U.S. Supreme Court spurns attorney-client privilege fight in crypto tax probe

Jan 23 (Reuters) – The U.S. Supreme Court docket on Monday threw out a circumstance about the scope of legal professional-customer privilege involving a regulation firm’s bid to withhold information from prosecutors associated to a cryptocurrency-promoting shopper in a tax investigation.

The unsigned a single-sentence ruling “dismissed as improvidently granted” an enchantment by an unnamed legislation firm of courtroom orders holding it in contempt for not turning over records relevant to a single of its purchasers in response to a federal grand jury subpoena.

The justices did so only two weeks after hearing arguments in the case. Numerous of the specifics of the circumstance are unclear, as the names of the law company and consumer have been stored from the community history for the duration of the usually secretive grand jury probe.

In accordance to court papers, the regulation firm specializes in worldwide tax challenges and encouraged a consumer the U.S. Department of Justice claims was an early promoter of bitcoin who expatriated himself from the United States in 2014.

The legislation organization suggests it prepared the client’s tax returns and also delivered authorized advice on how to establish possession of cryptocurrency property and value them.

In response to a grand jury subpoena in search of data connected to the preparation of the client’s tax returns, the business generated in excess of 20,000 webpages of data but withheld other folks, citing lawyer-customer privilege.

When a court ordered it to change in excess of about 54 other individuals, it resisted. Those data, the business explained, had been “dual-goal” communications that contained authorized suggestions as well as non-authorized, assistance regarding the preparation of its tax returns.

But the San Francisco-based 9th U.S. Circuit Courtroom of Appeals upheld the lessen-courtroom judge in indicating legal tips experienced to be the “main” function of the communication to qualify for legal professional-customer privilege.

That ruling was at odds with what some other federal appeals courts have dominated in very similar situations, and several lawyers’ teams like the American Bar Affiliation submitted briefs urging the justices to undertake a far more expansive normal for privilege.

For the duration of arguments on Jan. 9, some justices questioned why the 9th Circuit’s typical was mistaken, with liberal Justice Sonia Sotomayor noting that “the vast vast majority of states use the key function exam.”

Liberal Justice Elena Kagan pointed out that no federal appeals court docket till 2014 experienced advised a diverse standard must use. She jokingly questioned a attorney for the law firm to comment on “the historical authorized basic principle of ‘if it ain’t broke, will not deal with it.’

Reporting by Nate Raymond in Boston modifying by Jonathan Oatis

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