In Wells Fargo & Co. v. United States, No. 10-57 (D. Minn. 2013), the Minnesota district court ruled in favor of Wells Fargo holding that its in-house attorneys’ and outside auditors’ FIN 48 measurement and recognition analyses of its uncertain tax positions in its tax accrual workpapers was protected from disclosure by the work product doctrine.
During an examination of Wells Fargo’s 2007 and 2008 tax years, the IRS issued a summons seeking all tax accrual workpapers (“TAWs”) prepared by either Wells Fargo or its outside auditor, KPMG, including documentation of uncertain tax positions (“UTPs”). Wells Fargo asked the court to quash the summons contending that, among other arguments, the information being sought by the IRS was protected by the work product doctrine. Work product that is created in anticipation of litigation is protected from disclosure to the IRS.
The court held that Wells Fargo’s identification of UTPs was not protected by the privilege because this information was not created in anticipation of litigation. The court ordered Wells Fargo and KPMG to disclose Wells Fargo’s UTPs, its process for identifying UTPs, and other factual information surrounding its UTPs. On the other hand, Wells Fargo was not required to disclose information that revealed settlement analysis of Wells Fargo’s attorneys, its attorneys’ FIN 48 measurement and recognition analyses, or its attorneys’ assessments of its likelihood of pursuing or prevailing in a dispute with the IRS. Further, the Court held that KPMG’s TAWs were protected to the same extent as Wells Fargo’s TAWs because KPMG’s TAWs tested the analysis of Wells Fargo’s in-house attorneys.