S

Tax Issues for

Attorneys and Law

Firms

Kevan P. McLaughlin, Esq., LL.M

Attorney-Client Privilege

o Privilege holder is, or sought to be, a client;

o Communication was to made:

o To a member of the bar or subordinate, and

o Made in connection with them acting as a lawyer,

o Relates to fact attorney of which attorney was informed:

o By the client

o Without the presence of strangers

o For the purpose of securing primarily either:

o An opinion of law,

o Legal services, or

o Assistance in some legal proceeding, and not

o For the purpose of committing a crime or tort, and

o The privilege has been

o Claimed, and

o Not waived by the client.

o See also IRC § 7525

Record Keeping Requirements

Every person liable for any tax imposed

by this title, or for the collection thereof,

shall keep such records, render such

statements, make such returns, and

comply with such rules and regulations

as the Secretary may from time to time

prescribe.

IRC § 6001

Record Keeping Requirements

(a) ... any person required to file a return of information with respect to income, shall keep such permanent books of account or records, including inventories, as are sufficient to establish the amount of gross income, deductions, credits, or other matters required to be shown by such person in any return of such tax or information.

(e) The books or records required by this section shall be kept at all times available for inspection by authorized internal revenue officers or employees, and shall be retained so long as the contents thereof may become material in the administration of any internal revenue law.

Treas. Reg. § 1.6001-1

Record Keeping Requirements

IRC § 446(b)

Cohan v. Commissioner, 39 F.2d 540 (2d Cir.

1930)

IRC § 274(d)

Income Issues

o Unreported Income

o Deferral of Income

o Constructive Receipt

o Non-Cash Sources

o Cash Payments

Advanced Client Costs

oNet Fee Arrangements

oGross Fee Arrangements

oNon-Contingent Fee Cases

Worker Classification

oBehavioral Control

oFinancial Control

oType of Relationship

Worker Classification

Concerns

oReciprocal State Employment Tax Matters

oSection 530

o Trust Fund Recovery – IRC § 6672

oVoluntary Worker Classification Settlement Program (VCSP)

Information Reporting

oForm 1099

o IRC § 6041

oTreas. Reg. § 1.6045-5

oForm 8300

o IRC § 6050I