Each federal court has its own discovery rules and procedures.
The Tax Court strongly encourages and requires the voluntary exchange of facts, documents and other information between the parties through informal means of communication. A great deal of information can be obtained from the IRS through a Freedom of Information Act (FOIA) request. Where information is needed beyond that included in a FOIA request it is normally acquired through the use of a Branerton letter. A Branerton letter is a written request to the opposing party listing in detail the information and documents desired. The parties are expected to meet to discuss and exchange information and documents without the Tax Court’s supervision or involvement.
Discovery is the formal legal process that allows the parties to obtain solely relevant information. Discovery is limited by the concept of relevancy so that information sought that has no possible bearing on the issues in the case will not ordinarily be discoverable. Formal discovery methods that can be used in deficiency actions include:
The use of depositions is highly restricted by the Tax Court. In addition, requests for admissions (statements as to facts that are not in dispute) are not used as frequently in the Tax Court.
Interrogatories are written questions served on the opposing party that must be answered unless a defense or privilege applies. Interrogatories are often used to obtain as much information as possible to sufficiently prepare the case and avoid adverse surprise at trial.
The answering party has 30 days after the interrogatories are served to answer or object to each question. All answers must be supplied in good faith and be as complete as possible within reason. Each objection must state the reason for the opposition to the questions and the objection must be signed by the party or his counsel. Upon a party’s objection or failure to answer an interrogatory, the serving party can file a motion with the court for an order compelling a response. The objecting party in the face of a motion to compel has the burden of convincing the court that he or she does not have to answer because of an applicable defense such as relevancy, privilege, or improper form of question.
The burden is on the party opposing discovery to establish that the documents or responses sought via interrogatories are not discoverable due to the existence of an applicable privilege or defense. Commonly, the party opposing discovery files a motion for a protective order after being served with an objectionable discovery request.
The most common discovery defenses, and protections (privileges) available in all three Federal Courts that hear tax litigation are listed below.
Enforcement: A party that improperly refuses to respond to a request for discovery risks sanctions by the court. Moreover, an evasive or incomplete answer or response is considered a failure to answer or respond.
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