Magazine article The CPA Journal

CPA Firm's Memo to Client's In-House Attorney Not Privileged

Magazine article The CPA Journal

CPA Firm's Memo to Client's In-House Attorney Not Privileged

Article excerpt

Sequa Corp., acquired Atlantic Research Corp. and later sought to combine it with another subsidiary. Sequa's tax vice president (VP) requested a memorandum from Arthur Andersen concerning the tax implications of the acquisition.

The IRS audited the return for the year of the subsidiary reorganization and requested the Arthur Andersen memo and related correspondence. The company refused. The IRS issued a summons and the tax VP still refused on the grounds that the correspondence was protected by the attorney-client priveledge and the work-product doctrine.

The IRS sued to enforce the summons. The taxpayer presented affidavits from the taxpayer's managment stating that it relied on the tax VP for legal advice, and from the tax VP that he relied on Arthur Andersen to assist in rendering legal advice. Nevertheless, the U.S. District Court held the documents were neither priveledged nor protected by the workproduct doctrine and ordered the documents to be produced. The taxpayer appealed and now the Second Circuit's Court of Appeals has entered into the fay. …

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