Saturday, February 24, 2018

Taxpayers with Failed Bullshit Tax Shelters Use FOIA to Try to Get Whistleblower, if any, Information (2/24/18).

In Montgomery v. IRS, 2018 U.S. Dist. LEXIS 26313 (D. D.C. 2/20/18), here, taxpayers were caught using partnerships to claim large tax benefits based on bullshit tax shelters.  "In fact, both partnerships were structured in such a way that they were able to report tax losses without the partnerships (and, by extension, the partners) experiencing any real economic loss." After the FPAA proceedings and resulting and related litigation resolved those cases, the taxpayers made FOIA requests and, upon denial, brought this suit for the requested information and documents.  Their goal is "to deduce who, if anyone, tipped off the" IRS as to their raid on the fisc.  In this FOIA suit, the Government moved for summary judgment, alleging that the earlier resolutions of the cases they brought over the bullshit tax shelters foreclosed their FOIA claims.  The Court denied the Government's motion for summary judgment, so the case will proceed to further proceedings.  The Court ordered the parties to submit a new proposed briefing schedule.

Basically, the issue resolved by the Court was whether the prior resolutions in the cases dealing with the merits of their claims for tax benefits foreclosed their right to pursue FOIA requests.  The Court held that the neither the settlement agreements in the merits litigation nor principles of law (collateral estoppel and res judicata) foreclosed their right to pursue FOIA requests.  The settlement agreements merely presented a contract issue, and the Court held that the contracts did not foreclose the suits.  And the merits resolutions did not invoke principles of claim or issue preclusion because the FOIA claims or anything like them were not resolved in the earlier case.

The resolution is not particularly noteworthy.  Rather, what I thought was noteworthy is the taxpayers' pursuit of the whistleblower, if any, role, probably at some significant additional expense.  Maybe they are just curious, maybe they seek revenge, maybe they want to make some type of claim against the whistleblower, if any.  Who knows?  But maybe the further proceedings, if public, will shed light on that.

The docket entries are here.

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