IRS and work product

Yesterday, a judge ruled that the IRS was not entitled to see workpapers that were deemed work product. This is a very important ruling in tax matters.

“Work product” is used in legal cases to protect papers that you don’t want the other side to see. Essentially, the attorney in a case doesn’t have to show the other side his notes and his work. Why? Because doing so would give the other side an unfair advantage if they get to see his research and though process.

And so the decision went in this tax case.

The IRS and Justice Department wanted the tax accrual workpapers of Textron Inc. They wanted to see how the company came up with its accrual. The judge said no, because those workpapers contain a legal analysis of transactions that the IRS might challenge. The judge said that allowing the IRS to see that information would amount to an unfair advantage, just as taxpayers would have an unfair advantage if they were able to see the IRS’s behind-the-scenes work on tax issues.

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