Must a law firm withhold a client's name from the IRS on a Form 8300 cash-payment report when the client asks it to?

Plain-English summary

Opinion 214 (adopted September 18, 1990) addressed a law firm that had represented a client on drug-related criminal charges and received over $12,000 in cash toward its bill. The firm told the client it would have to file IRS Form 8300, the report of cash payments over $10,000, but at the client's insistence agreed to withhold his name; the client agreed to bear the cost of resisting any IRS effort to compel disclosure. More than a year later the IRS served an administrative summons demanding the client's name and other identifying information. The firm refused pending the committee's guidance, asking whether it had to withhold the name, how far that obligation extended, and whether the client's unpaid balance affected it.

The committee, applying DR 4-101 and noting the parallel Rule 1.6, drew on its prior opinions (especially Opinion 124, involving an IRS auditor) holding that where a client requests nondisclosure or disclosure would embarrass or detrimentally affect the client, the fact of representation is a protected confidence or secret, and the firm must resist disclosure until the client consents or available avenues of appeal are exhausted. Because disclosure of this client's name could embarrass or harm him, the firm could not voluntarily comply. The committee distinguished Opinion 124 on one point: the name was sought under Internal Revenue Code § 6050I, a narrow, specific statute, rather than the IRS's general authority to examine relevant records, so § 6050I was a "law" that could justify disclosure in an appropriate case. But because substantial good-faith arguments existed about whether a law firm is a "trade or business" under § 6050I and whether Congress meant to override lawyer-client confidentiality, the firm could not disclose without consent until the courts resolved those questions.

On the extent of the duty, the committee concluded the firm had to assert the client's objections to disclosure if the IRS sued to enforce the summons, but, in light of Comment 26 to Rule 1.6 and its prior opinions, could comply with a final judicial order without itself seeking appellate review, provided it first gave the client notice of the order and a reasonable opportunity to seek review independently. Finally, the committee concluded the client's arrears did not relieve the firm of its duty to resist disclosure, because the obligation to protect a client's confidences is not a matter of contract between lawyer and client.

Currency note

This opinion was issued in 1990, before the District of Columbia's adoption of the 2007 revisions to the Rules of Professional Conduct, and was decided under the former Code of Professional Responsibility. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could the firm withhold the client's name from IRS Form 8300?

A: Yes. The committee concluded that, because disclosure could embarrass or harm the client, his identity was a protected secret the firm could not voluntarily disclose without his consent.

Q: Did the IRS summons require the firm to hand over the name?

A: Not automatically. The committee concluded the firm had to resist the summons and assert the client's objections, disclosing only if and when ordered by a court.

Q: Did Internal Revenue Code § 6050I require disclosure?

A: Not yet. The committee concluded § 6050I was a "law" that could justify disclosure in an appropriate case, but that good-faith arguments about whether it reached law firms and overrode confidentiality had to be resolved by the courts first.

Q: Did the client's unpaid bill change the firm's duty?

A: No. The committee concluded the duty to resist disclosure was not a matter of contract, so the client's arrears did not relieve the firm of it.

Background and rules framework

The opinion was decided under the former Code's DR 4-101 (preservation of confidences and secrets), with the committee noting that Rule 1.6 of the Rules of Professional Conduct, effective January 1, 1991, applies similarly. DR 4-101(B) bars knowingly revealing a client's confidence or secret, and DR 4-101(C)(2) permits disclosure when required by law or court order. The committee weighed that exception against Internal Revenue Code § 6050I, the narrowly drawn statute behind Form 8300, and read Comment 26 to Rule 1.6 to allow compliance with a final court order after notice to the client.

Citations and references

Rules of Professional Conduct and Code provisions:

• D.C. RPC 1.6(a) and 1.6(d) / Model Rule 1.6 (confidentiality; disclosure required by law or court order)
• Former Code DR 4-101(B) and DR 4-101(C)(2) (preservation of confidences and secrets)

Statutes:

• 26 U.S.C. § 6050I, the requirement to report cash payments over $10,000 (Form 8300)
• 26 U.S.C. § 7602(a)(1), the IRS's general authority to examine records

Cases:

• Holland v. United States, 348 U.S. 121 (1954), net-worth method of proving unreported income
• In re Semel, 411 F.2d 195 (3d Cir. 1969), client identity and fee information generally not privileged

Other opinions cited:

• D.C. Opinion 124 (1983): a firm must resist an IRS request for client names until consent is obtained or appeals are exhausted
• D.C. Opinions 99 (1981) and 180 (1987): a colorable basis for confidentiality must be resolved in favor of nondisclosure

See also

• DC Ethics Op. 223: Nondisclosure of Protected Information to a Funding Agency
• DC Ethics Op. 219: Revealing Client Fraud Where a Federal Regulation Requires It
• DC Ethics Op. 236: Revealing Confidences to Collect Fees in Bankruptcy

Source

• Landing page: https://www.dcbar.org/for-lawyers/legal-ethics/ethics-opinions-210-present/ethics-opinion-214