Another Tax Case Headed for a Supreme Court Decision

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After this morning’s post went up the Supreme Court granted cert in another tax case – In re Grand Jury, case number 21-1397, in the U.S. Supreme Court.

At issue is the IRS summons or subpoena power. In the case before the Court, the IRS seeks information from a law firm about its clients through a grand jury subpoena. The law firm seeks to shield privileged information from the IRS, but the firm also prepared the client’s tax returns and return preparation is not considered legal work protected by the attorney client privilege. What information can the IRS get when the information is mixed between privileged and non-privileged information in a manner making it difficult to parse the sometimes dual purpose documents created. A workable solution in this situation is difficult to reach and circuits have split.


  1. Robert Kantowitz says

    Allow me to “think big.” From my perspective reflecting over 40 years combined in tax practice, banking, capital markets and consulting, the right answer is that as long as information is privileged, it should not lose that privilege merely because there were also other reasons why the document needed to be prepared (including the fact that a public corporation may need to include information about its tax position in documents filed with the SEC or any entity may need to disclose tax information and projections to a bank to support a borrowing or to enlighten its tax preparer on counsel’s views on the viability of a particular tax treatment ). To make these vitiate privilege on the basis of a narrow “but for” view of privilege or the imposition of strict the criteria for preservation of privilege, creates distinctions that are unfair, inappropriate and unrelated to any legitimate tax policy (i) between public corporations and private businesses, (ii) between cash-rich borrowers and those that can borrow without tax disclosures, on the one hand, and those that cannot on the other and (iii) businesses that do everything in-house and those that hire outside service providers.

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