Newspaper article The Christian Science Monitor

The IRS Pits Lawyers against Their Clients

Newspaper article The Christian Science Monitor

The IRS Pits Lawyers against Their Clients

Article excerpt

AT first the news was shocking: A respected federal judge in Boston had been sued by the Justice Department for alleged tax-law violations that hinted at money laundering. Was this another corruption scandal?

But most lawyers believe that United States district-court Judge Nancy Gertner is acting both ethically and honorably in refusing to divulge to the Internal Revenue Service the names of certain clients she represented as a prominent Boston trial lawyer before she was appointed to the bench this year. Citing attorney-client privilege and Massachusetts legal-ethics rules that protect clients' confidentiality, Ms. Gertner insists that she won't identify former clients who made three sizable cash payments to her in 1991 and 1992, unless a court orders her to reveal the names.

Defenders of Gertner and other lawyers in the same boat say the government's demand for the clients' names violates the Constitution, intrudes on the special relationship between lawyers and clients, deters people from seeking responsible counsel from ethical attorneys, and could force lawyers to furnish evidence against people who have retained them on a basis of trust.

Under the US tax code, banks, businesses, and professionals who receive cash payments of $10,000 or more must file Form 8300 with the IRS, describing the transaction and disclosing the payer's name. The requirement, enacted by Congress in 1984 as part of a deficit-reduction act, helps the IRS collect taxes on the large, and generally hidden, cash economy. But law-enforcement agencies quickly saw uses for the reporting requirement to track down drug pushers and other criminals who need to launder greenbacks.

A few years ago the IRS began cracking down on attorneys - primarily criminal-defense lawyers - who, the government said, failed to comply fully with the revenue code.

Gertner, like numerous other lawyers, reported the cash fees (two payments of $25,000 and one of $15,000) on Form 8300 and paid the required income taxes, but she withheld the clients' names. …

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