Second Circuit Rules Against IRS

Companies and financial institutions that consult on legal issues and share confidential information in the process do not have to turn that information over to the IRS, according to a Second Circuit Ruling that relies on the Common Interest Doctrine. In Schaeffler v. United States, the court considered a 2008 tender offer by Schaeffler to purchase shares financed through a consortium of banks. Two days before the offer expired the stock market collapsed. Shareholders sold at the previously agreed but suddenly highly inflated price. Details of the financing and restructuring strategy devised by Schaeffler to stave off insolvency were sought by the IRS, but the Second Circuit’s decision denied access to the plan.