Will the “Blogger Rule” Join the “Fatty Rule” as Litigation over IRC 6015(e)(7) Continues? (Part One)

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In Thomas v. Commissioner, Dkt. 12982-20, the interpretation of “newly discovered or previously unavailable evidence” in IRC 6015(e)(7) seems to be squarely before the Tax Court.

We have covered the Taxpayer First Act changes to the Tax Court’s innocent spouse jurisdiction in prior posts, such as my early post here. Most recently, Keith blogged the bench opinion in Bacigalupi v. Commissioner in which Judge Holmes followed the analysis he first adopted in Fatty v. Commissioner (blogged by Les here): since the IRS administrative process to adjudicate innocent spouse claims does not allow for sworn testimony or cross examination, witness testimony is “previously unavailable” and thus admissible evidence in a Tax Court trial. Judge Holmes was careful to note that in these nonprecedential orders he was not establishing a general rule for all future cases and that he might take a different view in the future. Nevertheless, the opinions show one potential approach to “previously unavailable” evidence.

The Thomas case presents an opportunity for the Tax Court to flesh out the other caveat in 6015(e)(7): “newly discovered” evidence. In Thomas, Respondent offered as trial exhibits several blog posts written by the petitioner Ms. Thomas, including some that were published before the final innocent spouse determination issued but which were not part of the administrative record. The Center for Taxpayer Rights, the Community Tax Law Project, and the Tax Clinics at Hastings and Villanova with my colleague Les Book together filed an amicus brief in the case flagging some broader concerns, including the inadequacy of the current administrative process in building a record for de novo review, particularly as to claimants navigating the impacts of domestic violence and other barriers.


Thomas v. Commissioner and Initial Evidentiary Issues Presented

Ms. Thomas and her husband were going through financial and marital difficulties when he passed away unexpectedly. Ms. Thomas then requested relief from joint underpayments, offering (among other reasons) that her husband was abusive and that she could not afford to pay the debts. Before her husband’s death, Ms. Thomas had started a new business targeting a well-heeled clientele and she wrote a blog to promote that business. Ms. Thomas continued to post on her blog while her innocent spouse claim was pending. In Respondent’s view, the blog posts show a very different lifestyle than the picture Ms. Thomas painted for CCISO.

The IRS, though CCISO, denied Ms. Thomas’s claim on September 8, 2020. (The record does not reveal why Ms. Thomas did not appeal the preliminary determination.) Ms. Thomas appealed CCISO’s denial to the Tax Court, and she represented herself at trial on April 4, 2022. At trial both parties sought to introduce new documents that weren’t part of the administrative record, and respondent also raised hearsay and relevance objections to some documents in the record.

Judge Toro took the objections under advisement, and on April 26 issued an order discussing IRC 6015(e)(7) and the eight challenged trial exhibits. Here is a modified version of the table that appears in the order:

Exhibit NumberDescriptionObjection (P or R)Included in the Administrative Record?
Exhibit 6-J, p. 10-14 Exhibit 29-PLetters of supportHearsay (R)Yes
Exhibit 6-J, p. 15-18Real estate recordsRelevance (R)Yes
Exhibit 6-J, p. 29Employment ContractRelevance (R)Yes
Exhibit 13-RBlog postsI.R.C. § 6015(e)(7) (P)No
Exhibit 31-PBankruptcy Court filingsI.R.C. § 6015(e)(7) (R)No
Exhibit 32-PNews articleHearsay; Relevance (R)No
Exhibit 33-PLand Rover invoiceRelevance (R)No

After setting out some preliminary considerations, Judge Toro determined that “it would advance the orderly resolution of this case to treat each of the exhibits listed above as admitted in full.” However, the Court invited either party to file a motion to strike, and further noted that if such a motion was filed, the Court would entertain a motion for leave to file an amicus brief “in support or opposition.”

Respondent declined this invitation, but petitioner filed a motion to strike part of Exhibit 13-R: the blog posts that were published before the September 2020 determination. As noted above, an amicus brief (to which Les and I contributed) was filed in support of petitioner. Respondent filed an objection to the motion, to which petitioner replied, as well as a response to the amicus brief and a response to petitioner’s reply.

While only Ms. Thomas’s pre-determination blog posts remain at issue, practitioners may want to take note of the items that Respondent initially challenged and prepare to litigate these issues if necessary in other cases. To the government’s credit, here it did not maintain its initial relevance or hearsay objections to documents found in the administrative record.

Kudos to the Court for soliciting amicus briefs on this novel issue, and for encouraging the petitioner to seek counsel. Ms. Thomas is now represented pro bono by Megan Brackney of Kostelanetz & Fink.

The Blogger Problem

Judge Toro’s order identifies many questions raised by the blog posts:

  1. Are the blog posts newly discovered or previously unavailable evidence?
  2. In making that determination, what is the importance (if any) of the fact that some of the blog posts were publicly available via Internet search during the IRS innocent spouse administrative proceeding?
  3. If the Commissioner did not “discover” the blog posts until after the administrative proceeding was complete, is that sufficient to allow the blog posts into evidence at trial?
  4. Should the phrase given its ordinary meaning (e.g., evidence that was not “found out” before a relevant time) or should it be viewed as a term of art? […]
  5. If the phrase is viewed as a term of art, is its meaning different from the ordinary meaning of the phrase?
  6. Should Federal Rule of Civil Procedure 60(b)(2) inform our interpretation of the term “newly discovered evidence” in I.R.C. § 6015(e)(7)? That rule provides that “[o]n motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b). Fed. R. Civ. P. 60(b)(2) (emphasis added).
  7. If Federal Rule of Civil Procedure 60(b)(2) should inform our interpretation of the term “newly discovered evidence” in I.R.C. § 6015(e)(7), what is the import of the qualifying language used in that rule and italicized above?
  8. Relatedly, should this Court’s interpretation of the term “newly discovered evidence” in other contexts inform our interpretation of the same term in I.R.C. § 6015(e)(7)? See, e.g. Estate of Quick v. Commissioner, 110 T.C. 440, 441 (1998) (applying the term “newly discovered evidence” in the context of a motion to reconsider pursuant to Rule 161, Tax Court Rules of Practice and Procedure); Fairmont Aluminum Co. v. Commissioner, 22 T.C. 1377, 1383 84 (1954) (same, regarding a motion for new trial pursuant to Rule 162, Tax Court Rules of Practice and Procedure); Rule 1(b), Tax Court Rules of Practice and procedure, the Court . . . may prescribe the procedure, giving particular weight to the Federal Rules of Civil Procedure to the extent that they are suitably adaptable to govern the matter at hand.”).
  9. Does the “newly discovered evidence” standard mean that the same evidence could be admissible if offered by one party but inadmissible if offered by the other? For example, might the older blog posts be admissible if the Commissioner offers them (because they existed at the time of the administrative proceeding but were then unknown to (or had not been “found out” by) the Commissioner), but not if the petitioner offers them (because she knew of them at the time of the administrative proceeding)? And if the one party is allowed to offer “newly discovered evidence,” how can the other party rebut that evidence in a manner consistent with I.R.C. § 6015(e)(7)?

The parties’ answers to these questions reflect very different visions for the future of innocent spouse cases under the TFA. In Part Two, we’ll examine the arguments raised.

Christine Speidel About Christine Speidel

Christine Speidel is Associate Professor and Director of the Federal Tax Clinic at Villanova University Charles Widger School of Law. Prior to her appointment at Villanova she practiced law at Vermont Legal Aid, Inc. At Vermont Legal Aid Christine directed the Vermont Low-Income Taxpayer Clinic and was a staff attorney for Vermont Legal Aid's Office of the Health Care Advocate.

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