Protecting Privileged Documents from the IRS

January 26, 2016  |  New York Law Journal

Before executing complicated financial transactions, sophisticated taxpayers frequently seek advice from lawyers and accountants. These professionals will often prepare detailed written analyses of the likely tax consequences of the transactions under consideration, which may be shared with counterparties to the transactions. In auditing tax returns reporting the transactions in question, the Internal Revenue Service may seek copies of the analyses from the counterparties, leaving the taxpayers to argue that sharing the materials did not constitute a waiver of either the attorney-client privilege or work product doctrine. This article discusses two recent decisions by the United States Court of Appeals for the Second Circuit reversing district court decisions rejecting assertions of privilege.

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