Washington, D.C., partner Stuart Bassin, former Senior Litigation Counsel with the U.S. Department of Justice Department Tax Division. authored an article, "Managing Tax Accrual Workpapers After Textron," which was published in the May 4, 2009, edition of Tax Notes Today.
According to the article, in recent years, tax practitioners have been confronted with much more frequent requests by the IRS to obtain corporate tax accrual workpapers during the audit process. A major milestone in the resulting litigation has been the recent litigation in the First Circuit surrounding an IRS summons seeking production of Textron's tax accrual workpapers. Earlier this year, a divided panel ruled that the tax accrual workpapers were protected from disclosure by the work product doctrine because the documents were prepared in anticipation of litigation—a major defeat for the IRS. The First Circuit has recently ordered an en banc rehearing of that decision, thereby raising new questions for practitioners evaluating the legal rules governing the discoverability of corporate tax accrual workpapers.
In his article, Bassin summarizes the Textron litigation and provides a general primer on the topic of corporate tax accrual workpapers. He provides a description of the content and uses of tax accrual workpapers, as well as the development of the work product doctrine, particularly as it relates to tax accrual workpaper issues. He then summarizes the opinions issued by the courts in Textron and the arguments still being asserted by the parties in that litigation. Finally, he provides a critique of the various opinions and arguments, concluding with a series of recommendations for practitioners operating in the current uncertain legal environment.
To read the full article (PDF), click here.