Chicago (July 8, 2004) -- In a partial victory for BDO Seidman in its ongoing legal battle with the Internal Revenue Service, a district court judge ruled that the accounting firm doesn't have to turn over most of the documents that the government had requested.
As part of its crackdown on abusive shelters, the IRS has been trying for two years to enforce a series of summonses ordering BDO to turn over more than 100 documents related to its past tax shelter activities.
Judge James F. Holderman ruled that many of the documents the IRS has requested are protected from disclosure by attorney-client privilege or the work product doctrine. Of the 110 documents requested by the IRS, Holderman ordered the firm turn over only six.
"The firm doesn’t comment on matters of ongoing litigation; however, we believe the ruling speaks for itself," a spokesman for BDO told WebCPA.
The government argued that BDO, along with three law firms, Brown & Wood (now Sidley Austin Brown & Wood), DeCastro, West, Chodorow, Glickfield & Nass Inc. and Proskauer Rose LLP were "marketing partners" and that the advice the firms provided to BDO was unprivileged business advice, not privileged legal advice.
However, in his 11-page opinion, Judge Holderman wrote, "the government has failed to submit adequate proof to establish that BDO and the three outside law firms in question were co-promoters."
The ruling is in contrast to a recent ruling by Chief Judge Thomas F. Hogan in a case against KPMG, who ruled that opinion letters written by Brown & Wood may not be privileged because the letters "appear to be nothing more than an orchestrated extension of KPMG's marketing machine," and ordered the Big Four to comply with nine IRS summonses.
-- Melissa Klein Aguilar
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