- 13 -
privilege is inapplicable here stem from conduct occurring before
or considered by the State courts, this fact does not transform
the Federal tax nature of, or inject any State law cause of
action into, the present proceeding. We also point out that one
of the grounds relied upon in respondent’s motion (wherein
petitioners are alleged to have placed communications at issue by
their litigation posture in this Court) deals exclusively with
what has transpired before us. We conclude that Federal common
law governs.
B. Analysis
As construed under Federal common law, the attorney-client
privilege exists “to encourage full and frank communication
between attorneys and their clients and thereby promote broader
public interests in the observance of law and administration of
justice.” Upjohn Co. v. United States, 449 U.S. 383, 389 (1981).
The privilege applies to communications made in confidence both:
(1) By a client to an attorney for the purpose of obtaining legal
advice, and (2) by an attorney to a client where containing legal
advice or revealing confidential information on which the client
seeks advice. Id. at 390; Bernardo v. Commissioner, 104 T.C.
677, 682 (1995); Hartz Mountain Indus. v. Commissioner, 93 T.C.
521, 525 (1989); Karme v. Commissioner, 73 T.C. 1163, 1183
(1980), affd. 673 F.2d 1062 (9th Cir. 1982). The burden of
establishing that the attorney-client privilege is applicable to
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011