Tax Division Statement On 1st Circuit Appeals Court Ruling In U.S. V. Textron, Inc.
WASHINGTON – On Aug. 13, 2009, the 1st U.S. Circuit Court of Appeals, sitting en banc, in United States v. Textron, Inc. and Subsidiaries (No. 07-2631), refused to afford work product protection to tax accrual workpapers that the IRS sought in an administrative summons issued during an audit of Textron. The 1st Circuit held that the work product privilege is designed to protect work done for litigation, not work done for the preparation of financial statements, and it recognized that providing the IRS with access to the workpapers serves the legitimate, and important, function of deterring abusive tax shelters.
“We are extremely pleased that the 1st Circuit has concluded that tax accrual workpapers prepared by a public corporation to support the corporation's tax reserve figures in its audited financial statements do not constitute privileged attorney work product and are thus disclosable to the IRS,” remarked Gilbert S. Rothenberg, Acting Deputy Assistant Attorney General of the Department of Justice's Tax Division.