Section of Taxation Publications
  VOL. 57
NO. 3
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 Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.
Are Tax Shelter Clients' Identities Protected by Section 7525 Privilege or Left Out in the Cold? United States v. BDO Seidman
Angela Ahern


In United States v. BDO Seidman, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s order to enforce Service summonses that commanded production of documents, including the identity of BDO Seidman clients (hereinafter “Does”) involved in 20 types of tax shelter transactions. The Does’ motion to intervene was denied because they could not show a colorable claim of privilege under section 7525, which extends a limited form of the attorney-client evidentiary privilege to tax practitioner-client communications.

This Note discusses the Seventh Circuit’s application of the section 7525 privilege to exclude the identity of tax shelter investors. Part I sets out the parameters of the tax practitioner-client statutory privilege and the Service’s tax shelter listing requirements. Part II explains the facts leading to BDO IV, the arguments of the parties on appeal, and the court of appeals ruling. Part III argues that the appellate interpretation of section 7525 was incorrect but that tax advisors should be wary of relying on the privilege to protect the identities of tax shelter investors. Finally, Part IV concludes that the Seventh Circuit should have used the tax practitioner-client privilege to protect the identities of the Does.


Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center


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