Attorney-Client Privilege Protected for Company’s Internal Documents

In a good win for the taxpayer, the state of California Northern District Court denied enforcement of an Internal Revenue Service Summons requesting certain taxpayer information prepared by the corporation’s internal legal team for use by its external legal team.

To support its worthless stock deduction of approximately $503 million, Sanmina Corporation provided the Internal Revenue Service with a valuation report prepared by its outside attorneys. A footnote to the valuation report referenced two memos from the company’s in-house attorneys. Upon receiving an Internal Revenue Service summons for these memos, the corporation objected, claiming that the memos were privileged because they were prepared internally and provided tax advice in anticipation of litigation.

The District Court agreed with the company. Even though the internal memos were given to outside attorneys and accountants and were cited in the valuation report given to the IRS, the mere reference to the memos, without disclosing any content, wouldn’t waive the privilege. Thus, they were protected by attorney-client privilege and the work product doctrine.

The case reference, should you wish to read the entire document is Sanmina Corp and Subsidiaries, 115 AFTR 2d 2015-XXXX (DC CA).

Questions and comments may be directed to Bob Grossman or Melissa Bizyak at 412.338.9300.


Picture of Melissa Bizyak

Melissa Bizyak

Melissa leads the firm’s Business Valuation & Litigation Support Services Group. She has practiced in public accounting for more than 25 years and has significant experience in providing business valuation services for privately-held concerns and their owners. Melissa also provides litigation support services, including expert witness testimony.
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