Tuesday, August 31, 2010

U.S. District Court Rules on Discovery Privileges In Tax Shelter Case Regarding Emails

A recent U.S. District Court case, Green v. Beer, et. al., No. 1: 06-cv-4156 (Southern District of New York) addressed attorney-client privilege issues in connection with emails, and ruled legal advice concerning certain aspects of the shelter were protected, while emails shared with the legal clients' financial advisors resulted in waivers of the privilege with respect to those emails.  This case should provide helpful guidance to tax counsel providing tax advice in connection with a transaction as to the do's and don'ts of privilege protections. 

Our Firm will be glad to furnish a copy of the case upon request.

Friday, August 27, 2010

Whitehouse Valuation Case Remanded

The Fifth Circuit Court of Appeals just remanded Whitehouse to the Tax Court. The case involves the valuation of a facade easement and one of the interesting issues in the case is the determination of highest and best use. See Whitehouse Hotel Limited Partnership v. Commissioner, Case No. 09-60085 (5th Cir., 8/10/10).

TIGTA Annual Report Reviews IRS-CID

The Treasury Inspector General's Office for Tax Administration has issued its annual review of IRS Criminal Investigation Division Enforcement Activities for FY 2009.  It found that IRS-CID had successfully increased criminal tax investigation initiations by 14.4% overall and by 13.3% for legal source tax investigations for the prior fiscal year.  TIGTA concluded that the increases demonstrated that CID tax investigations, and particularly legal source tax investigations, were a priority for CID, but due to case inventory pipeline management issues related to FY 2008 backlog, that IRS CID fell slightly short of its goal of completing 3,900 investigations, finding that only 3,848 such investigations were completed for FY 2009.

The IRS Criminal Investigation Division has increased it's staffing of special agents from last year by 4.1%, from 2,617 agents to a current level of 2,725 agents.  The average length of a CID investigation to completion for both legal and illegal source cases 415 to 425 days, though it takes on average less than 1 year (341 days) for IRS-CID to refer a case for prosecution.  The conviction rate for CID following case investigation completion is approximately 92%. The average number of months a subject is incarcerated for legal source tax crimes has increased from 2004 to 2009 by 11.1%  (from an average of 18 months to 20 months).  84% of Americans believe it is not acceptable to cheat on their taxes under any circumstances.  For the other 16% of American taxpayers, IRS-CID resources are being agressively deployed to enforce compliance with the nation's self assessment system of voluntary compliance.

TIGTA's Report Reference Number is 2010-30-074.  Our Firm will be glad to provide you a copy of the Report upon request.