Holifield v. US, No. 88-C-179.

• Court: United States District Courts. 7th Circuit. United States District Court of Eastern District of Wisconsin
• Writing for the Court: WARREN
• Citation: 689 F. Supp. 865
• Parties: Dallas L. HOLIFIELD, Petitioner, v. UNITED STATES of America, Respondent.
• Docket Number: No. 88-C-179.
• Decision Date: 19 July 1988

689 F. Supp. 865

Dallas L. HOLIFIELD, Petitioner,
v.
UNITED STATES of America, Respondent.

No. 88-C-179.

United States District Court, E.D. Wisconsin.

July 19, 1988.

689 F. Supp. 866

Stephen E. Kravit, Janice A. Rhodes, Craig H. Zetley, Kravit, Waisbren & De Bruin, S.C., Milwaukee, Wis., Martin Kohler, Levine & Epstein, Milwaukee, Wis., for petitioner.

Ann M. Kisting, Asst. U.S. Atty., Milwaukee, Wis., Jeffrey D. Snow, Trial Atty., Tax Div., U.S. Dept. of Justice, Washington, D.C., for respondent.

DECISION AND ORDER

WARREN, Chief Judge.

This case raises the question of whether the attorney-client privilege protects an attorney from responding to an Internal Revenue Service summons seeking details of the financial arrangement between the attorney and client. This case also involves the issue of whether that privilege protects

689 F. Supp. 867

the attorney from responding to a summons seeking documents relating to a client's acquisition of assets

I. BACKGROUND

On January 28, 1988, Attorney Martin Kohler of the Milwaukee firm of Levine & Epstein was served with an Internal Revenue Service (IRS) summons in the matter of Dallas L. Holifield, who Attorney Kohler had represented in a variety of matters. The summons directed Attorney Kohler to produce the following documents before an IRS agent on March 2, 1988.

1. Records/documents pertaining to retainers/legal fees paid by Holifield to the law firm of Levine & Epstein for legal services during the years 1983, 1984, 1985 and 1986.

2. Records/documents pertaining to the legal fee paid by Holifield to the law firm of Levine & Epstein relative to the insurance settlement Holifield received from Liberty Mutual in October, 1986— auto accident.

3. Records/documents pertaining to the acquisition of assets (real estate, vehicles, etc.), or the negotiation for the acquisition of assets, by Holifield during the years 1983, 1984, 1985 and 1986.

On February 16, 1988, Holifield, by Attorney Kohler, petitioned this Court under 26 U.S.C. § 7609(h) to quash the summons. The petition to quash claimed that the materials sought by the summons were protected by the attorney-client privilege and Holifield's Sixth Amendment right to counsel. The petition also alleged that the summons was issued under an abuse of summons process. On April 18, 1988, the United States filed a motion to dismiss the petition, arguing that no privilege existed for the material in question and that no abuse of the summons process had occurred. Holifield, again through Attorney Kohler, filed a brief in response to the government's motion, contending, in part, that fee information is protected by the attorney-client privilege.

II. ANALYSIS

Under 26 U.S.C. § 7602(a), the IRS has the following authority to issue a summons.

For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, or collecting any such liability, the Secretary is authorized —

(1) To examine any books, papers, records, or other data which may be relevant to such inquiry;

(2) To summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of accounts containing entries relating to the business of the person liable for tax or

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