Formal Opinion 194
(1997)
Disclosure of Client Information to Treasury Department on IRS Form 8300

Issue:

What is a lawyer’s obligation regarding compliance with the U.S. Treasury Department IRS Form 8300 which asks the disclosure of the identity of a client making cash payments of more than $10,000 to the lawyer, as required by federal law and regulation when the client or the client’s attorney has asserted that the client’s identity is a secret?

Short Answer:

A lawyer is obligated to comply with the requirements of federal law and regulations that IRS Form 8300 be filed under circumstances requiring it. However, the identity of a client paying more than $10,000 to a lawyer may be a "secret" as defined in the Rules of Professional Conduct when it is "information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client." In those circumstances, the attorney may not disclose client identifying information except as permitted by RPC 1.6. Refusal to make such disclosure may result in the issuance of a summons to the lawyer, and the lawyer must properly respond to any efforts to enforce the summons.

Discussion:

Section 6050I of the Internal Revenue Code of 1986, as amended, requires that any person who is engaged in a trade or business and who, in the course of such trade or business, receives more than $10,000 in cash in one transaction or in two or more related transactions, must file a return with the U. S. Treasury Department. The return, which is to be made on IRS Form 8300, requires various information about the cash transaction, including the name, address, and tax identification number of the person from whom the cash was received.

It is our opinion that a lawyer must disclose to a client that if the client pays the lawyer more than $10,000 in cash, the lawyer must comply with the requirement that IRS Form 8300 be returned as required by law. A lawyer must also disclose to the client that the lawyer may be compelled by court order to identify the client if the identity of the client is not provided in the original Form 8300 return. However, the lawyer may not disclose to the Treasury Department, through the filing of Form 8300 or otherwise, any information pertinent to the client’s identity, when the client or the client’s attorney has asserted that the client’s identity is a secret, without the informed consent of the client or pursuant to other circumstances permitting disclosure as specified in Rule 1.6 of the Rules of Professional Conduct.

RPC 1.6 provides in part that:

(a) A lawyer shall not reveal confidences or secrets relating to representation of a client unless the client consents after consultation, except for disclosures that are impliedly authorized in order to carry out the representation, and except as stated in section (b)

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(b) A lawyer may reveal such confidences or secrets to the extent the lawyer reasonably believes necessary:

(1) To prevent the client from committing a crime; or

(2) To establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, to respond to allegations in any proceeding concerning the lawyer’s representation of the client, or pursuant to court order.

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"Confidence" is defined by the RPC Terminology section as "information protected by the attorney-client privilege under applicable law." See also, Dietz v. Doe, 131 Wn.2d 835, 935 P.2d 588 (1997). "Secret" is defined as "other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client." For a discussion of the distinction between "confidence" and "secret," as well as additional reasoning equally supportive of our conclusions herein, see Formal Opinion 183 (1990).

An assertion by a lawyer of the inability to disclose information on IRS Form 8300 because of the requirements of RPC 1.6 may result in the service of a summons upon the lawyer pursuant to 26 U.S.C. §7602, seeking the withheld information. An IRS summons is not self-enforcing. United States district courts instead are authorized to enforce a summons upon a proper showing. §26 U.S.C. §7402(b) and 7604. See, U.S. v. Blackman, 72 F.3d 1418 (9th Cir. 1995).

If a summons is served upon a lawyer, the lawyer must continue to decline to disclose client secrets except in compliance with RPC 1.6. If the government then seeks enforcement of the summons through the federal courts, the lawyer must respond properly and litigate the issue of disclosure. If ordered to disclose by a judge, a lawyer may then do so in compliance with RPC 1.6, which permits a lawyer to reveal client secrets to the extent the lawyer reasonably believes necessary "pursuant to court order."