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In Roxworthy, 98 AFTR2d 2006-5694 (CA-6, 2006), the Sixth Circuit concluded that two memoranda sought by the IRS in a summons enforcement suit were protected from disclosure by the work-product doctrine. The ruling reversed both a magistrate's finding that the documents should be produced and a lower court's adoption of the magistrate's ruling.
Background. During its examination of the taxpayer, the IRS analyzed the tax consequences of two related transactions. As part of its response to an IRS informal information request, the taxpayer provided a privilege log listing seven documents it believed to be privileged under the work-product doctrine. The IRS eventually received five of the documents. The taxpayer refused to produce the remaining two documents, which were memoranda prepared by KPMG detailing possible tax consequences related to the two transactions at issue.
The IRS filed a petition with the U.S. district court to enforce its summons. At the show-cause hearing, the magistrate found that the documents were created to assist the taxpayer in audit defense, rather than for litigation, and ordered their production. The taxpayer filed objections to the magistrate's findings, conclusions of law, and recommendation, and was granted the opportunity to expand the record. The taxpayer...