Young & Co., as a firm of certified public accountants, are responsible for complying with their practitioner’s code of conduct. It is common for practitioners to acquire clients like Amerada who at times might request the practitioner not to provide its financial statements and tax accrual work papers. Professionally, Young has to obey and turn over the work papers as requested by IRS as this would be a means of adhering to the collective body and applicable laws and standards for accountants and IRS codes. If Young fails to turn over the work papers as requested by IRS and instead chose to ignore, it would mean that Young has violated professional codes of conduct, an act that will discredit their profession. IRS 7602 (a) 1962 provides that it offers a purpose that ascertains the correctness of returns when it summons an individual liable for tax or any person who is required to perform the act, an employee or an officer who has possession of the records, data or books containing accounting entries that relate to company or business. Upon summons, such individuals should appear before the secretary and produce the records, data, and the books and also issues testimony after taking an oath relevant to the inquiry. Hence accounting work papers is relevant to IRS investigations and thus as an accountant, Young was obliged to produce the tax accrual work papers as per the summon.
The attorney-client privileged protects work papers from being summoned by the government and enables a client to prevents an obligated disclosure of confidential communications between the clients and their attorneys when seeking legal assistance. When the government summons the company’s accrual work papers, it discourages proper analysis of the company’s tax accrual work papers. Besides, IRS tends to undermine a company’s financial statement integrity.
IRS should prevail and impose its duty as per the section 7602 summons since it is obliged to ascertain that taxpayers have paid all taxes that are owed. Section 7602 also empowers the governing body to summon documents that are relevant in determining the validity of tax that taxpayers pay.