Hale E. Sheppard article on Series of Tax Court Orders Allowing Nonconsensual Depositions by IRS: Aberration or Trend?
Taxpayers in disputes with the Internal Revenue Service (“IRS”) can seek judicial review in any one of three courts, but they frequently choose the Tax Court. This makes sense because the Tax Court is favorable to taxpayers in many ways. For instance, judges travel to dozens of cities throughout the year to make justice accessible, taxpayers do not need to pay the amount in dispute before fighting, the parties must work cooperatively to exchange evidence, narrow issues, and agree on facts, and pre-trial discovery demands are often minimal. Things have started changing, though, particularly when it comes to cases involving conservation easements. This article explains the main data-gathering tools used by the IRS during audits, pre-trial discovery actions, limitations on depositions of potential witnesses, the conservation easement donation process, and three recent Tax Court Orders allowing the IRS to conduct nonconsensual depositions of various characters affiliated with partnerships that donated easements.