Opinion
6709-19L
03-20-2023
ROBERT L. STEPHENSON, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER TO SHOW CAUSE
David Gustafson Judge
Now before the Court are two motions filed March 17, 2023, by the Commissioner-- a motion (Doc. 43) to compel petitioner Robert L. Stephenson to produce documents, which we will grant in part, and a motion (Doc. 42) asking us to issue to Mr. Stephenson an "Order to Show Cause", which we hereby grant.
Background
As we have previously ordered, this case will be tried in about seven weeks, at a session in Washington, D.C., beginning May 8, 2023. Our order issued on December 15, 2022 (Doc. 36)--i.e., about 3 months ago--resolved all the issues in this case except the entitlement of petitioner Robert L. Stephenson to business expense deductions for the year 2012. Our order stated (at 11):
We will therefore, in due course, set this case for trial on the issue of business expense deductions for 2012. The judge signing this order expects to hold a trial session in Washington, D.C. in May 2023 and expects to order that this case will be tried at that session. The parties should not await such an order but should begin promptly to exchange information and prepare for trial. [Emphasis added.]
Consistent with that expectation, we issued on January 13, 2023, a notice (Doc. 39) setting this case for trial at our trial session in Washington, D.C., commencing May 8, 2023, and our standing pretrial order ("SPTO"; Doc. 40). The SPTO gave the parties instructions about preparing for trial, including the instruction to file pretrial memoranda by April 17, 2023, and the instruction to file their stipulation and proposed trial exhibits by April 24, 2023.
Motion to Compel (Doc. 43)
The Commissioner's motion to compel alleges that on February 17, 2023, he served on Mr. Stephenson two document requests
1. Cancelled checks, invoices, receipts, bills, and account statements for all deductions claimed on each Schedule C included with your Form 1040, U.S. Individual Income Tax Return, for the taxable year 2012.
2. All documents you intend to introduce into evidence during trial of this case. [Doc. 43 at 11.]
--but that Mr. Stephenson has not responded.
These are reasonable requests that seek documents relevant to this case. These are documents of the sort that our order issued December 15, 2022 (i.e., 3 months ago) already directed Mr. Stephenson to exchange with the Commissioner. The Commissioner needs to see these documents in order to prepare for trial and to cooperate effectively in preparing the parties' joint stipulation of facts.
We will therefore grant the motion to compel, to the extent set out below.
Motion for an Order to Show Cause (Doc. 42)
Under this Court's Rule 91, the parties have a duty to cooperate in preparing a joint stipulation (i.e., a written statement signed by both parties) setting out the agreed facts in the case. Under the SPTO, that stipulation is due to be filed by April 24, 2023. However, the Commissioner's motion (Doc. 42) alleges that on February 17, 2023, he sent to Mr. Stephenson a proposed stipulation of facts but that Mr. Stephenson has not responded. Without prejudging the truth or falsehood of the alleged facts stated in the proposed stipulation, we can say that the alleged facts are plausible, and that they are verifiable propositions that we can fairly require Mr. Stephenson to admit, deny, or correct (including the State of Mr. Stephenson's residence, facts about the audit of his 2012 return, and the authenticity of documents).
On the apparent facts, it would seem that Mr. Stephenson may be unreasonably refusing to stipulate facts to which he does not actually object. It is therefore
ORDERED that the Commissioner's motion for order to show cause why proposed facts and evidence should not be accepted as established, as provided in Rule 91(f) of the Court's Rules of Practice and Procedure, is granted. It is further
ORDERED that Mr. Stephenson shall, on or before April 3, 2023, file and serve a response in compliance with the provisions of Rule 91(f)(2), showing why the matters set forth in the Commissioner's proposed stipulation of facts should not be deemed admitted for purposes of the pending case. For the matters that Mr. Stephenson does admit, his response should so indicate; for the matters he does not admit, his response should explain why and should state what he believes the actual facts to be. If by April 3 no response is filed with respect to any matter or portion thereof, or if the response is evasive or not fairly directed to the proposed stipulation or portion thereof, then that matter or portion thereof will be deemed stipulated for purposes of the pending case, and an order will be entered accordingly, pursuant to Rule 91(f)(3). It is further
ORDERED that, no later than April 14, 2022, the Commissioner shall file and serve a reply (or, if petitioner has failed to file and serve a response to this Order to Show Cause, then the Commissioner shall file a status report).
It is further
ORDERED that the motion to compel (Doc. 43) is granted in part, in that no later than April 3, 2023, Mr. Stephenson shall cause to be delivered to Internal Revenue Service SB/SE Associate Area Counsel, Suite 2600, 77 K Street, NE, Washington, DC 20002, for inspection and copying, all of the "Cancelled checks, invoices, receipts, bills, and account statements for all deductions claimed on each Schedule C included with your Form 1040" for 2012 (Request No. 1) and all other "documents you intend to introduce into evidence during trial of this case" (Request No. 2). To the extent that the motion to compel requests preclusive relief in the alternative, the motion is denied in part without prejudice.