Paul L. Caron

Thursday, July 24, 2014

District Court Guts Work Product Protection for Tax Opinions

Tax Analysys Logo (2013)Robin L. Greenhouse, Michael Kelleher & Randy Herndon (all of McDermott Will & Emery, Washington, D.C.),  District Court Opinion Guts Work Product Protection for Tax Opinions, 144 Tax Notes 329 (July 21, 2014):

With implications that should alarm tax controversy practitioners and their clients, in Schaeffler v. United States the U.S. District Court for the Southern District of New York denied a taxpayer’s petition to quash an IRS summons for a tax opinion issued by an accounting firm. The court’s finding that the tax opinion was not entitled to work product protection significantly undermines the application of that doctrine. Although the court denied the petition to quash, it later granted the taxpayer’s motion to stay enforcement of the summons pending appeal to the Second Circuit.

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What is most odd about the opinion (probably because the issue was not raised by either party), is that it implicitly assumes that E&Y is eligible for the attorney-client and attorney work product privileges. Since E&Y consistently takes the position that it is not engaged in the practice of law, I do not understand how it can claim the benefit of those privileges. I had always understood that one of the advantages of retaining a lawyer rather than an accountant for tax advice was that legal advice and work product was privileged in a way that accountancy advice was not.

Posted by: Ted Seto | Jul 24, 2014 9:44:52 AM