Opinion
8820-20
09-27-2021
JEFFREY A. MILLER & PATRICIA J. MILLER, Petitioners v. Commissioner of Internal Revenue, Respondent
ORDER
Richard T. Morrison Judge
I. Procedural history
On May 25, 2021, respondent served 12 interrogatories on petitioners.
On July 16, 2021, respondent filed a motion to compel responses to the interrogatories. At the time that respondent filed his motion, petitioners had not answered the interrogatories.
On July 18, 2021, petitioners filed a reply to the motion to compel responses to interrogatories. Despite its title, the court paper was not a reply to respondent's motion. Rather it consisted of answers and objections to respondent's interrogatories.
On September 9, 2021, the Court issued an order that stated:
[R]espondent filed its motion to compel interrogatories before petitioners answered or objected to the interrogatories. Therefore, although we now have petitioners' answers and objections, we do not have respondent's views on which interrogatories have been answered and do not require enforcement and what respondent's position is on petitioners' objections.
The Order required respondent to supplement his July 18, 2021 motion to compel responses to interrogatories.
On September 13, 2021, respondent filed a supplement to his July 18, 2021 motion to compel responses to interrogatories. In the supplement, respondent asks for an order compelling responses to interrogatories 2 and 4 through 12.
II. The law
Rule 71(a) allows a party to serve interrogatories (i.e., written questions) on the opposing party.
Rule 71(c) requires each interrogatory to "be answered separately and fully under oath, unless it objected to, in which event the reasons for the objection must be stated in lieu of the answer." Rule 71(b) provides that answers to interrogatories must be made "as completely as the answering party's information shall permit"; however, the answering party is required to make "reasonable inquiry and ascertain readily obtainable information" and "may not give lack of information or knowledge as an answer or as a reason for failure to answer, unless such party states that such party has made reasonable inquiry and that information known or readily obtainable by such party is insufficient to enable such party to answer the substance of the interrogatory."
Rule 71(c) places the burden on the party authoring the interrogatories "to move for an order with respect to any objection or other failure to answer an interrogatory", and to include with the motion (1) the interrogatory and (2) a copy of the answers and objections, if any.
III. Respondent's interrogatories, petitioners' responses, and the Court's rulings
Interrogatory 2
Interogatory 2: "Identify all persons whom petitioners intend to call as witnesses at the trial of this case, and a short description of what he or she is expected to testify about."
Petitioners object to interrogatory 2 (and all interrogatories) on the following grounds: (1) it requires the release of information protected by attorney-client privilege; (2) it requires the release of information protected by the attorney-work-product doctrine; (3) it requires the release of information protected by any other discovery privilege recognized under the Rules of the Tax Court; (4) it requires petitioners to provide information that may be obtained by respondent from another source that is more convenient, less expensive, or less burdensome; (5) it is vague, ambiguous, overly broad, unduly burdensome, oppressive, or impossible to answer fully; (6) it seeks information that is confidential or which is not relevant and is not reasonably calculated to lead to the discovery of admissible; (7) it seeks confidential, proprietary, or trade-secrets information from petitioners; (8) the information sought is the subject of continuing investigation by petitioners; and (9) respondent does not describe the documents to be produced.
Petitioner's specific response to interrogatory 2 is: "Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners have not finalized their witness list and are not presently aware of any witnesses they intend to call, with the exception of Mr. David Beckstrom of Beckstrom Accounting."
Petitioners' answer explains that they know they will call David Beckstrom as a witness but they do not yet know their other witnesses. This answer, standing alone, seems reasonable. Petitioners do not yet know their full witness list. Presumably, petitioners will supplement their answer to the interrogatory as they formulate their witness list. However, petitioners' answer is conditioned on several objections, thus suggesting that petitioners' answer withholds information or that petitioners will withhold information later when they make a supplemental answer. Indeed, respondent explains that the set of interrogatories defines the word identify as to give information about a person other than just a name (e.g., telephone number and email), information petitioners failed to give for Beckstrom.
If we were to find that petitioners' objections have merit, then we should let the answer stand and not order a full answer. However, we do not find the objections persuasive. Therefore, we will order a full answer.
Interrogatory 4
Interrogatory 4: "Identify petitioners' bank accounts during the 2015 and 2016 tax years, including those affiliated with petitioners' Schedule C1 and Schedule C2."
Petitioners make the same general objections to interrogatory 4 as they make to interrogatory 2. Petitioners' specific answer to interrogatory 4 is:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners have provided all bank account information to the Internal Revenue Service during its audit and as of Friday July 16, 2021, also to Respondent's Counsel in this case, in that all of the account information was sent via Fedex, at Petitioners' expense to Respondent's Counsel on that day.
Petitioners' answer is insufficient. The answer does not specify whether the bank account information already provided corresponded to all bank accounts petitioners had during 2015 and 2016 and did not identify which of the accounts related to petitioners' Schedule Cs.
Petitioners' answer is also conditioned on several objections, thus suggesting that petitioners' answer withholds information. We do not find the objections to have merit and so we will order a full answer.
Interrogatory 5
Interrogatory 5: "Identify petitioners' client trust accounts and CA IOLTA accounts during the 2015 and 2016 tax year."
Petitioners make the same general objections to interrogatory 5 as they make to interrogatory 2. Petitioners' specific answer to interrogatory 5 is:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners have provided all bank account information to the Internal Revenue Service during its audit and as of Friday July 16, 2021, also to Respondent's Counsel in this case, in that all of the account information was sent via Fedex, at Petitioners' expense to Respondent's Counsel on that day.
Petitioners' answer is insufficient. The answer did not identify their client trust accounts and California IOLTA accounts during 2015 and 2016.
Petitioners' answer is also conditioned on several objections, thus suggesting that petitioners' answer withholds information. We do not find the objections to have merit and so we will order a full answer.
Interrogatory 6
Interrogatory 6:
In petitioners' facsimile transmission to the revenue agent, dated August 11, 2019, petitioners stated "By way of further specificity, it is our standing position that a majority of the money I received into my Law Firm accounts was third party money that was passed along to third party entities and therefore was not income earned by us." Identify the specific deposits that are not income earned by petitioner.
Petitioners make the same general objections to interrogatory 6 as they make to interrogatory 2. Petitioners' specific answer to interrogatory 6 is:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners are conducting a detailed review of the thousands of pages of bank statements and are not able to yet respond to this Interrogatory. Petitioners are now further delayed in reviewing the bank statements as they have forwarded the thousands of pages to Respondent's Counsel in response to Respondent's Requests for Production of Documents. Respondent's Counsel has indicated that she would return said documents to Petitioner in approximately two weeks from receipt, currently scheduled for Monday July 19, 2021. Therefore, Petitioners expect to receive the documents back from Respondent's Counsel by the end of July 2021 and likely will need approximately thirty (30) days to conduct their review of the bank statements. Until that time, Petitioners are unable to respond to this Interrogatory.
Petitioners' response indicated they would be unable to answer the interrogatory until around August 30, 2021. However, that date has passed and there is no indication that petitioners have answered the interrogatory. It is appropriate to order petitioners to answer the interrogatory unless we agree with their objections. We do not find their objections persuasive. Therefore we will order an answer.
Interrogatory 7
Interrogatory 7: "Identify the "third party entities" petitioners reference in their August 11, 2019 facsimile, and described in paragraph 6."
Petitioners make the same general objections to interrogatory 7 as they make to interrogatory 2. Petitioners' specific answer to interrogatory 7 is:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners are conducting a detailed review of the thousands of pages of bank statements and are not able to yet respond to this Interrogatory. Petitioners are now further delayed in reviewing the bank statements as they have forwarded the thousands of pages to Respondent's Counsel in response to Respondent's Requests for Production of Documents. Respondent's Counsel has indicated that she would return said documents to Petitioner in approximately two weeks from receipt, currently scheduled for Monday July 19, 2021. Therefore, Petitioners expect to receive the documents back from Respondent's Counsel by the end of July 2021 and likely will need approximately thirty (30) days to conduct their review of the bank statements. Until that time, Petitioners are unable to respond to this Interrogatory.
Petitioners' response indicated they would be unable to answer the interrogatory until around August 30, 2021. However, that date has passed and there is no indication that petitioners have answered the interrogatory. It is appropriate to order petitioners to answer the interrogatory unless we agree with their objections. We do not find their objections persuasive. Therefore we will order an answer.
Interrogatory 8
Interrogatory 8: "Identify the specific deposits that are pass through losses" from the chart provided.
Petitioners make the same general objections to interrogatory 8 as they make to interrogatory 2. Petitioners' specific answer to interrogatory 8 is:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners are conducting a detailed review of the thousands of pages of bank statements and are not able to yet respond to this Interrogatory. Petitioners are now further delayed in reviewing the bank statements as they have forwarded the thousands of pages to Respondent's Counsel in response to Respondent's Requests for Production of Documents. Respondent's Counsel has indicated that she would return said documents to Petitioner in approximately two weeks from receipt, currently scheduled for Monday July 19, 2021. Therefore, Petitioners expect to receive the documents back from Respondent's Counsel by the end of July 2021 and likely will need approximately thirty (30) days to conduct their review of the bank statements. Until that time, petitioners are unable to respond to this Interrogatory.
Petitioners' response indicated they would be unable to answer the interrogatory until around August 30, 2021. However, that date has passed and there is no indication that petitioners have answered the interrogatory. It is appropriate to order petitioners to answer the interrogatory unless we agree with their objections. We do not find their objections persuasive. Therefore we will order an answer.
Interrogatory 9
Interrogatory 9: "Identify the 'other parties' petitioners reference in their September 6, 2019 facsimile, and described in paragraph 8."
Petitioners make the same general objections to interrogatory 9 as they make to interrogatory 2. Petitioners' specific answer to interrogatory 9 is:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners are conducting a detailed review of the thousands of pages of bank statements and are not able to yet respond to this Interrogatory. Petitioners are now further delayed in reviewing the bank statements as they have forwarded the thousands of pages to Respondent's Counsel in response to Respondent's Requests for Production of Documents. Respondent's Counsel has indicated that she would return said documents to Petitioner in approximately two weeks from receipt, currently scheduled for Monday July 19, 2021. Therefore, Petitioners expect to receive the documents back from Respondent's Counsel by the end of July 2021 and likely will need approximately thirty (30) days to conduct their review of the bank statements. Until that time, Petitioners are unable to respond to this Interrogatory.
Petitioners' response indicated they would be unable to answer the interrogatory until around August 30, 2021. However, that date has passed and there is no indication that petitioners have answered the interrogatory. It is appropriate to order petitioners to answer the interrogatory unless we agree with their objections. We do not find their objections persuasive. Therefore we will order an answer.
Interrogatory 10
Interrogatory 10: "Identify the specific amount of Schedule C2 Gross Receipts adjustments petitioners are disputing for the 2015 tax year."
Petitioners make the same general objections to interrogatory 10 as they make to interrogatory 2. Petitioners' specific answer to interrogatory 10 is:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners are conducting a detailed review of the thousands of pages of bank statements and are not able to yet respond to this Interrogatory. Petitioners are now further delayed in reviewing the bank statements as they have forwarded the thousands of pages to Respondent's Counsel in response to Respondent's Requests for Production of Documents. Respondent's Counsel has indicated that she would return said documents to Petitioner in approximately two weeks from receipt, currently scheduled for Monday July 19, 2021. Therefore, Petitioners expect to receive the documents back from Respondent's Counsel by the end of July 2021 and likely will need approximately thirty (30) days to conduct their review of the bank statements. Until that time, Petitioners are unable to respond to this Interrogatory.
Petitioners' response indicated they would be unable to answer the interrogatory until around August 30, 2021. However, that date has passed and there is no indication that petitioners have answered the interrogatory. It is appropriate to order petitioners to answer the interrogatory unless we agree with their objections. We do not find their objections persuasive. Therefore we will order an answer.
Interrogatory 11
Interrogatory 11: "Identify the specific amount of Schedule C1 Gross Receipts adjustments petitioners are disputing for the 2015 and 2016 tax years."
Petitioners make the same general objections to interrogatory 11 as they make to interrogatory 2. Petitioners' specific answer to interrogatory 11 is:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners are conducting a detailed review of the thousands of pages of bank statements and are not able to yet respond to this Interrogatory. Petitioners are now further delayed in reviewing the bank statements as they have forwarded the thousands of pages to Respondent's Counsel in response to Respondent's Requests for Production of Documents. Respondent's Counsel has indicated that she would return said documents to Petitioner in approximately two weeks from receipt, currently scheduled for Monday July 19, 2021. Therefore, Petitioners expect to receive the documents back from Respondent's Counsel by the end of July 2021 and likely will need approximately thirty (30) days to conduct their review of the bank statements. Until that time, Petitioners are unable to respond to this Interrogatory.
Petitioners' response indicated they would be unable to answer the interrogatory until around August 30, 2021. However, that date has passed and there is no indication that petitioners have answered the interrogatory. It is appropriate to order petitioners to answer the interrogatory unless we agree with their objections. We do not find their objections persuasive. Therefore we will order an answer.
Interrogatory 12
Interrogatory 12:
If petitioners do not admit each and every request contained in Respondent's First Requests for Admissions, filed on April 15, 2021, provide the following information:
a. In regard to each request for admission which is denied, either completely or in part by petitioners, explain in detail what the true facts are in regard to this particular request for admission.
b. In regard to each request for admission which is neither admitted nor denied, either completely or in part by petitioners, explain in detail why petitioners cannot admit or deny the particular request for admission.
Petitioners make the same general objections to interrogatory 12 as they make to interrogatory 2. Petitioners' specific answer to interrogatory 12 is:
Subject to and without waiving the foregoing general objections, petitioners respond as follows: Petitioners are conducting a detailed review of the thousands of pages of bank statements and are not able to yet respond to this Interrogatory. Petitioners are now further delayed in reviewing the bank statements as they have forwarded the thousands of pages to Respondent's Counsel in response to Respondent's Requests for Production of Documents. Respondent's Counsel has indicated that she would return said documents to Petitioner in approximately two weeks from receipt, currently scheduled for Monday July 19, 2021. Therefore, Petitioners expect to receive the documents back from Respondent's Counsel by the end of July 2021 and likely will need approximately thirty (30) days to conduct their review of the bank statements. Until that time, Petitioners are unable to respond to this Interrogatory.
Petitioners' response indicated they would be unable to answer the interrogatory until around August 30, 2021. However, that date has passed and there is no indication that petitioners have answered the interrogatory. It is appropriate to order petitioners to answer the interrogatory unless we agree with their objections. We do not find their objections persuasive. Therefore we will order an answer.
IV. Conclusion
Given the foregoing, it is
ORDERED that petitioners shall, on or before October 25, 2021, file amended answers to respondent's interrogatories 2, and 4 through 12.