Good-Faith Defense Waives Attorney-Client Privilege


Andrew Roberson said that a new Tax Court decision limiting the protection of attorney-client privilege on tax opinion letters from a law firm “suggests that asserting the reasonable belief defense to the substantial understatement penalty or the general reasonable cause and good-faith defense impliedly waives the attorney-client privilege, regardless of whether the taxpayer intends to rely on an opinion or advice of counsel for penalty protection.” He added that taxpayers and their advisers should “carefully consider the Tax Court’s analysis when responding to the assertion of penalties, both at the administrative level and in Tax Court filings.”