Tax accrual workpapers and the discovery process: Textron provides insight

The paper examines certain recent developments concerning the extent to which tax accrual workpapers are subject to discovery by third parties. One context in which this issue has arisen has involved IRS efforts to attain such workpapers from accountants in the course of conducting a tax audit. Arguments raised in an effort to protect such workpapers from discovery have included: the attorney-client privilege, tax practitioner privilege and work product doctrine. Assertion of the work product doctrine has met with some success in recent cases, e.g., Roxworthy and Textron. Included among the topics discussed in this paper are the IRS definition of tax accrual workpapers, standards and rules concerning the application and waiver of the work product doctrine, and the recent United States District Court decision in the Textron case.