Monday, August 8th, 2011
The IRS published the Attorneys Audit Technique Guide to help examiners audit an attorney’s tax return. However, the document is not an official pronouncement of the law or the position of the IRS, and cannot be relied upon as such.
The Guide notes in part that:
- the identity of a client and the nature of his or her fee arrangement generally is not protected by the attorney-client privilege.
- attorneys who base their fees on hours worked plus case-related costs should be able to provide detailed records of their time and costs since that is how they bill their clients.
- attorneys working on a contingency fee basis use either a gross fee contract (where court costs, expert fees, etc. are deductible business expenses) or a net fee contract (where expense advances are treated as loans until settlement).