Communications with an attorney are generally protected from disclosure. But what about client names? And what power does the IRS have the power to force an attorney to disclose the names of his clients? Can the IRS issue an IRS summons to get this information? The court addressed this in U.S. v. Servin, No. 17-1371 (3d Cir. 2018).
Facts and Procedural History
The case involved an attorney licensed in Pennsylvania. The IRS issued two administrative summonses to the attorney.
The IRS summonses requested (1) the attorney’s current client list, including the names and addresses of each client, and (2) a list of the attorney’s cases that will be settling or have settled within a specified time period, including the parties’ names and addresses.
The summonses were issued by an IRS revenue officer (i.e., a collector) to assess his income and assets and to collect delinquent taxes. The summonses were issued to verify the income generated through the attorney’s law practice.
The attorney appeared for the summonses but refused to provide the client’s names. The IRS asked the court to enforce the summons and the trial court ordered the attorney to disclose the information, but only for cases that had already been settled.
The attorney-client privilege generally protects communications between an attorney and his or her clients. The privilege is found in two sets of rules, i.e., professionalism rules that govern attorneys and the rules of evidence that dictate what evidence can be admitted in court.
As noted by the trial and appeals courts, the professional rules that govern attorneys do not impact the attorney-client privilege. These rules merely provide for discipline against the attorney if the rules are violated. The trial and appeals court upheld the IRS summons on this basis.
The rules of evidence provide stronger protections. These rules vary from jurisdiction to jurisdiction, but they generally do not prevent the disclosure of client names. They do prevent disclosure of client names if disclosure would subject the client to liability for a prior crime or to some other liability.
The trial and appeals court did not consider the rules of evidence as this case focused on an IRS administrative summons. The IRS administrative summons is not a court proceeding, so the rules of evidence do not apply.
The John Doe Summons
It should also be noted that this case did not involve a dispute over the IRS’s powers in Sec. 7609. This law allows the IRS to issue a summons to obtain client names.
IRS summonses issued under this law are often referred to as a “John Doe Summons,” as the summons isn’t directed to a specific taxpayer. The IRS uses this type of summons to locate the names of unknown taxpayers to ascertain the tax liabilities, etc. for the unnamed taxpayers. Unlike a traditional summons issued to a specific taxpayer, the John Doe Summons must be approved by the courts prior to being issued.
This case did not involve a John Doe Summons as the IRS was not seeking the names of the attorney’s clients to determine their tax liabilities–the IRS was seeking to identify the attorney’s liabilities or ability to pay them.