Treasury Department Sues One of Nation's Largest Law Firms

The Treasury Department, on behalf of the IRS, sued one of the nation's largest law firms, Dallas-based Jenkens & Gilchrist, on Thursday, demanding that the firm turn over information about clients who participated in potentially abusive tax shelters that were promoted by the law firm.

The lawsuit was filed in U.S. District Court in Chicago against the Chicago office of Jenkens & Gilchrist. According to the suit, at least 600 clients of the law firm participated in tax shelters promoted by the firm and produced what the IRS estimates as at least $2.4 billion in losses that should actually have been reported as taxable gains.

In particular, the Treasury Department is looking at one shelter known as "Son of BOSS" which allegedly provides paper losses in the millions of dollars which participants claimed on their tax returns.

Several of the firm's clients are also suing the firm, claiming the tax shelters are worthless.

The law firm has indicated it does not intend to comply with the Treasury Department's request to disclose the names of participants because of the firm's ethical responsibility to its clients. "Our clients and their rights come first," the firm said in a statement.

IRS Chief Counsel B. John Williams disagrees and believes attorney-client privileges do not extend to the sales of tax shelters by the firm. The law firm contends that it did not sell the shelters but instead offered legal advice in the form of promoting the shelters.

"Americans have a right to consult with an attorney in confidence, and only the clients themselves can waive that right," said the firm's statement.

IRS Commissioner Mark Everson said, "attorneys and accountants should be pillars of our system of voluntary compliance, not the architects of its circumvention."

You may like these other stories...

Boehner addresses GOP priorities ahead of midterm electionsHouse Speaker John Boehner (R-OH) on Thursday delivered what amounted to closing arguments ahead of the November elections, laying out a list of Republican...
As anyone who's ever been through a divorce can attest, the pain of parting with your spouse isn't just emotional—the fallout from divorce can wreak financial havoc as well long after the dust in the courtroom...
Former DOJ Tax Division head Kathryn Keneally joining DLA Piper in New YorkGlobal law firm DLA Piper announced on Thursday that Kathryn Keneally, the former head of the US Justice Department Tax Division, is joining the firm...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.