Legislature(1995 - 1996)
02/29/1996 04:12 PM House JUD
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* first hearing in first committee of referral
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JOINT HOUSE JUDICIARY STANDING COMMITTEE AND
HOUSE STANDING COMMITTEE ON FINANCE
February 29, 1996
4:12 p.m.
HOUSE JUDICIARY MEMBERS PRESENT
Representative Brian Porter, Chairman
Representative Joe Green, Vice Chairman
Representative Al Vezey
Representative Cynthia Toohey
Representative David Finkelstein
HOUSE JUDICIARY MEMBERS ABSENT
Representative Bettye Davis
Representative Con Bunde
HOUSE FINANCE MEMBERS PRESENT
Representative Mark Hanley, Co-Chair
Representative Eldon Mulder
Representative Terry Martin
Representative Sean Parnell
Representative Gene Therriault
Representative Mike Navarre
Representative Ben Grussendorf
Representative Vic Kohring
HOUSE FINANCE MEMBERS ABSENT
Representative Richard Foster, Co-Chair
Representative Kay Brown
Representative Pete Kelly
COMMITTEE CALENDAR
HOUSE BILL NO. 341
"An Act establishing a tax court to consider and determine certain
taxes and penalties due and collateral matters, and amending
provisions relating to taxpayer challenges to the assessment, levy,
and collection of taxes by the state; and providing for an
effective date."
- OVERVIEW PRESENTATION
PREVIOUS ACTION
BILL: HB 341
SHORT TITLE: TAX APPEALS/ASSESSMENT/LEVY/COLLECTION
SPONSOR(S): REPRESENTATIVE(S) GREEN
JRN-DATE JRN-PG ACTION
05/09/95 2042 (H) READ THE FIRST TIME - REFERRAL(S)
05/09/95 2042 (H) RES, JUD, FINANCE
10/24/95 (H) RES AT 9:00 AM ANCHORAGE LIO
10/24/95 (H) MINUTE(RES)
01/19/96 (H) RES AT 9:00 AM CAPITOL 124
01/19/96 (H) MINUTE(RES)
01/24/96 (H) RES AT 8:00 AM CAPITOL 124
01/24/96 (H) MINUTE(RES)
01/26/96 2536 (H) RES RPT CS(RES) NT 1DP 4NR 3AM
01/26/96 2537 (H) DP: GREEN
01/26/96 2537 (H) NR: OGAN, AUSTERMAN, KOTT, WILLIAMS
01/26/96 2537 (H) AM: NICHOLIA, DAVIES, LONG
01/26/96 2537 (H) FISCAL NOTE (COURT)
01/26/96 2537 (H) ZERO FISCAL NOTE (REV)
01/26/96 2537 (H) REFERRED TO JUDICIARY
01/26/96 (H) RES AT 8:00 AM CAPITOL 124
01/26/96 (H) JUD AT 1:00 PM CAPITOL 120
01/26/96 (H) MINUTE(RES)
01/26/96 (H) MINUTE(JUD)
01/29/96 (H) JUD AT 1:00 PM CAPITOL 120
01/29/96 (H) MINUTE(JUD)
02/28/96 (H) JUD AT 3:00 PM CAPITOL 124
02/29/96 (H) JUD AT 4:00 PM HOUSE FINANCE 519
WITNESS REGISTER
DEBORAH VOGT, Deputy Commissioner
Office of the Commissioner
Department of Revenue
P.O. Box 110400
Juneau, Alaska 99811-0400
Telephone: (907) 465-2300
POSITION STATEMENT: Testified on HB 341
PAUL H. FRANKEL
Morrison and Foerster
New York, New York
Telephone: Unavailable
POSITION STATEMENT: Provided information on HB 341
ACTION NARRATIVE
TAPE 96-27, SIDE A
Number 0000
The Joint House Standing Judiciary Committee and House Standing
Committee on Finance was called to order by Chairman Porter at 4:12
p.m. House Judiciary Committee members present at the call to
order were Representatives Porter, Green, Toohey, and Vezey. House
Finance Committee members present at the call to order were
Representatives Hanley, Kohring, Mulder, Martin, Parnell,
Therriault, Navarre, and Grussendorf.
CHAIRMAN BRIAN PORTER announced the agenda was a hearing on HB 341,
a bill currently being held in the House Judiciary Committee.
HB 341 - TAX APPEALS/ASSESSMENT/LEVY/COLLECTION
Number 0032
CHAIRMAN PORTER said HB 341 addresses the tax appeal process within
the Department of Revenue (DOR). He said Ms. Vogt would explain
the current process and then Mr. Frankel would explain how the
current process could be improved.
DEBORAH VOGT, Deputy Commissioner, Office of the Commissioner,
Department of Revenue, was first to testify. She said DOR has an
old-fashioned in-house revenue of tax matters. She said there are
a group of auditors who audit tax returns if they find something
that needs to be assessed. She said, at that time, the taxpayer
can ask for an informal conference in front of an informal conferee
within DOR or can go straight to the DOR's formal hearing section.
She said, depending on the nature of the proceeding, the informal
conference can be just a taxpayer and a single representative of
the DOR, or it can be a more formal matter with representation by
the Attorney General's office and by the counsel for the taxpayer.
MS. VOGT said the formal hearing is in the commissioner's office
and occurs if the taxpayer is still dissatisfied with the result at
the end of the informal conference and has appealed to the
commissioner's office. She said the commissioner could hold the
hearing himself, but usually hearing officers take testimony on
behalf of the commissioner. She said when that determination is
made, if the taxpayer is still dissatisfied, the taxpayer can
appeal to superior court. She added that this appeal is on an
appellate record, not a trial at the superior court and it is this
issue which the taxpayers have complained about the most. The
taxpayers feel, and Mr. Frankel would probably agree, that there
needs to be a stage in the proceeding where a trial-like proceeding
can take place outside the department.
Number 0098
MS. VOGT said Representative Green introduced HB 341 last year
which would have provided for a tax court and is currently in a
revised form. The DOR in-house proceedings has been an area that
taxpayers have been dissatisfied with for many years. She said the
courts have always upheld this use of in-house proceedings and it
is a model used by a fair number of states. She added that she
believes that it is a fair system, but it has been perceived as a
"a deck-stacked against the taxpayers." She said, at the beginning
of the Knowles Administration, the DOR agreed to look at this issue
anew, partially as a result of HB 341 and new taxpayer complaints.
She said DOR spent a substantial amount of time drafting
legislation that address this issue and the DOR feels comfortable
with, which the Governor introduced, HB 427 and SB 224. She said
the DOR has received advice from Mr. Frankel regarding this issue
and has worked with a number of states in revising their hearings.
She said the DOR has also completed a survey and found that Alaska
is one of the few remaining states that holds all the tax hearings
in-house until an appellate review.
Number 0145
CHAIRMAN PORTER said Mr. Frankel has extensive background in tax
appeal matters. He summarized Ms. Vogt's testimony for those
Representatives joining the committee meeting including
Representative Finkelstein from the House Judiciary Committee and
Representatives Mulder, Martin, Navarre, and Grussendorf from the
House Finance Committee.
PAUL FRANKEL, Morrison & Foerster, said he does tax litigation
within the state of New York and elsewhere in the United States.
He said before doing this, he was tax counsel for W.R. Grace & Co.,
and before that he was an Internal Revenue Service (IRS) trial
lawyer. He said, when a person has a tax dispute with the IRS,
they can go through the entire in-house system consisting of
conferences and appeals.
Number 0171
MR. FRANKEL said at the end of this period, if the taxpayer is not
satisfied, he/she gets a 90 day letter which gives him/her 90 days
to file a petition with the United States Tax Court saying why the
taxpayer does not feel he/she owes the tax. He said this petition
begins the tax preceding, nothing is paid out. He added that the
United States Tax Court is a stream-lined, efficient and
independent system where the taxpayers felt they received a fair
treatment. He said as a trial lawyer for the IRS, it was his job
to defend the position of the IRS before this court. He said the
IRS often felt that they were not receiving an edge as the judges
took into consideration that the IRS trial lawyers knew the
procedures and tried to balance out the other lawyers inexperience
with this particular system to make it as fair as the judges could.
He said the chief judge, when he was a trial lawyer, was a man
named, Howard Dawson who told Mr. Frankel that the United States
Tax Court was in the worst possible place, in the IRS building.
Mr. Dawson said the public perceived that the U.S. Tax Court was
part of the IRS. He said, as a result of Mr. Dawson's lobbying,
the U.S. Tax Court now has their own building in Washington, D.C.
MR. FRANKEL then discussed his job as tax counsel for W.R. Grace &
Co. where he did federal as well as state tax litigation. He said,
at the state level, there was a perception of real or imagined
bias. He said the typical state revenue tax dispute consisted of
a proposed notice of assessment or proposed assessment from an
auditor which claimed the taxpayer owed taxes, announced a trial
date and a location of the hearing. He said the hearing auditor
would work for the same person that proposed the assessment, which
caused the taxpayer to feel that the "cards were stacked against
you all over the place." He said there were no separation of
powers. He stressed the importance of having someone outside the
process looking at, weighing the facts and making an independent
judgement whether the taxpayer was right or wrong.
MR. FRANKEL said one of the tax cases he was counsel for was in the
state of Alaska, twenty years ago. He said the corporate treasurer
was at the hearing and questioned how the system could be fair with
the same people working at different levels within the different
hearing process.
Number 0244
MR. FRANKEL said he is originally from New Jersey and said he is
active in the bar association in that state. He said, twenty years
ago, he began to work in the state of New Jersey to make it a
better tax dispute place as it probably had the worst tax
procedures within the United States. He said, it wasn't just the
lack of an independent, prepayment tax dispute system, but the
state of New Jersey gave the state revenue department statutes of
limitations to audit which were lengthy, and the taxpayer short
periods of time to claim refunds, gave no interest on refunds, gave
the state big interest on deficiency, gave the taxpayer short times
to protest and if the taxpayer was away he/she lost this
opportunity. He said New Jersey changed their tax system into the
best system in the nation because the bar association, businesses,
legislature and, the key factor, the Department of Revenue
supported an independent tax court. He said taxpayer feel that
when they leave the New Jersey tax court they have had a fair
"shake."
Number 270
MR. FRANKEL said the state of New York had an in-house tax system,
but the state was reluctant to give up this process. He said the
New York formed a tax appeals bureau which functioned in a similar
manner to the U.S. Tax Court except it was part of the N.Y.
Department of Revenue, the bureau reported to the commissioner and
there was still a perception of bias. He said, after ten years, a
new commissioner with advice changed the system. A tax tribunal
was set up in 1987 with three judges at the top level, which is the
tribunal for appellate. He said there are hearing officers at the
lower level within the state system. He said the New York system
is fast, efficient, contains no new discovery, is inexpensive and
the taxpayers feel they are treated fairly. He said the chief
judge was the general counsel for the Department of Revenue.
Number 292
MR. FRANKEL said New York City has the fourth largest tax
collection agency in the country, behind California, the IRS, and
the state of New York. New York City was long viewed as an
aggressive department with in-house hearing officers who usually
ruled for the city, 80 percent to 90 percent of the time, no matter
what the case was. He said a new commissioner was appointed in the
late 1980's who drafted a change in the city charter, pushed
through a New York City tax tribunal, took the existing hearing
officers with the same budget and informed them that they were to
judge the cases as fairly as possible and to not back up city
policy. He said the same officers who had ruled 80 percent to 90
percent, now were ruling 50 percent in favor of the city.
Number 318
MR. FRANKEL said there have been many movements, for changes within
the tax system, throughout the country. He mentioned some of these
examples. In Connecticut, a tax court was formed three years ago
by appointing two judges, who liked tax, to head this court. The
state of Indiana picked one judge to run the tax court. He said
state after state have adopted similar systems of many different
forms, and added that it does not matter if the change is judicial
or administrative as long as it is separate from the Department of
Revenue. He said it is important that taxpayers go into the system
feeling that they are going to be listened to and judged on the
facts and the law. He added that this system works before anyone
has to pay anything, they should have their day in court before
they have to pay or post a bond. He heard of a case in Tennessee
where a company was almost put in bankruptcy because an agent had
declared a big deficiency. He said there was no review system in
Tennessee before the state took the money.
MR. FRANKEL stated that there should a right to a hearing before
anyone takes money or posts a bond, someone who is independent and
someone who knows and likes tax. A lot of people are afraid of tax
and a judge who likes tax law will do a good job. Massachusetts
has a wonderful system, as well as Maryland, Ohio, Wisconsin,
Minnesota, Delaware, Missouri, Oregon, Montana, Hawaii, and Arizona
and once these systems are in place everyone realizes it's the only
way to go. The commission cannot also be the judge and have the
power to tell somebody they owe them money.
Number 352
MR. FRANKEL said he had reviewed the present legislation before the
committees for consideration and noted that there are two areas in
general which he felt were important to mention. The first area
was discovery, which is where a party has the right to issue a
subpena before a trial and put an executive or governmental
official on a witness stand to ask questions in deposition form.
This can be a major burden. He also mentioned interrogatories
where someone would be requested to produce all sorts of documents.
The U.S. Tax Court had no discovery when he was there and he
thought it was a very efficient system. New York state does not
have discovery either and when discovery bogs people down, it's a
bad thing, particularly if one of the parties can't afford to go
through this procedure extensively. It almost never produces
anything worthwhile. He said he was generally against discovery,
but if they chose discovery, it should not be discretionary
discovery. In the case of discretionary discovery, the judge has
the right to establish what type of discovery will be allowed on a
case by case basis. This could also lead to a perception of bias.
He suggested a compromise which might allow for no depositions, but
just requests for questions, things like this.
MR. FRANKEL noted that one of the things which made the U.S. Tax
Court very efficient were mandatory stipulations of fact. In this
situation each side is required to agree in writing to all facts
that are not in dispute, or which should not be in dispute and
attach all documents which are authentic, even if there is a
challenge to materiality or relevance. These cases would really
move through the system and usually nine out of 10 cases settle.
MR. FRANKEL suggested that the committees rather than get bogged
down in side issues, just pass the legislation through. If there
is a bill which allows for a system independent from the department
and the tax payer can have their day without paying or posting a
bond, if the judges are specialized in tax law, and if they could
adopt it, the sooner the better.
Number 394
CHAIRMAN PORTER noted that Alaska has a very small amount of people
residing here and a small amount of cases, but with very high value
attached to them. He asked if these characteristics set up a
scenario for a different procedure than what Mr. Frankel outlined.
MR. FRANKEL responded that there is a similar situation in the U.S.
Tax Court where there are very large cases. These Section 482
cases involve transfer pricing of foreign operations, involving
multi-millions of dollars, but there are other smaller cases too.
The key ingredient in every case that whomever the tax payer is,
they should have the feeling that someone is listening and they
will get a fair shake regarding their cases. In other states,
where the cases are complex, they appoint a special trial judge or
a special master to work with a particular case. This seems to
work with long and complex cases. In regards to budget, Mr.
Frankel pointed out that the U.S. Tax Court has a filing fee
system. He noted that no one seems to mind paying a filing fee.
Number 418
REPRESENTATIVE JOE GREEN noted that a sub-committee was presently
working through some big and small differences regarding their
legislation. One of the concerns that has come up is that because
Alaska is a small state, it's going to be difficult and maybe
unduly expensive to establish this kind of review team to be
available for the big and small cases. He noted that there may not
be enough litigation to warrant a specialize system. He also added
that these tax issues are from one industry. Alaska is such a
large resource state. He asked if there was any place where Mr.
Frankel had worked where there was an establishment of one or more
of these administrative law judges by something other than the
commissioner. Is this appointment accomplished by law temporarily,
permanently, etc. He asked what the most expeditious and fair way
would be to establish this system.
MR. FRANKEL noted that establishing a system is proceeded by the
enactment of a bill and outlining an appointment process, but
keeping the judges or hearing officers busy is also something to
consider. In Maryland, they do not have a full time tax court.
They have these judges who do other things, maybe they're lawyers
in private practice, but they're available when needed, although
they probably wouldn't be able to practice tax cases.
Number 454
REPRESENTATIVE GENE THERRIAULT asked about the majority of the
other states and how their judges are selected.
MR. FRANKEL stated that in New Jersey there are judicial judges
and they are appointed like any judge. The state bar association
submits a slate of names to the governor which they believe are
qualified. The governor appoints them. He noted that every other
appointment in New Jersey is Democrat and Republican on a rotation
basis. There is a political balance of the judges in this state.
It seems to work. In New York, the governor appoints the top three
of the New York tribunal, but there are hearing officers called
administrative law judges at the second level who the governor does
not appoint. These are appointed by the chief judge of the New
York state tribunal. Generally they are appointed by the governor
and generally are legislatively confirmed.
Number 485
REPRESENTATIVE GREEN mentioned the related piece of legislation
introduced last year which attempted the establishment of a tax
court and with people who are knowledgeable about tax law.
Presently, it allows for appointment of tax specific individuals,
but if after a hearing there is still dissatisfaction, their system
allows for appeal to a superior court. He noted Mr. Frankel's
mention of those states which don't have this by-pass feature in
their system.
MR. FRANKEL said that every state has a system where an individual
can appeal up to court, but the crucial level is where is the
record made. If the record of the trial is made in the department
people don't feel right about this. It seems to be unfair. If the
record is made in front of an independent judge, then things are
fine. He noted that most states provide for a de novo trial level
in the tax courts. Some of these tax courts are administrative and
some are judicial, but it's within the tax forum which this de novo
case is made and it's made outside of the department.
Number 509
REPRESENTATIVE AL VEZEY asked if Mr. Frankel was advocating a
single judge or adjudicator per case as opposed to an arbitration
where there are typically three.
MR. FRANKEL said he felt that the U.S. Tax Court had a good system
for this. They have 19 judges. The chief judge assigns a case to
one judge. The trial is before one judge, but an opinion is passed
from the court. This judge is asked to write a proposed opinion,
which is circulated among all the other judges. If the other
judges think the proposed opinion is wrong, they have the power to
vote by majority as to what the right answer is. Mr. Frankel noted
that some states do their own opinions, but he did not recommend
this because there could be judges on the same court which seem to
go in a different direction. In the case of California where they
have a board of equalization, the tax payers go before five judges
at once. Mr. Frankel felt as though this was not too efficient and
not productive.
Number 527
REPRESENTATIVE ELDON MULDER referred to an independent agency which
would hear tax cases and then if the parties involved were not
satisfied with this review they could appeal it to superior court,
with a caveat that they could go directly to superior court. He
asked if this option was available in other states and he asked
what the justification would be to go to superior court and bypass
a judge or a hearing officer.
MR. FRANKEL said the only place he sees this system is in
California and even there an individual has to pay to go directly
to court. There is such a perception of bias in California that
people do not want to go through the system. The state board of
equalization in California made up of five judges are the same
individuals who supervise all the sales tax agents. They also sit
on the franchise tax board which is the group which does the income
tax audits. This is the only place where he sees individuals by-
passing the system. Usually the system is set up that if an
individual goes up the ladder, and the individual looses, they can
then appeal on this record to the appellate division. He
recommended that the first stage must be perceived as independent
allowing for a latter process of appeal, rather than a side-jump.
Number 604
MR. FRANKEL outlined the following federal procedure in response to
a question by Representative Green provide that an informal hearing
would be instigated before a more formalized hearing was
undertaken, with a court proceeding built into the system. In the
federal system a taxpayer receives a 90 day letter. If they decide
to opt for a trial without payment, they have to go to the United
States Tax Court. After 90 days go by, they pay their tax, they
file a claim for refund and then they can either go to the U.S.
Claims Court or the U.S. District Court. The state of Michigan has
a similar system.
REPRESENTATIVE MARK HANLEY asked Representative Green where under
his provision does he anticipate having the administrative law
judge.
REPRESENTATIVE GREEN answered that they would be outside of the
Department of Revenue, perhaps in the Department of Administration.
REPRESENTATIVE HANLEY noted that the perception of creating
independence seemed to be of the utmost importance. This judge
would obviously be appointed by the governor, possibly confirmed by
the legislature and Representative Hanley asked if a judge with the
Department of Revenue would be separate enough.
MR. FRANKEL noted that the more separate the better.
Number 646
REPRESENTATIVE GREEN added that the original bill in essence tried
to set up a separate tribunal. The problem in Alaska is that they
were afraid they wouldn't find enough qualified individuals to hear
these cases. He also noted the infrequency of these tax cases.
When they do come up they're so large in terms of money. He
thought there might be a point where they couldn't go too far
because they wouldn't be able to justify this expenditure.
MR. FRANKEL said they just need to do the best they can. If the
Department of Administration is the best they can do, this is fine.
About staffing, he found that ex-government people go out of their
way to be fair because they don't want to be thought of as an
extension of the department they used to work for, or as a rubber
stamp.
Number 668
REPRESENTATIVE THERRIAULT asked if this administrative judge just
dealt with questions of tax or to the constitutionality of a tax.
MR. FRANKEL stated that the judicial New Jersey tax court will make
a constitutional finding like any judge, but the New York state tax
tribunal which is administrative wrestled with making
constitutional findings. They do not rule a statute as
unconstitutional, but they can rule that a regulation is invalid.
They can rule that the application of the law by the department is
unconstitutional, but if there is a case in New York that someone
is convinced represents an unconstitutional statute, there is a
mechanism to go directly to court in order to address
constitutionality questions.
REPRESENTATIVE THERRIAULT asked Representative Green whether an
individual would go through an administrative tax system.
REPRESENTATIVE GREEN stated that the system allows for an initial
informal review, then a person would go directly to a formal review
and from there a superior court if the parties still had not
reached an agreement. He also mentioned a side-bar, that after an
informal review a individual could go directly to superior court.
Effectively, he pointed out that there were two avenues emanating
after the individual has had an informal review.
REPRESENTATIVE THERRIAULT wondered if this system could further be
refined when the question was more mathematical in terms of how the
tax was figured or constitutional, that the individual could choose
one course of action over the other depending on the issue.
Number 702
MR. FRANKEL stated that usually the appeal from the tax court is on
the record, it is not de novo. It's an appeal usually claiming
error of law or a substantial error of fact at the lower level.
When an individual comes to a tax court, the job of that judge is
to make a decision based upon what comes into this court room. The
Alaska pending legislation has a provision that if the judge
believes a remand is appropriate, the judge could remand it to a
lower level, but what is in this court room as evidence should
decide this case.
TAPE 96-27, SIDE B
Number 008
REPRESENTATIVE VEZEY asked if he believed if this tax court system
works better when it's under the administrative branch of
government or the executive branch of government.
MR. FRANKEL said he thought it worked best when it's out of the
Department of Revenue. What matters is that someone is told that
he or she is an administrative law judge or a judicial judge and
their job is to do the right thing. They should not be responsible
to the commissioner who wrote the regulations, or a co-worker with
the auditors who did the audit and that they don't have to back up
their friends.
Number 034
CHAIRMAN PORTER asked Mr. Frankel if there were other parts of the
bill which raised red flags.
MR. FRANKEL responded that the time periods regarding a request for
reconsideration which was established at ten days grabbed his
attention. He said he would change this to 30 days. He would make
any 30 day provision, 60 days. There was also a provision which
said that the parties shall attend a hearing, except that the
administrative judge can monitor by teleconference or telephone.
Mr. Frankel wouldn't give the judge this power. He thought that if
the tax payer wants to come they should be able to attend the court
room. If they don't want to come, they shouldn't be forced to do
so. The tax payer should have the right to make the election for
a telephonic hearing.
Number 073
REPRESENTATIVE GREEN asked about judges being appointed by the
governor and confirmed by the legislature.
MR. FRANKEL said that where he sees this system, it works. He saw
no downside to doing this, but it shouldn't stop the bill either.
If the bill is ready to go and this is still a problem it's
probably more important to push the bill through for passage.
Number 102
REPRESENTATIVE CYNTHIA TOOHEY asked about rotating the appointments
of these judges, one Republican, the next Democrat and wondered if
this was included in the proposed Alaskan legislation. She felt as
though this was an important concept.
REPRESENTATIVE GREEN said that no, the Alaska legislation did not
provide for this type of system. He saw no reason for a
prospective judge to disclose their party preference.
Representative Finkelstein pointed out that the state of Alaska
does provide for this rotation in the appointment of their other
judges.
REPRESENTATIVE TOOHEY felt as though this party rotation was an
important concept to provide balance to the system. She felt as
though this rotation spoke to the concept of keeping the system
fair.
CHAIRMAN PORTER said he had the opposite take on this. He noted
that under this system there is the assumption that a person will
be appointed with a certain persuasion in mind and a different one
the next. He spoke to the concept of neutrality.
Number 145
REPRESENTATIVE GREEN felt as though that what they were looking for
was fairness, but not necessarily a concept of fairness based on a
party affiliation. He then answered a question by Representative
Hanley regarding how the legislation treated discovery. He noted
that there was an attempt to limit discovery. The bill as drafted
does not address the specific types of discovery regarding
depositions or interrogatories, but it does set up a procedure
where by the parties come to the administrative law judge for
approval of a discovery plan.
Number 193
MR. FRANKEL noted that the U.S. Tax Court works very well with
mandatory stipulations. If discovery is changed, Mr. Frankel
thought that depositions could be limited. He felt that out of all
the forms of discovery which are burdensome for both sides, it
would be depositions. They could be limited to special situations
such as perpetuation of testimony of someone which is ill. He
added that generally depositions can be very burdensome.
REPRESENTATIVE GREEN asked how far they could go with determining
relevancy because in some cases someone wouldn't know if something
was relevant until you go into it.
MR. FRANKEL said it helped if discovery was limited, the more the
better because attorneys love discovery and the process can go on
and on, but a small case can't afford this. The mandatory
stipulation of fact tends to limit this and makes the trial shorter
and helps to focus people on settlements.
ADJOURNMENT
CHAIRMAN PORTER adjourned the meeting at 5:15 p.m.
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