IRS sues Jenkens for client list
Legal Week reports
September 03, 2003 at 08:03 PM
2 minute read
The US tax authorities have begun a court battle to force Dallas firm Jenkens & Gilchrist to hand over the names of 600 clients in what promises to be a high-profile test of attorney/client privilege.
The US' Internal Revenue Service (IRS) last month lodged a suit against Jenkens in Chicago after the law firm refused an earlier court summons to hand over the names of some of its tax clients.
A list of up to 600 client names had been sought by the IRS as part of its crackdown on tax shelters used by US citizens.
The IRS is claiming that Jenkens promoted tax shelters and is, therefore, liable to name the clients that took up its advice as laid down in US tax law.
However, Jenkens strongly disputes the IRS' stance, arguing that it was merely giving tax advice to clients – a process that is subject to attorney/client privilege.
The case, which was filed in the Northern District court of Illinois, is the latest attempt by federal agencies to pressure law firms into handing over privileged client information, amid criticism of the role of advisers in a string of high profile corporate collapses.
The IRS is understood to be pursuing the case through its own legal team, while Jenkens has told Legal Week it has hired McDermott Will & Emery to defend its position.
A Jenkens spokesman said: "This is the next step in the process, there are many levels of federal courts."
The Jenkens spokesman indicated that the firm had no intention of willingly giving up the details of clients who have sought tax advice.
The court case follows a move last month by a group of former Jenkens tax clients to launch a class action against the firm claiming they were misled into believing their tax arrangements would not fall foul of the authorities. Jenkens denies this.
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