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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

STEVEN H BLOCK, et. al,

Plaintiffs, 

v.

UNITED STATES OF AMERICA,

Defendant. 

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Civil Action No. 3:22-CV-1899-X

MEMORANDUM OPINION AND ORDER 

Before the Court is Plaintiffs Steven Block and Patrice Block’s (the “Blocks”) 

motion for protective order. (Doc. 24). Having carefully considered the underlying 

facts, the parties’ arguments, and the applicable law, the Court DENIES the motion. 

(Doc. 24). 

I. Background

This is a federal income tax refund dispute. The Blocks filed this action against 

Defendant United States of America seeking $181,916.14, plus statutory interest, 

based on their alleged entitlement to a refund for overpayment for tax year 2016. 

They sought to carryback a net operating loss from tax year 2017 to prior tax year 

2016 to reduce their taxable income for 2016 and generate an overpayment. Then, 

the Blocks wanted this overpayment refund to be credited to their 2019 income tax 

liability. 

The IRS sent a letter denying the refund because the statute of limitations had 

expired, which the Blocks contend is incorrect, and informing the Blocks that the net 

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operating loss should have been carried back to 2015, not 2016. The Blocks filed an 

amended refund claim that applied the net operating loss to 2015. The IRS 

subsequently sent the Blocks a notice requiring payment for their 2019 income taxes, 

which did not account for the refund claims. And the Blocks filed this action. 

Presently, the parties are engaged in the discovery process. The United States 

previously served the Blocks with a set of requests for production and a set of requests 

for admission. Now, the United States served the Blocks with a second set of requests 

for production and its first set of interrogatories. These requests seek all materials 

the Blocks used in preparing their tax returns for 2015, 2016, and 2017 as well as 

detailed information concerning credits, deductions, and losses claimed on those 

returns. 

The Blocks filed the instant motion seeking a protective order against the 

United States’ second set of requests for production and first set of interrogatories in 

their entirety. They contend that these discovery requests are duplicative, 

disproportional, irrelevant, and unduly burdensome because the issue here is 

whether the IRS improperly denied their refund based on the statute of limitations. 

The United States believes that the issue is whether the Blocks are legally entitled 

to the refund they are seeking; thus, the detailed discovery information it currently 

seeks is critical to that determination. The motion is ripe for this Court’s 

consideration. 

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II. Legal Standard

Federal Rule of Civil Procedure 26(c) allows courts to issue a protective order 

for good cause.1 Courts have broad discretion “to decide what degree of protection is 

appropriate and what degree of protection is required.”2 The burden is on the party 

seeking the protective order to specifically demonstrate why issuance of the order is 

necessary.3 Additionally, Rule 26(b) limits the scope of discovery to nonprivileged 

information “that is relevant to any party’s claim or defense and proportional to the 

needs of the case.”4

III. Analysis

The Court concludes that the Blocks’ requested protective order is 

unnecessary, and the Blocks must respond to the United States’ discovery requests 

at issue here only as to information not already produced. “In tax refund actions, the 

district court reviews de novo the Commissioner’s decision regarding a taxpayer’s tax 

liability.”5 “A taxpayer seeking a refund must demonstrate not only the error in the 

asserted deficiency but also the amount of the refund to which he is entitled, i.e., the 

correct amount of his tax liability.”6 “It is not enough for him to demonstrate that 

1 Fed. R. Civ. P. 26(c). 

2 Seattle Times Co. v. Rhinehart, 467 U.S. 20, 36 (1984). 

3 In re Terra Int’l, Inc., 134 F. 3d 302, 306 (5th Cir. 1998). 

4 Fed. R. Civ. P. 26(b)(1). 

5 Trinity Indus., Inc. v. United States, 757 F.3d 400, 413 (5th Cir. 2014). 

6 Mallette Bros. Const. Co., Inc. v. United States, 695 F.2d 145, 149 (5th Cir. 1983). 

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the assessment of the tax for which refund is sought was erroneous in some 

respects.”7 

Here, the Blocks seek $181,916.14, plus statutory interest, based on their 

alleged entitlement to a refund for overpayment for tax year 2016 resulting from a 

net operating loss from tax year 2017. The IRS informed them that the net operating 

loss should have been carried back to 2015. They complied with the IRS’s guidance 

but also maintain that “[t]he relevant issue is the 2017 net operating loss . . . carried 

back and applied to the 2016 tax year.”8 

The United States now seeks the documents and information the Blocks used 

in generating their tax returns for 2015, 2016, and 2017, including detailed 

information about the credits, deductions, and losses claimed. For example, one of 

the United States’ requests for production seeks “[a]ll documents and materials 

supporting the $88,192.00 deduction for real estate taxes reported on Your tax year 

2017 Form 1040 Schedule A.”9 

This type of information, which provides the basis for the Blocks’ alleged 

overpayment and losses, is certainly relevant and discoverable in a tax refund 

lawsuit. And it would be unfair to prevent the United States from discovering that 

information considering the Blocks possess most of the relevant documents and 

7 United States v. Janis, 428 U.S. 433, 440 (1976). 

8 Doc. 27 at 3.

9 Doc. 25-2 at 6.

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information in this kind of suit, so the parties’ access to relevant information is onesided. 

To the extent the Blocks claim that the United States’ requests are duplicative, 

the Blocks clearly do not have to reproduce information they have already given to 

the United States thus far. But the Court sees no need to issue an order protecting 

the Blocks from producing information that provided the basis for their tax refunds. 

That is standard practice and necessary in a tax refund lawsuit. 

IV. Conclusion

For the reasons explained above, the Court DENIES the Blocks’ motion for 

protective order. (Doc. 24). 

IT IS SO ORDERED this 28th day of March, 2024. 

___________________________________ 

BRANTLEY STARR

UNITED STATES DISTRICT JUDGE

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