Preparing for Discovery in a Tax Dispute

Tips for Private Company Officers and HNW Taxpayers Getting Ready to Answer Questions Under Oath
Preparing for Discovery in a Tax Dispute

You increase the odds of getting the desired outcome when you give effective discovery answers. Here are some tips to help you.

Stick to the Facts & Tell the Truth

Be specific and conservative with your answers. Do not overgeneralize. 

Tell the truth. And, sometimes, that will mean saying “I don’t know” and “I don’t remember”. Do not guess or speculate.

We win tax cases, in part, because people believe what we say.

When your answers are accurate and you tell the truth, you increase our odds. 

Listen to Each Question

There is a natural human tendency to listen to the first part of a question, then to stop listening to the question, jump to a conclusion, and start formulating an answer. Be aware of this tendency and try to avoid it.

Listen to the questioner until they have completed the question. Do not interrupt.

Answer the specific question.

Do not answer a question the CRA’s lawyer didn’t ask.

Say You Don’t Know

There is another natural human tendency to want to answer a question even if you are not sure of the answer. Be aware of this tendency and try to avoid it.

Do not guess. Say you don’t know.

Say You Don’t Understand

The CRA’s lawyer should ask questions in a straightforward way. For example, they should avoid compound questions. This is their task. Do not help them do their job.

Be sure you understand the question. If you feel unsure about the question, ask for clarification. Do not try to reword the CRA’s lawyer’s question.

Ask the CRA’s lawyer to repeat or rephrase their question.

Be Brief

Give short and responsive answers to the CRA lawyer’s questions. Do not explain or justify your answer.

Aim to respond to the question in 40 words or less.

Please remember the general rule: what you say in discovery will not help your case; it can only hurt you. 

Answer the question and stop talking.

Do not volunteer information.

Do not give speeches.

Be Informative

Respond to the CRA’s lawyer’s question (even if it hurts). If you try to evade answering a valid question, you will make things worse. If the question is improper, we will object. But if the question is proper, the Rules require you to answer it.

Answer calmly and matter-of-factly. 


Be Polite

We act civilly because its the strategic thing to do.

Be strategically friendly. Avoid triggering a conflict.

If the CRA lawyer insults or baits you, don’t react. Do not respond in kind. Avoid getting emotional, judgmental, opinionated, defensive, or critical.

Speaking and acting politely will neutralize their tactics. And it will have a calming effect on the other side (and the discovery will end sooner).

You decide whether you will starve or feed the CRA’s lawyer’s questions and the discovery. Focus on speaking carefully and calmly rather than emotionally reacting to questions or conduct.

If the CRA’s lawyer’s conduct is uncivil, we will warn them on the record and ask them to stop. If it persists, we will tell the reporter we’re taking a 10-minute break so the CRA lawyer can compose themselves and walk out of the room. If this happens, please do not speak, and follow us.

Use the Right Pace

You will give effective answers and appear more credible when you speak at the right pace. But simply telling yourself to “slow down” will not work.

So, don’t focus on trying to go slow. Instead, take deep breaths while giving your answers. And focus on opening your mouth more when speaking.

When you take deep breaths and open your mouth more, you will naturally talk at the right pace.

Sit Quietly

Silence triggers a fear response in some people, and they keep talking.

The CRA’s lawyer might use silence to extract more information from you. They might stare at you after you’ve stopped talking, look at you in disbelief, or pretend to review their notes. Alternatively, they might move from one question to the next in a painfully slow way without any particular strategy in mind.

Resist the urge to speak.

Do not “fill the space”.

Let’s talk.

Tell us about your tax challenge.
Then we’ll tell you how we can help.

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