Opinion
24703-21
07-29-2024
NORTH DONALD LA PROPERTY, LLC, NORTH DONALD LA INVESTORS, LLC, TAX MATTERS PARTNER, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
ALBERT G. LAUBER JUDGE
This case is calendared for trial at an initial session of the Court beginning September 9, 2024, and a second session beginning October 7, 2024, both in New Orleans, Louisiana. The case involves a charitable contribution deduction claimed by North Donald LA Property, LLC (North Donald), for a conservation easement. The IRS also determined a civil fraud penalty under section 6663. The fraud penalty has since become a major focus of the parties' attention.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C, in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure.
On April 26, 2024, petitioner filed a Motion to Compel Production of Documents asking that respondent be directed to produce any information gathered by the United States Government-defined to include the IRS Criminal Investigation Division (CID)-that may be relevant to this case. On May 13, 2024, the Court held an informal conference call with the parties. During the call, respondent identified three "buckets" of information that might contain documents responsive to petitioner's request: (1) grand jury materials, (2) materials from an unrelated criminal case, and (3) materials from an injunction suit filed by the Department of Justice against various promoters and appraisers.
Respondent represented during the call that most of this information was already available to petitioner or was privileged. The Court asked the parties to work together to identify a potential subset of relevant, non-privileged, non-duplicative material from these three "buckets" that might be responsive to petitioner's request. Petitioner represents that "the parties have worked to do [this]."
In May 2024 petitioner served subpoenas on 17 non-party individuals and entities (subpoenaed parties) seeking documents and communications exchanged between each subpoenaed party and the "United States Government." One of the subpoenaed parties produced an email that he had sent to a CID agent requesting "a copy of the information/statement I previously provided to the attorney handling the civil matter." Petitioner states its belief that the same CID agent previously interviewed several of the subpoenaed parties, some or all of whom who may be called as witnesses in this case.
On July 24, 2024, petitioner filed a First Supplemental Motion to Compel Production of Documents. Petitioner contends that the facts recited in the previous paragraph show that respondent has in its possession information compiled by CID, including documents supplied by a potential witness and memoranda or notes summarizing interviews with potential witnesses. Respondent allegedly declined to produce this information, contending (among other things) that petitioner "could learn the same information by interviewing the witnesses." In reply petitioner cites cases standing for the proposition that "memoranda of IRS interviews of nonparty witnesses are discoverable by the taxpayer under Rules 70(b) and 72, even without a showing of good cause." Riland v. Commissioner, 79 T.C. 185, 203 (1982) (citing authorities).
Upon due consideration, it is
ORDERED that, on or before, August 19, 2024, respondent shall file a response to petitioner's First Supplemental Motion to Compel Production of Documents.