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

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In Part One I introduced the pending case Thomas v. Commissioner, in which a taxpayer seeks to exclude some of her blog posts from evidence in her innocent spouse trial. She argues the blog posts must be excluded under 6015(e)(7) as they were public at the time of the administrative determination and so should not be considered “newly discovered” or “previously unavailable” to respondent.

Does “Newly Discovered” Imply Any Diligence Requirement?

As you’ll recall from Part One, Judge Toro set out nine questions for the parties to consider in their memoranda of law. Perhaps the most crucial question is this:

  1. 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).

In her motion to strike, Ms. Thomas argues that applying the FRCP 60(b)(2) standard makes sense under Tax Court Rule 1(b) and Tax Court precedents applying the standard to Tax Court Rules 161 and 162. She notes:

Applying the ordinary meaning would set a very low bar in determining whether evidence is “newly discovered,” as it would allow Respondent to freely reopen the record and submit any evidence at trial just on a showing that it did not previously know about it without any consideration of Respondent’s attempt to obtain the evidence sooner. It is unlikely that this is what Congress intended when enacting the TFA.

Fed. R. Civ. P. 60(b)(2), in contrast, provides an administrable standard for admitting newly discovered evidence, by requiring a showing that the party seeking admission has exercised reasonable diligence.

In petitioner’s view, 6015(e)(7) would be meaningless if “materials which were publicly and freely available on the internet, and which Respondent could have easily located with a simple internet search, are ‘newly discovered evidence.’” She points out that the IRM permits CCISO to engage in internet research.

Respondent’s Objection to Motion to Strike, in contrast, argues that the plain language of the statute should control without any requirement of IRS diligence during the administrative proceeding. Respondent points out that a requesting spouse bears the burden to establish that they are entitled to relief, and that CCISO is not directed to thoroughly investigate each case before it: “It would be a waste of IRS resources to gather additional evidence to refute an inadequate claim…”

Petitioner states that respondent would have been able to find the blog by doing a simple internet search for petitioner’s name. Respondent should not have to do that because petitioner generally has the burden of proof at all stages of the request for relief and, to the extent important information is on a blog or elsewhere, petitioner ought forthrightly to provide the information as required by the Form 8857 she signed under penalties of perjury. The ease with which one may be able to find evidence does not matter when a party omits it…

…Exhibit 13-R, in its entirety, should be admitted into evidence as respondent did not become aware of petitioner’s blog until after the final administrative determination.

Concern for Moral Hazards versus Concern for Unsophisticated Taxpayers

The Objection also raises the danger that petitioners could potentially withhold information or documents from CCISO. If the government does not discover those items on its own, a petitioner could be rewarded for their malfeasance. In her reply, petitioner points out that there is no evidence the blog posts were deliberately withheld from CCISO.

as Petitioner explained during the trial, she did not view her blog, which was an attempt at self-branding and marketing, as relevant to her actual real world financial circumstances.

I cannot think of any client (or even any attorney) who would submit all potentially relevant documents to CCISO in the first instance. Innocent spouse cases (especially equitable relief cases) are fact-dense, and the universe of potentially relevant documents is enormous. Without the ability for some development of the case by exchanges of information and arguments on both sides, it is difficult to see how one could reach the right result on the merits of most equitable relief cases.

The clinics’ amicus brief urges the Court consider the realities of the administrative process and how self-represented taxpayers experience that process. Ms. Thomas likewise argues that

the Tax Court should take special care in determining what constitutes reasonable diligence in the innocent spouse context, particularly where the taxpayer is pro se and/or has suffered domestic abuse. …[T]he determination of whether the party seeking admission of the evidence exercised reasonable diligence should take into account the resources and wherewithal of that party. (Petitioner’s reply)

Respondent agrees that “the court should consider factors like who has knowledge of and control over the evidence and which party has the burden of proof.” But, Respondent also asks the Court to “consider the administrative burden of extensive research to try to capture evidence uniquely within petitioner’s control or that which petitioner willfully hides.” (Objection ¶42) And in response to petitioner’s reply, Respondent contends the requesting spouse actually has the upper hand before CCISO:

If anything, because the requesting spouse is the expert on their factual circumstances, respondent’s burden should be lighter unless the requesting spouse affirmatively discloses information during the administrative stage.

CCISO Engages in Limited Factfinding: On which side should that weigh?

Respondent’s filings and the amicus brief both point out the limitations of the current administrative process, but they draw very different conclusions. The amicus brief spends some paragraphs detailing the administrative process in the CCISO IRM, pointing out that it is not designed to generate a full factual record upon which the Tax Court can reach a de novo conclusion on the merits of the case. (A forthcoming Tax Lawyer article by Scott Schumacher argues that the administrative process is so flawed that CCISO does not reach the correct result except by accident.)

Respondent presents a similarly limited view of CCISO’s role, but for reasons of administrative efficiency and capacity as well as the burden of proof, the government would place all the onus on the requesting spouse to establish the administrative record. Respondent ties this to the “general requirement in administrative law to exhaust administrative remedies.” (Objection ¶ 11.) I find this an odd fit with 6015(e). Not only is there no requirement to request an administrative appeal before a court appeal (reflected in Respondent’s practice of sending docketed cases to Appeals for settlement consideration), a requesting spouse can file a petition before the IRS makes any determination at all. IRC 6015(e)(1)(A)(i)(II).

I found it interesting that in Respondent’s view, requiring a fuller investigation by CCISO would make the administrative process more adversarial. (Response to Reply ¶14, 15) Given that many requesting taxpayers are unrepresented and often face considerable barriers, it would be a terrible outcome for taxpayers if future CCISO technicians only investigated to uncover unfavorable or impeachment evidence. If the Court ultimately views 6015(e)(7) as incorporating a reasonable diligence requirement on the part of the agency, the IRS should consider other models of non-adversarial investigative processes, such as those employed for veterans benefit or Social Security disability claims. The Center for Taxpayer Rights’ Reimagining Tax Administration workshops, especially sessions 5, 6, and 7, provide much food for thought here.

A Note about The Role of Amicus Briefs

Responding to the amicus brief, Respondent commented that (in their view) the clinics’ amicus brief is counter to petitioner’s position. I disagree, but it is true that the amicus brief does not exactly track petitioner’s analysis.

One of the benefits of an amicus brief is that it can bring “to the attention of the Court relevant matter not already brought to its attention by the parties.” In the clinics’ view, this includes taking a broader perspective on the issues which may include analysis that is not identical to that of the petitioner, despite the amicus brief ultimately supporting petitioner.


Thomas raises thorny issues as everyone grapples with an unclear and ill-advised statute. The difficulties posed in applying 6015(e)(7) to the blogging taxpayer perhaps show why this is a highly unusual standard and scope of review in the administrative state. Innocent Spouse litigation may be very messy for many years to come.

If the “Fatty rule” holds, it will mitigate the harmful impact of the TFA on self-represented petitioners who are unlikely to build an adequate administrative record for judicial review. Here’s hoping that a future “blogger rule” does not have the opposite result. No matter how the case comes out, it will set important precedent on a novel question of law.

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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