June 04, 2012 The Tax Lawyer

United States v. Deloitte: The Proper Judicial Approach to Work Product in Light of Broadening Regulatory Requirements Including Schedule UTP

Vol. 65, No. 1 - Fall 2011

Ryan McCarthy


    In United States v. Deloitte, a panel of judges from the Court of Appeals for the District of Columbia Circuit recognized a legal roadblock between the Service and the work product contained in a company’s tax accrual workpapers released to their independent auditors. This decision represents an enormous setback to the Service’s ability to obtain work product from Securities and Exchange Commission (SEC) registrants and will have a profound impact on Tax Court litigation and the newly finalized Schedule UTP. This decision further confounds the multifaceted circuit split over this issue concerning not only the appropriate test to apply, but also the subsequent analytical framework when faced with the assertion of work product protection for tax accrual workpapers in a litigation context.

    Although this decision represents an impediment to the Service and stands in stark contrast to the First Circuit’s holding in United States v. Textron Inc., the holding in Deloitte is strongly supported by both legal precedent and the policy rationale responsible for the common law development and codification of the work product doctrine. Part II of this Note examines the historical context leading to the Deloitte decision, including the history of the modern work product doctrine and the First Circuit’s incongruous approach to this issue in Textron, Part III summarizes the Deloitte decision. Part IV then argues that this decision represents an appropriate analytical framework for courts to follow and that it is strongly supported by legal precedent, the public policy driving the development and codification of the work product doctrine, and the complex regulatory realities facing reporting companies. Part V briefly explores the potential impact of this decision on the Service’s ability to acquire documents in support of its newly finalized Schedule UTP requirements. Part VI concludes this Note by advocating for an acceptance of the D.C. Circuit’s analytical framework by other federal courts faced with assertions of work product protection for tax accrual workpapers.

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