis in Jeffrey Miller Real Estate Brokerage Inc. for the 2015 tax year."
Petitioners' eight general objections apply to this paragraph. But the objections are as unpersuasive against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners are not presently aware of or in possession of documents responsive to this request. By way of further response, this [r]equest for [p]roduction appears to call for a response by an expert in accounting and [p]etitioners are not qualified to respond to this [r]equest for [p]roduction.
Court's ruling: This response could be interpreted as stating that petitioners are unable to evaluate this request because they are not experts in accounting. This is not an excuse for failing to comply with the request. Furthermore, petitioners' statement that they are not "presently aware of or in possession of documents" is insufficient. Petitioners have not stated that the documents are outside of their control. Rule 72(a)(1). We will compel production of the documents requested in this paragraph.
Paragraph 15
Request: "All documents showing petitioners' basis in Jeffrey Miller Real Estate Brokerage Inc. for the 2016 tax year."
Petitioners' eight general objections apply to this paragraph. But the objections are as unpersuasive against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners are not presently aware of or in possession of documents responsive to this request. By way of further response, this [r]equest for [p]roduction appears to call for a response by an expert in accounting and [p]etitioners are not qualified to respond to this [r]equest for [p]roduction.
Court's ruling: This response could be interpreted as meaning that petitioners are unable to evaluate this request because they are not experts in accounting. This is not an excuse for failing to comply with the request. Furthermore, petitioners' statement that they are not "presently aware of or in possession of documents" is insufficient. Petitioners have not stated that the documents are outside of their control. Rule 72(a)(1). We will compel production of documents requested in this paragraph.
Paragraph 16
Request: "All documents relating to petitioners' entitlement to claim Home Mortgage Interest and Points from Form 1098 in the amount of $16, 705.00 for the 2015 tax year."
Petitioners' eight general objections apply to this paragraph. But the objections are as unpersuasive against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response:
Subject to and without waiving the foregoing general objections, [p]etitioners respond as follows: Petitioners have the materials in question in storage, just as the thousands of pages of bank statements were in storage. As of this [r]esponse, [p]etitioners have ordered the boxes from storage, at their own expense and expect to be able to identify and produce the documents responsive to this request in the next thirty (30) days. Petitioners will supplement their [r]esponse hereto and produce the documents responsive to this [r]equest for [p]roduction within thirty days.
Court's ruling: Petitioners indicate that they are willing to eventually produce the "materials in question". But respondent contends--credibly--that petitioners have been promising to do this for months. We will therefore order production of the documents requested in this paragraph.
Paragraph 17
Request: "All documents relating to petitioners' entitlement to claim Home Mortgage Interest and Points from Form 1098 in the amount of $14, 335.00 for the 2016 tax year."
Petitioners' eight general objections apply to this paragraph. Their objections are as unpersuasive against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response:
Subject to and without waiving the foregoing general objections, [p]etitioners respond as follows: Petitioners have the materials in question in storage, just as the thousands of pages of bank statements were in storage. As of this Response, [p]etitioners have ordered the boxes from storage, at their own expense and expect to be able to identify and produce the documents responsive to this request in the next thirty (30) days. Petitioners will supplement their [r]esponse hereto and produce the documents responsive to this [r]equest for [p]roduction within thirty days.
Court's ruling: Petitioners indicate that they are willing to eventually produce the "materials in question". But respondent contends--credibly--that petitioners have been promising to do this for months. We will therefore order production of the documents requested in this paragraph.
Paragraph 18
Request: "All documents relating to petitioners' argument that respondent should not impose the accuracy-related penalty in the amount of $202, 248.80 under I.R.C. § 6662(a) for the 2015 tax year."
Petitioners' eight general objections apply to this paragraph. Their objections are as unpersuasive as against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response:
Subject to and without waiving the foregoing general objections, [p]etitioners respond as follows: Petitioners are not presently aware of or in possession of documents responsive to this request. By way of further response, this [r]equest for [p]roduction appears to call for a response by an expert in accounting or calls for a legal conclusion and [p]etitioners are not qualified to respond to this [r]equest for [p]roduction.
Court's ruling: This response could be interpreted as meaning that petitioners are unable to evaluate this request because they are not experts in accounting. This is not an excuse for failing to comply with the request. Furthermore, petitioners' statement that they are not "presently aware of or in possession of documents" is insufficient. Petitioners have not stated that the documents are outside of their control. Rule 72(a)(1). We will order production of documents requested in this paragraph.
Paragraph 19
Request: "All documents relating to petitioners' argument that respondent should not impose the accuracy-related penalty in the amount of $143, 000.20 under I.R.C. § 6662(a) for the 2016 tax year."
Petitioners' eight general objections apply to this paragraph. Their objections are as unpersuasive as against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners are not presently aware of or in possession of documents responsive to this request. By way of further response, this [r]equest for [p]roduction appears to call for a response by an expert in accounting or calls for a legal conclusion and [p]etitioners are not qualified to respond to this [r]equest for [p]roduction.
Court's ruling: This response could be interpreted as meaning that petitioners are unable to evaluate this request because they are not experts in accounting. This is not an excuse for failing to comply with the request. Furthermore, petitioners' statement that they are not "presently aware of or in possession of documents" is insufficient. Petitioners have not stated that the documents are outside of their control. Rule 72(a)(1). We will order production of documents requested in this paragraph.
Paragraph 20
Request: "All documents relating to petitioners' argument that respondent should not impose additions to tax in the amount of $202, 013.20 under I.R.C. § 6651(a)(1) for the 2015 tax year."
Petitioners' eight general objections apply to this paragraph. Their objections are as unpersuasive as against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners are not presently aware of or in possession of documents responsive to this request. By way of further response, this [r]equest for [p]roduction appears to call for a response by an expert in accounting or calls for a legal conclusion and [p]etitioners are not qualified to respond to this [r]equest for [p]roduction.
Court's ruling: This response could be interpreted as meaning that petitioners are unable to evaluate this request because they are not experts in accounting. This is not an excuse for failing to comply with the request. Furthermore, petitioners' statement that they are not "presently aware of or in possession of documents" is insufficient. Petitioners have not stated that the documents are outside of their control. Rule 72(a)(1). We will order production of documents requested in this paragraph.
Paragraph 21
Request: "All documents relating to petitioners' argument that respondent should not impose additions to tax in the amount of $104, 603.25 under I.R.C. § 6651(a)(1) for the 2016 tax year."
Petitioners' eight general objections apply to this paragraph. Their objections are as unpersuasive as against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners are not presently aware of or in possession of documents responsive to this request. By way of further response, this [r]equest for [p]roduction appears to call for a response by an expert in accounting or calls for a legal conclusion and [p]etitioners are not qualified to respond to this [r]equest for [p]roduction.
Court's ruling: This response could be interpreted as meaning that petitioners are unable to evaluate this request because they are not experts in accounting. This is not an excuse for failing to comply with the request. Furthermore, petitioners' statement that they are not "presently aware of or in possession of documents" is insufficient. Petitioners have not stated that the documents are outside of their control. Rule 72(a)(1). We will order production of documents requested in this paragraph.
Paragraph 22
Request: "If petitioners deny any of Respondent's First Request for Admissions, filed on April 15, 2021, provide all documents that support such denial(s)."
Petitioners' eight general objections apply to this paragraph. Their objections are as unpersuasive as against this paragraph as against paragraph 1. We overrule the objections.
Petitioners' response: "Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners are not presently aware of or in possession of documents responsive to this request."
Court's ruling: Petitioners' statement that they are not "presently aware of or in possession of documents" is insufficient. Petitioners have not stated that the documents are outside of their control. Rule 72(a)(1). Therefore, we will order production of the documents requested in this paragraph.
Given the foregoing, it is
ORDERED that respondent's motion to compel is granted and petitioners shall produce at 950 Hampshire Road, East Pavilion, Thousand Oaks, California 91361 for inspection and copying, on or before October 7, 2021, and continuing from day to day thereafter for so long as reasonably necessary to examine and copy the documents requested in paragraphs 1 through 4, and paragraphs 8 through 22, of respondent's request for production of documents served on petitioners on May 25, 2021. It is further
ORDERED that upon failure of petitioners to completely comply with the this Order, petitioners may be prohibited from introducing the requested documents into the record.