Schaeffler v. United States15 shows how the courts analyze the privilege of the common interest and the importance of a common interest agreement in the tax context. Schaeffler participated in the restructuring of the Schaeffler Group – a German company, 80 percent of its shares held by an American – and the refinancing of debts belonging to a banking consortium following the 2008 financial crisis.16 Kovel`s accounting term is based on the case usa v. Kovel, 296 F.2d 918 (2d Cir. 1961). Kovel`s accountants are hired when a tax lawyer is concerned that his client`s behaviour or, in some cases, a lack of behaviour will lead to criminal tax charges. The tax lawyer must understand from a numerical point of view what the exposure might be. For example, Kovel`s accountant may be called upon to establish schedules for unreported bank deposits and determine the potential amount of a tax debt. The confidentiality of lawyers and clients is not quite the same as solicitor-client privilege, although it is based on the same premise. Confidentiality refers to a lawyer`s legal obligation not to disclose what his client is telling him.
This is an ethical violation and could result in disciplinary action unless the client gives informed consent to his lawyer to act and speak. This means that information obtained by an accountant under a Kovel agreement should be distinguished from the information the accountant collects as an accountant or as a different accountant. Keep things as separate and well documented as possible. This may include the use of another audit firm for audit or other work where possible. No ongoing litigation is required to assert the privilege of the common interest; Instead, communications to be made during an “ongoing joint venture and for the promotion of the business” are protected. 13 The courts have held that the documentation of the existence of the common interest and the agreement on respect for the confidentiality of the common communication in a common interest agreement are relevant to the analysis of the applicability of the transaction14.14 The Schaeffler Group has instructed legal advisers and an audit firm to provide advice on assessing and minimizing the tax consequences of restructuring and refinancing. Knowing that transactions are subject to IRS review.17 As part of the refinancing and analysis of their tax consequences, the Schaeffler Group shared materials containing preferred tax advice with the consortium under a mutual interest agreement18.18 The IRS subsequently convened documents containing legal advice. The Schaeffler Group withdrew the subpoena and withheld the documents on the basis of the common interest privilege and the doctrine of solicitor-client work.19 Solicitor-client privilege, also known as solicitor-client privilege, is the provision in the law that states that what you say to your lawyer remains between you and your lawyer. Your lawyer cannot be forced to say what you said. They do not need to provide their notes on the interview as part of the investigation – the part of a complaint in which both parties are legally required to disclose all relevant information for the case.