United States District Court, E.D. North Carolina, Western Division
W. FLANAGAN United States District Judge.
the Court is the United States' motion requesting an
order compelling the Defendant, Tanisha Chambers a/k/a
Tanisha Salmon, to provide initial disclosures required by
Fed.R.Civ.P. 26(a)(1) and a written response to the
government's First Set of Requests for Production of
Documents, along with all responsive documents.
lawsuit, the United States seeks injunctive and other
equitable relief pursuant to 26 U.S.C. §§ 7402(a),
7407, and 7408, claiming that the Defendant, through the
preparation of federal tax returns, engages in conduct that
interferes with the enforcement of the internal revenue laws
and that injunctive relief is necessary to prevent a
recurrence of that conduct. The United States also seeks an
order requiring the Defendant to disgorge the ill-gotten
gains she received for the preparation of tax returns making
16, 2017, the United States served 39 requests for production
of documents on the Defendant. The Defendant did not respond.
The Defendant also failed to provide Rule 26(a)(1) mandatory
disclosures on or before May 15, 2017, as required by the
Court's scheduling order. (Docket no. 11.) The Defendant
subsequently provided the names of individuals likely to have
discoverable information that she may use to support her
claims or defenses, but has not made any of the other
disclosures that Fed.R.Civ.P. 26(a)(1) requires.
United States filed its motion on July 18, 2017, and the
Defendant failed to respond. The Court will grant the United
Rule 26, a party “may obtain discovery regarding any
nonprivileged matter that is relevant to any party's
claim or defense and proportional to the needs of the case,
considering the importance of the issues at stake in the
action, the amount in controversy, the parties' relative
access to relevant information, the parties' resources,
the importance of the discovery in resolving the issues, and
whether the burden or expense of the proposed discovery
outweighs its likely benefit.” Fed.R.Civ.P. 26(b)(1).
Evidence is relevant if “it has any tendency to make a
fact more or less probable than it would be without the
evidence” and “the fact is of consequence in
determining the action.” Fed.R.Evid. 401. When, as
here, a party fails to respond to discovery seeking relevant
information, under Rule 37 “[a] party, upon reasonable
notice to other parties and all persons affected thereby, may
apply for an order compelling disclosure or discovery.”
Fed.R.Civ.P. 37(a). A party waives its objections if it fails
to respond to discovery requests within the allotted time.
See Merriweather v. Radio Shack, 2012 WL 4578695, at
*1 (E.D. N.C. Oct. 1, 2012).
United States' requests for production of documents seek
information relevant to the government's claims and they
are proportional to the needs of the case. To obtain the
relief it seeks, the government must show that 1) the relief
sought is necessary or appropriate for enforcement of the
internal revenue laws; 2) the Defendant acted recklessly or
negligently with respect to the preparation of tax returns or
engaged in any other deceptive conduct which substantially
interferes with the administration of the Internal Revenue
laws; or 3) the Defendant advised, or assisted in the
preparation of a tax return knowing (or having reason to
believe) that it would be used in connection with any
material matter arising under the internal revenue laws and
would result in an understatement of another person's tax
liability. See United States v. Stinson, ___
F.Supp.3d ___, 2017 WL 881839, *18 (M.D. Fla. Mar. 6, 2017)
(internal citation omitted); United States v.
Renfrow, 612 F.Supp.2d 677, 691 (E.D. N.C. 2009);
United States v. Preiss, 2008 WL 2413895, at *5
(M.D. N.C. June 11, 2008).
Defendant, by failing to timely respond, waived any
objections other than to privilege. As explained below, the
government's document requests seek material relevant to
the government's claims for relief and the Defendant
shall be compelled to respond to the requests in writing and
to produce responsive documents.
1, 2, 3, 4, and 9 seek copies of tax returns prepared by the
Defendant or her employees, and also her “customer
files” (whether in paper or electronic format), which
are records that tax return preparers maintain, such as Forms
W-2 and 1099, or receipts for income or expenses, provided by
the customer for use in preparing the tax return. These
records may show whether the claims made on customers'
tax returns are supported or contradicted by the information
that the customers provided.
5 seeks documents showing the fees received by the Defendant,
which is relevant to the government's claim for
disgorgement of ill-gotten gains. Additionally, requests 6,
7, and 8 request franchise agreements, employment agreements,
and other documents related to employees, which are relevant
to identify potential witnesses and also to show whether the
Defendant is a “tax return preparer” as defined
in 26 U.S.C. § 7701(a)(36).
10 seeks records of communications between the Defendant and
the IRS to show any notice that the Defendant may have
received regarding errors on tax returns that she prepared.
11 seeks documents showing the Electronic Filing
Identification Numbers that the Defendant and her tax
preparation stores used when filing tax returns. These
records may enable the government to identify all of the
stores owned by the Defendant and identify all of her
employees who may have registered EFINs with the IRS.
Moreover, the government may identify returns filed using
those EFINs and compare IRS records of filed tax returns with
any other records (i.e. customer files and related
electronic records) provided by the Defendant to determine
whether the filed ...