Data Retention, Storage, and the IRS

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Observations about the political issues relating to the Proposed Changes to FRCP Rule 37

Written by Howard Reissner, CEO at Planet Data

Over the past few weeks we have seen the issues involving the IRS’s inability to produce emails pursuant to a Congressional inquiry re: Lois Lerner and other IRS staffers grow in complexity. The initial reaction from much of the public has been disbelief that this data was not properly retained and archived, especially in light of the fact that a litigation hold should have been implemented when a lawsuit was filed against the IRS by a tax exempt group, in 2010! The agency claims that Ms. Lerner’s computer crashed in 2011, well after the time the relevant data should have been preserved. I have read multiple explanations of why the IRS’s claim to no longer have that data could in fact be valid, due to the utilization of outdated storage systems and a lack of funding to acquire additional resources to retain the emails on a network wide basis. As such, the IRS is sticking with the claim that the only copy of the emails were on the computers of Ms. Lerner and her associates.

What I find most interesting is that the Congressional inquiry into this matter is being led by the Republicans. They are upset that the information that they seek to further their review of possible improper IRS conduct is being hampered by a failure to adequately maintain a large, complex data creation and storage enterprise.

Over the past year, there have been numerous comments and policy positions taken as the new proposed amendments to FRCP Rule 37 winds its way through the legal and political process. Not surprisingly, the Republicans are sympathetic to the final proposed amendments which should enable corporations to more comfortably reduce data preservation expense and lessen the risk of sanctions when reasonable steps have taken to preserve relevant data. I do find a bit of irony in the fact that the IRS is claiming that its failure to properly identify and retain the emails sought by the Republicans was due to a lack of adequate resources, thereby inadvertently allowing the destruction of back-up tapes that may have contained the requested information.

So, to date, the Congressional inquiry has been hampered by the inability to obtain the information requested of the IRS. This is the type of argument made by Democrats who believe that the proposed FRCP Rule 37 will make it more difficult for plaintiffs to obtain potentially relevant data from corporate defendants.

All of this should make for some interesting developments over the next several months as these issues mature.

Read more from Howard ReissnerDownload Planet Data’s latest legal analysis — a candid review of the proposed amendments to the FRCP Rule 37 — authored by nationally recognized consultant, Anne Kershaw, Esq., with commentary from eDiscovery expert, Howard Reissner, Esq. and prominent industry analyst, David Horrigan, Esq.


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