We previously wrote about the lack of a US Tax Court (Tax Court) rule requiring notice to other parties before service of non-party subpoenas for the production of documents, information, or tangible things and inconsistent practices for Judges at the Tax Court. See here and here. To recap, Tax Court Rule 147 allows a party to issue a subpoena to a non-party but does not require that prior notice be given to the other side of the issuance. Prior notice is required under the Federal Rules of Civil Procedure, which govern federal cases before the US district courts. As previously discussed, this absence of a Tax Court rule has led to inconsistent orders from the Tax Court on the subject.
Change may be coming soon, according to comments from Tax Court Chief Judge Marvel on June 16, 2017 at the New York University School of Professional Studies Tax Controversy Forum. Judge Marvel indicated that the Tax Court is considering amendments to Tax Court Rule 147 to conform to the Federal Rules of Civil Procedure. This would be a welcome development for taxpayers, as the Internal Revenue Service (IRS) would no longer be able to issue subpoenas and gather information from non-parties without a taxpayer’s knowledge and access to the same materials.
Practice Point: The Tax Court has not indicated when the next amendments to its Rules will be released. Until that time, taxpayers in litigation should not expect that the IRS will provide notice of subpoenas issued to non-parties. As we have pointed out before, taxpayers should routinely and regularly issue discovery requests on the IRS seeking: (1) a list of all third-party contacts, including the documents sent and received; (2) copies of all subpoenas, including a copy of all documents sent and received; and (3) a list of the dates on which the third-party contacts occurred, including phone calls and meetings. These requests should be made at the beginning of every case, and it should be stated that the requests are continuing in nature.