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Wednesday, October 03, 2007


The IRS has summons authority to gain access to taxpayer and third party documents. However, if the documentation is protected by the work product privilege, such access is difficult to obtain.

The work product privilege privilege protects written statements, private memoranda and personal recollections, prepared or formed by an adverse party's counsel in the course of his legal duties. It is intended to prevent a litigant from taking a free ride on the reasoning and thinking of his opponent's lawyer and thus avoid deterring a lawyer's committing his thoughts to paper.

A document is eligible for protection under the work product rule where it was created “because of” anticipated litigation and wouldn't have been prepared in substantially similar form but for the prospect of that litigation.  In addressing whether a tax opinion issued prior to audit is covered by the work product privilege, the IRS recently proclaimed that a "document prepared in anticipation of an audit, even if it focuses on a particular transaction or item, is not prepared in anticipation of litigation. If a document is prepared before even an audit has been initiated, the specter of litigation is, absent [special facts], too insubstantial and attenuated to support a conclusion that the possibility of litigation is concrete or significant" enough to bring such a document under the privilege.

Note, however, that this pronouncement was made in an Action on Decision whereby the IRS was disagreeing with an appellate court ruling that was opposite to what it is asserting. Therefore, the IRS' position on this issue, as announced in the AOD, should not be taken as a correct interpretation of law, but merely a strong indication of the IRS' intent to fight the work product privilege in similar circumstances.

AOD 2007-004 (10/1/07)

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