On May 26, the United States Tax Court held that a privilege log was “plainly inadequate” and ordered the petitioner to turn over to the IRS several emails because petitioner failed to show the items were protected by the attorney-client privilege.28 The Tax Court granted the IRS’s Motion to Compel Production.

Background

Before trial, the IRS served a subpoena duces tecum on Steven Dunning, a general business attorney and trusted advisor for the taxpayers. At trial, Dunning produced some documents, but declined to produce numerous emails on the ground that they were protected by the attorney-client privilege. Dunning produced a privilege log which contained a table with four columns: Column 1 listed the name of the person who sent the email; Column 2 identified the names of persons to whom the email was addressed; Column 3 listed the names of persons who were copied on the email and Column 4 provided the email sent date. The privilege log covered approximately 2,000 emails. Conspicuously absent from the privilege log was any description of the contents of any email.

Legal Analysis

The Tax Court began its analysis by noting that the burden of establishing that the attorney-client privilege applies to particular communications or documents rests with the party asserting the privilege.29 A blanket assertion of the privilege is not adequate; the “proponent must conclusively prove each element of the privilege.”30 The Tax Court Rules of Practice and Procedure do not contain specific provisions addressing the content of a privilege log, but in practice, the Tax Court has generally required the submission of a privilege log whenever a party asserts the privilege over a large group of documents. In such cases, the Tax Court has given particular weight to the Federal Rules of Civil Procedure, which provides that “[a] person withholding subpoenaed information under a claim that it is privileged” must expressly make the claim and must also “describe the nature of the withheld documents, communications or tangible things in a manner that, without revealing information itself privileged or protected, will enable the parties to assess the claim.”31

Courts have required that a privilege log contain facts that establish, as to each document, each element of the claimed privilege, including the “author(s), date of preparation and subject matter of the documents, as well as facts establishing each element of the privilege.”32 A privilege log must indicate why the document was intended to be confidential. However, the need to demonstrate that specific communications are privileged must be balanced with the risk of inadvertently waiving the attorney-client privilege log by disclosing too much information.

The Tax Court held that the log provided by Dunning was inadequate and failed to establish each element of the attorney-client privilege because (i) it did not state the subject of any email; (ii) it did not describe the contents of any email; (iii) it did not indicate whether documents were attached to any email; (iv) it did not indicate the content of attachments; (v) it did not describe the purpose for why the document was created and (vi) it failed to include facts indicating that any particular communication was intended to be confidential. Without this information, the court could not determine from the privilege log whether Dunning’s communications included legal advice, as opposed to general business advice or transactional matters that do not entail legal services. Accordingly, the Tax Court granted the IRS’s Motion to Compel Production for the documents in question.