Does the DOJ aim to thwart attorney-client privilege in tax cases?

The Tax Division of the Department of Justice (DOJ) is attempting to increase its efficiency. One way it may attempt to reach this goal: increasing requests for a crime-fraud exception.

What is a crime-fraud exception?

Individuals or entities that establish an attorney-client privilege with legal counsel have the right to expect conversations and documents to remain confidential. This is supported by the law.

Thwarting the attorney-client privilege is not something to take lightly. Lawmakers agree to this privilege, so clients can openly discuss their situation and legal needs with their attorney. However, there are situations when the prosecution can override this privilege and access confidential information. One example: the crime-fraud exception.

How common is the use of the crime-fraud exception?

The Tax Division of the DOJ brought six or seven motions to apply the exception last year. Each request was granted. As a result, the government was able to access confidential, privileged documents. A Tax Division section chief stated at the American Bar Association’s Section of Taxation meeting in May of 2019 that the division would likely increase its reliance on such requests.

What should you do if your case receives a motion for the crime-fraud exception?

There are options for those who are concerned the government may request such an exception. Legal strategies to challenge the motion for the exception can include:

• Review of who filed the motion. In some cases, the taint team may have filed the motion. A taint team is a group of DOJ attorneys that reviews documents seized during an investigation. The job of the taint team is to determine if the documents are privileged. If the taint team files a crime-fraud motion, it may have crossed a line and taken a substantive role in the investigation.
• Concerns about a lack of impartiality. There is concern that the use of DOJ attorneys inherently lacks impartiality. These attorneys work for the government and have faced accusations of leaking information to the prosecution. As a result, it can be beneficial to argue for the use of an impartial, third-party special master as opposed to a taint team.