916 F.2d 171 (4th Cir. 1990), 89-2224, Hillig v. C.I.R.
|Docket Nº:||89-2224, 90-2021.|
|Citation:||916 F.2d 171|
|Party Name:||USTC P 50,538, 17 Fed.R.Serv.3d 1164 Bernard J. HILLIG; Barbara J. Hillig; Louis D. Napoli; Carol B. Napoli; Barry G. Brotman; Elizabeth M. Brotman; Alfred P. Coccaro; Elizabeth M. Coccaro, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee. Joel B. BOWERS; Susan G. Bowers; Robert L. Hamm, Petitioners-Appellants, v. CO|
|Case Date:||October 16, 1990|
|Court:||United States Courts of Appeals, Court of Appeals for the Fourth Circuit|
Argued June 6, 1990.
As Amended Nov. 6, 1990.
Stephen Richard Mysliwiec, argued (James G. Rafferty, Paul P. Andrews, on brief), Piper & Marbury, Washington, D.C., for petitioners-appellants.
Calvin Carl Curtis, argued (Shirley D. Peterson, Asst. Atty. Gen., Gary R. Allen, Jonathan S. Cohen, on brief), Tax Div., U.S. Dept. of Justice, Washington, D.C., for respondent-appellee.
Before WIDENER and CHAPMAN, Circuit Judges, and BUTZNER, Senior Circuit Judge.
BUTZNER, Senior Circuit Judge:
In this appeal, taxpayers assign error to the Tax Court's dismissal of their petitions as a sanction for violations of Tax Court Rules by the taxpayers' counsel. We vacate and remand for reinstatement of the petitions and consideration of sanctions against their lawyers.
The taxpayers, Bernard J. Hillig, Louis D. Napoli, Joel B. Bowers, Barry G. Brotman, Alfred P. Coccaro, and Robert L. Hamm are physicians who formed a partnership to purchase and lease medical equipment. The physicians also are shareholders of a professional services corporation, formed for the practice of medicine.
The Commissioner served the taxpayers in June 1988 with notices of deficiency for tax years 1981, 1982, and 1984. According to the notices, the taxpayers had taken improper investment tax credits for medical equipment purportedly leased by the partnership to the corporation. The taxpayers retained their corporate attorney to contest the notices. Because he lacked experience in Tax Court litigation, the taxpayers through their corporate counsel engaged special tax counsel. The attorneys filed petitions contesting the notices in September 1988.
In December 1988 the Tax Court issued a notice setting the case for trial on May 22, 1989. The notice warned that failure to cooperate may result in dismissal of the case. The court also issued its standing pretrial order, which required the parties to stipulate undisputed facts. The order also required that 15 days before the trial the
parties file with the court and exchange with each other documentary and written evidence, a trial memorandum, and reports of any expert witness. It stated: "If any unexcused failure to comply with this Order adversely affects the timing or conduct of the trial, the Court may impose appropriate sanctions, including dismissal, to prevent prejudice to the other party or imposition on the Court."
In January 1989, informal discovery began with a letter from the Commissioner to the taxpayers' counsel requesting eight categories of documents. The court held a discovery conference in February. Counsel for the Commissioner claims that taxpayers' counsel agreed to furnish the requested documents by March 13, 1989. Taxpayers claim that the Commissioner's counsel agreed to send a revised list of documents that had not been reviewed in the tax audit.
On March 15, 1989, the...
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