On February 1, 2018, a Third Circuit panel affirmed a Pennsylvania district court’s ruling in favor of the Internal Revenue Service (IRS), concluding that the attorney-client privilege does not shield an attorney’s client and settlement lists from the IRS during an investigation for delinquent taxes.
According to the courts decisions, the Internal Revenue Code grants the IRS broad authority to compel the production of documents in connection with determining tax liability. Pursuant to that authority, the IRS issued two summonses aimed at assessing an attorney’s income during ongoing investigations. The first of the summonses requested information about the attorney’s client list, including the names and addresses of client; and the second Summons requested a list of all prior and upcoming settlements.
When the attorney refused to produce this information, the IRS sought a court order to enforce the summons. As a defense, the attorney involved cited the Pennsylvania attorney-client privilege, arguing that the rules of confidentiality precluded him from producing the requested documents.
The district court found that, while a lawyer’s duty of confidentiality under Pennsylvania Rule of Professional Conduct 1.6 is “quite extensive”, the Rules of Professional Conduct do not govern or affect the judicial application of attorney-client privilege. Accordingly, the district court ruled that Rule 1.6 was not a defense to the enforcement of the IRS summonses, and the Third Circuit affirmed the decision in a non-precedential opinion.
To read the non-precedential Third Circuit opinion, click here.
