Chicago (May 20, 2004) -- In a victory for the Internal Revenue Service, a Chicago federal judge ordered a Texas law firm to turn over documents and the names of clients.

Senior U.S. District Judge James B. Moran rejected a privilege claim and ordered Jenkens & Gilchrist to comply with IRS summonses ordering the firm to turn over the names of tax shelter clients.

In his opinion issued May 14, Judge Moran agreed with an opinion issued last month by Judge Matthew F. Kennelly in U.S. v. Sidley Austin Brown & Wood LLP and denied the law firm's motion to dismiss and quash the summonses.

The ruling marks the third such victory for the IRS. In addition to the Sidley Austin Brown & Wood decision, it won a ruling ordering Big Four firm KPMG to disclose the names of tax shelter clients.

According to published reports, Jenkens & Gilchrist complied with the order and in a statement noted, "We continue to believe that the proper course of action . . . is to assert the privilege on behalf of a client until such time as it is clear that there is no basis for doing so."

IRS Commissioner Mark W. Everson lauded the decision as "yet another in a string of victories in the tax shelter battle." Everson added, "The courts are rapidly dismantling the baseless claim of privilege invoked by attorneys and accountants attempting to hide abusive transactions from IRS scrutiny."

-- WebCPA staff

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