488 B.R. 794
Bankr. N.D. Ga.2013Background
- Chapter 7 Trustee sues Debtor Frances Foster Parker's son and daughter-in-law for a lease-modification affecting property used in their business, Executive Auto.
- Original lease dated February 9, 2007: rent $5,800 per month plus taxes and insurance.
- Modification dated October 7, 2008 purportedly shifted rent to loan payments, taxes, insurance, and maintenance paid to lender, potentially constituting a prepetition transfer.
- Counts I and II allege actual/constructive fraudulent transfer under Georgia law and 11 U.S.C. § 544 or § 548; Count III alleges conspiracy to defraud creditors; Counts IV and V seek punitive damages and attorney’s fees.
- Trustee seeks 2007–2011 federal tax returns from the Parkers to prove rent deductions; Defendants claim they did not file those returns; Parker deposition suggests joint filing with wife with no mortgage/tax deductions.
- Court must decide whether the 2007 and 2008 tax returns are discoverable and, if so, whether to compel Form 4506 to obtain copies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are 2007–2008 tax returns discoverable? | Tax returns may reveal rent deductions and payments. | Returns may not exist or be obtainable; privacy concerns apply. | Yes, 2007–2008 returns are discoverable. |
| May the court compel Form 4506 to obtain the 2007–2008 returns? | Authorize Form 4506 to obtain IRS copies. | Submitting Form 4506 could expose nonfiling and create penalties. | Yes, compel production of 4506; if no returns exist, show IRS no record. |
Key Cases Cited
- Natural Gas Pipeline Co. of America v. Energy Gathering, Inc., 2 F.3d 1397 (5th Cir. 1993) (tax returns are discoverable when relevant and not readily obtainable)
- F.D.I.C. v. LeGrand, 43 F.3d 163 (5th Cir. 1995) (tax returns are discoverable; privacy considerations acknowledged)
- Searock v. Stripling, 736 F.2d 650 (11th Cir. 1984) (tax returns may be discoverable; multiple circuits cited)
- In re Wright, 2005 WL 6488101 (Bankr.N.D.Ga. 2005) (prior bankruptcy decisions cited on discovery of tax information)
- Scott v. Arex, Inc., 124 F.R.D. 39 (D.Conn. 1989) (discovery standards for tax documents)