Law360, the U.S. can enforce an Internal Revenue Service summons for client information from the Taylor Lohmeyer Law Firm because the firm failed to show attorney-client privilege protected the information, a Texas federal court found.
The court, in a order, approved a John Doe summons the government sought to obtain the names of Taylor Lohmeyer clients suspected to have used the firm to help hide taxable income in foreign countries, mainly through foreign bank accounts and entities. The government properly established that the summons was made with the legitimate purpose of combating tax evasion by identifying Taylor Lohmeyer clients, the court said.
Further, the burden to show the government made a
wrongful summons was on the firm, the court said.
The court faulted the law firm for making “blanket assertions of privilege” for its clients, and it requested a privilege log for each document Taylor Lohmeyer believes should be protected by attorney-client privilege.
Taylor Lohmeyer, in an earlier response, had argued that its clients' identities were privileged because their disclosure would reveal why they initially sought the firm’s advice — a position that failed to convince the court, which favored a case-by-case determination of client privilege.
The IRS investigation into Taylor Lohmeyer’s clients began when it audited an unnamed client who was later found to have owed more than $2 million in taxes on $5 million
in unreported offshore income.
From there, the IRS sought the identities and foreign activities of other unidentified Taylor Lohmeyer clients from 1995 to 2017, the court said.
An IRS agent found that the first unnamed client,
along with a former partner of Taylor Lohmeyer,
provided the agency with information suggesting that
the firm helped clients dodge taxes with
offshore trust structures and beneficial ownership schemes.
The case is Taylor Lohmeyer Law Firm PLLC v. U.S.
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