The Association of Corporate Counsel (ACC) joined the U.S. Chamber of Commerce in an amicus curiae brief filed today with the First Circuit Court of Appeals, contending that corporate counsel and their corporate clients would be denied work product rights if IRS demands for counsel analyses of litigation risks given to auditors were granted. United States v. Textron, Inc., (No. 07-2631).
The IRS argued that tax accrual papers prepared by Textron’s counsel – papers assessing tax positions in disputes with the IRS and other documents which reflect these analyses, and created to assess risks with financial statement reporting – should never receive work product protection. ACC argues that a ruling in the IRS’s favor would greatly harm the attorney-client relationship, chill analysis of litigation scenarios by the very attorneys who could best advise their corporate clients, and deny them long-standing and clearly recognized rights to confidentiality in the preparation and delivery of vital legal advice.
The District Court for the District of Rhode Island had correctly denied IRS access to Textron tax accrual papers due to the work product privilege, which the court held was not waived by Texron’s disclosure to independent auditors (United States v. Textron Inc., 507 F.Supp. 2d 138 (D.R.I. 2007)). ACC filed amicus in this lower court case supporting this decision. On March 25, 2009, the First Circuit and granted a US petition for rehearing on June 2, 2009.