Taxation and State Taxation -- active

United States v. Microsoft Corp.   (W.D. Wash.)

IRS tax advice

This case involves the protection of confidential communications between taxpayers and their non-attorney tax advisors. Federal law (the "Tax Privilege") generally makes such communications confidential, but there is an exception for communications relating to "the promotion of the direct or indirect participation" in a "tax shelter." While a tax shelter is extremely broadly defined, "promotion" is nott. The government wants the court to define it broadly, which could result in removing routine tax advice and common tax planning from the protections of the Tax Privilege.

The NAM filed an amicus brief 10/27/16 arguing that Congress did not intend such a broad interpretation, and tax policy favors the free flow of information between taxpayers and their advisors. Such routine advice should not make a tax advisor a "promoter" of a tax shelter. Instead, something more is required, such as where an advisor has a financial interest in the advice given other than what he typically bills. We provided a list of factors for a court to consider when determining whether a tax consultant is actually promoting a tax shelter.

Related Documents:
NAM amicus brief  (November 11, 2016)


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