Professor Ventry Comments on En Banc Review in Tax Notes
Professor Dennis J. Ventry, Jr. commented in the March 30 issue of Tax Notes on the First Circuit's decision to grant the government's petition for en banc review in United States v. Textron (No. 07-2631). In January, a divided panel majority had affirmed the district court's determination that a taxpayer's tax accrual workpapers are protected under the work product doctrine. These workpapers support a corporate taxpayer's reserve for deferred or contingent tax liabilities and for related representations in the taxpayer's audited financial statements. The dissent cited favorably to Ventry's article on the subject, and urged rehearing the case.
In the Tax Notes article, Ventry noted that the court's decision to grant the government's petition for rehearing was just as important as its decision to deny the taxpayer's petition. "The issues respecting waiver, and in particular, the possibility that a court could find waiver of work product in the event a company's auditors incorporate work product into their own workpapers, will not be before the en banc court." Instead, the sole issue to be determined is "whether workpapers are generated in the ordinary course of business, irrespective of litigation, and/or as required by the securities laws."
Ventry also observed that one of the judges who participated in the January decision was sitting by designation and is therefore prohibited from participating in the rehearing. Thus, Textron has effectively "lost one of the votes that provided it the panel majority." In the end, "The government lives to fight another day--to prove that workpapers are created for financial accounting purposes, not for litigation."
Professor Ventry is an expert in tax policy, and has written widely on the subject. His special interests include family taxation, legal ethics and professional standards, tax history, tax compliance and administration, and public finance.
Tax Notes is the flagship publication of Tax Analysts, the leading publisher of tax information worldwide.