Linda Galler Quoted by Law360 on Privilege Waivers in Tax Court

Curtis senior tax counsel Linda Galler was quoted by Law360 in its August 24th article, “3 Tips for Being Smart about Privilege Waivers in Tax Court.” The article was based on recent rulings by the U.S. Tax Court that attorney-client privilege will not shield private tax opinions when asserting a “reasonable cause good faith” defense to accuracy-related penalties.

Ms. Galler referenced one such case, Eaton Corp. v. Commissioner, in which the Tax Court last April said the IRS was entitled to review six tax opinion letters written by Eaton's lawyers despite the company claiming it relied on self-determination to meet the reasonable basis exception to penalties assessed by the agency.

“Simply by asserting a reasonable cause defense, the taxpayer put at issue all of its experience and knowledge and state of mind,” she said.

She added that the order showed that an attorney representing a client that is under audit or in litigation has to seriously consider privilege issues in deciding whether the client wants to raise a reasonable cause defense.

Ms. Galler told Law360 that attorneys need to think about privilege issues when giving tax advice even before a client is audited or gets caught up in litigation. She noted that the greater the likelihood that the client will ultimately end up asserting a reasonable cause and good-faith defense in court, the more likely it is that that document or that advice will have to be turned over.

“When one gives a tax opinion, and perhaps when one provides any sort of written advice, one can't assume that that document or that advice will be privileged,” Ms. Galler said.