In This Issue:

- Waiver of Privilege: Disturbing Trends

- New Repair Regulations Affect All Taxpayers

- Unclaimed Property – It Is Not a Tax, but It Can Feel Like One

- Excerpt from Waiver of Privilege: Disturbing Trends:

Several recent cases have given the government the upper hand in the battle over protection of privileged communications. Arguing that taxpayers cannot use the attorney-client and tax practitioner privileges and work product protection as both a “sword” and a “shield,” courts have increasingly required taxpayers to disclose tax advice prepared by their accountants and lawyers.

The attorney-client and tax practitioner privileges are waived when the privileged material is shared with any third person. That waiver then applies to “all other communication relating to that same subject matter.” Fort James Corp. v. Solo Cup Co., 412 F.3d 1340, 1349 (Fed Cir. 2005). Work product protection is waived when confidential material is shared with an adversary or a conduit to an adversary. The scope of waiver of work product immunity is more nuanced, depending on the type of work product. The waiver of work product, however, also extends to all non-opinion work product concerning the same subject matter. In re EchoStar Comms. Corp., 448 F.3d 1294, 1302 (Fed. Cir. 2006). Several recent opinions illustrate the application of these waiver rules and the potential ramifications of relying on privileged tax advice as a defense to proposed Internal Revenue Service (IRS) penalties.