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John E. North, James B. Cavanagh, McGrath, O'Malley, Kratz, Dwyer, O'Leary & Martin, 300 Continental Bldg., Omaha, Neb. 68102, for plaintiff. Bruce I. Crocker, Department of Justice, Washington, D. C. 20530, for defendant.

Guarantee Mutual initiated this lawsuit to recover various taxes paid to the Internal Revenue Service. The sums at issue were remitted subsequent to the IRS's determination that some insurance salesmen and agents associated with the plaintiff were employees rather than independent contractors. This conclusion by the government means that Guarantee Mutual was subject to the withholding provisions of the Federal Unemployment Tax Act and the Federal Insurance Contributions Act. Claiming that the IRS's assessments are erroneous, the plaintiff seeks to obtain a refund by establishing that the business relationship in question involved independent contractors as opposed to employees.

Independent Contractor v. Employee

In an attempt to prove the true status of these agents and salesmen, the plaintiff served various requests for production of documents on the United States. The government objects to Guarantee Mutual's request for the "complete federal income tax returns, including but not limited to Form 1040 and 1040SE, for the year 1973 for each individual" who was listed on the IRS's form entitled "Employment Tax Audit Changes." The United States further resists answering the following interrogatories:

     1. With respect to each of the individuals listed in

The Court does not believe that these interrogatories and requests for admissions seek the disclosure of irrelevant matter. The transactional relationship at issue directly affects the resolution of plaintiff's tax liability in this case. Evidence as to how these individual agents viewed their status is contained within these tax records. Their characterization significant and relevant. Aparacor v. United States, No. 139-73 (Ct. Cl., filed May 18, 1977); Farm & Home Aluminum Products, Inc. v. United States, No. 261-74 (Ct. Cl., filed August 4, 1976); Standard Chemical Mfg. Co. v. United States, CV 75-0-290, Slip op. at 8-9 (D. Neb., filed June 21, 1977).

The Court further holds that discovery should not be curtailed solely because the information might be available from other sources, or because production might prove burdensome to the defendant. The returns sought are not currently available to the plaintiff from any source other than these agents themselves. Guarantee Mutual avers that many of the agents that it employed during 1973 are no longer associated with their business, and that no feasible means exists to contact many of these salesmen. The IRS has all of the original returns in its records, and could produce them more readily than the plaintiff.

The government further relies on Section 6103(h)(4) of the Internal Revenue Code in its resistance to the plaintiff's discovery attempts. That section states as follows:

     (4) Disclosure in judicial and administrative tax

Whether all of the materials requested by the plaintiff should be disclosed is a separate question. A clear policy in favor of the privacy of the individual exists under the Internal Revenue Code. The Court must balance the countervailing policies of liberal discovery and privacy in its determination of the exact parameters of allowable disclosure under Section 6103.

The Court has reviewed the plaintiff's enumeration of reasons why full disclosure ought to be mandated, as well as the arguments in favor of limitation advanced by the government. The Court concludes that the defendant should produce such copies of Schedule C (Form 1040), Schedule SE (Form 1040) and Form 2106 as were filed with regard to the 1973 taxable year by each individual listed on the IRS's form entitled "Employment Tax Audit Changes." Obviously, no duty to produce exists if an individual has failed to file some or all of these forms. Form 1040 itself shall not be disclosed, as the relevant information contained therein can be gleaned from the materials produced. The Court further holds that Interrogatories 1(a), (b), (e), (g) and (h) shall be answered by the defendant.

Credit on Withholding Tax

The United States also resists the disclosure of information concerning the amount of taxes which the alleged independent contractors have already paid. The objection specifically relates to the following subparts of Interrogatory No. 1:

     (c) Did each taxpayer include as income on their tax

Evasive Answers to Remaining Interrogatories

The plaintiff seeks to obtain the name, address, telephone number and business affiliation of each and every individual whom the defendant intends to call as a witness at the time of trial, as well as a general summary or synopsis of the testimony which each such witness is expected to give or testify to.

The United States has responded by stating that it has not yet determined who, if anyone, it will call as witnesses. This answer is sufficient at the present time. Moreover, most federal courts have held that witness lists are not discoverable. 4 MOORE'S FEDERAL PRACTICE Para. 26.57[4], at 26-207 (2d ed. 1976). Since this is a civil case, the plaintiff shall be apprised of the defendant's witness list at the time of the filing of the order on the pretrial conference, pursuant to Local Rule 25 D.

The plaintiff also seeks to compel more specific answers to Interrogatories 4 and 5. The defendant's answers are sufficient.

IT IS HEREBY ORDERED that the plaintiff's motion to compel answers to interrogatories is granted as to Interrogatories 1(a), (b), (e), (g) and (h), and denied as to 1(c), (d), (f), (i), 3, 4 and 5.

IT IS FURTHER ORDERED that the plaintiffs' motion to compel the production of documents is granted, and that the defendant shall produce such copies of Schedule C (Form 1040), Schedule SE (Form 1040) and Form 2106 as may have been filed with regard to the 1973 taxable year by each individual listed on the IRS's form entitled "Employment Tax Audit Changes."

IT IS FURTHER ORDERED that all answers to interrogatories and production of documents required by this order shall be furnished within sixty (60) days of the date of this order.

IT IS FURTHER ORDERED that the tax returns and return information produced by the United States shall be for the use only by counsel and the Court, shall otherwise remain confidential and shall not be disclosed to anyone else except by order of the Court, shall be destroyed after the judgment in this case becomes final, and, within thirty (30) days after said judgment becomes final, counsel shall file with the Clerk of the Court a certificate attesting to such destruction.

IT IS FURTHER ORDERED that the plaintiff's request for an award of costs and attorney's fees pursuant to Rule 37(a)(4) of the Federal Rules of Civil Procedure is denied, as the Court finds that the opposition to the motion was substantially justified.