Must a Washington lawyer who receives more than $10,000 in cash from a client disclose the client's identity on IRS Form 8300?

Plain-English summary

Federal law (26 U.S.C. section 6050I) requires a person in a trade or business who receives more than $10,000 in cash to file IRS Form 8300, which reports the name, address, and tax identification number of the payer. The committee considered how that requirement interacts with RPC 1.6 when the cash comes from a client whose identity is confidential.

The committee concluded that the lawyer is obligated to file Form 8300 when federal law requires it, but that the client's identity may be "information relating to the representation" protected by RPC 1.6(a). Where it is, the committee said the lawyer must not disclose the client-identifying information, through the form or otherwise, without the client's informed consent unless RPC 1.6(b) permits the disclosure; the lawyer files the form omitting the client's identity. The committee emphasized that, unlike most jurisdictions, Washington had not adopted the Model Rule 1.6(b)(6) exception allowing disclosure "to comply with other law." Under RPC 1.4, the lawyer must inform the client of how the lawyer will proceed, and that a court may later compel disclosure of the identity. If the IRS serves a summons under 26 U.S.C. section 7602, the lawyer must continue to withhold confidential information, respond properly, and litigate the disclosure question, raising all nonfrivolous privilege and other-law claims; only if a judge orders disclosure may the lawyer comply, under RPC 1.6(b)(6), to the extent reasonably necessary to comply with the order. The committee also noted that the lawyer's right to be paid for these efforts is a legal question on which it expressed no view, but observed that the lawyer's ethical duty to protect the information exists even if the lawyer is not compensated.

Currency note

This opinion was issued in 1997 and amended in 2009. The amended text references the current Washington Rules of Professional Conduct (RPC 1.6, 1.4, and 1.0(e)). Later rule amendments or opinions may still have changed the analysis, and Washington's adoption status for any "other law" exception should be verified against the current rule. Treat this page as historical context, not current guidance, and verify against the current rules before relying on any specific provision mentioned here.

Common questions

Q: Does a lawyer have to file IRS Form 8300 when a client pays more than $10,000 in cash?

A: The committee concluded the lawyer must comply with the federal filing requirement, but must omit the client's identifying information when that identity is confidential under RPC 1.6 and the client has not consented.

Q: Can the lawyer simply put the client's name on the form to satisfy the IRS?

A: Not where the identity is protected by RPC 1.6(a) and the client has not given informed consent. The committee said Washington had not adopted the Model Rule exception for disclosure "to comply with other law," so the lawyer files the form without the identifying information.

Q: What did the committee say to do if the IRS serves a summons?

A: The lawyer must keep withholding confidential information except as RPC 1.6 allows, respond properly, and litigate the disclosure issue, raising all nonfrivolous privilege and other-law claims. If a judge then orders disclosure, the lawyer may comply under RPC 1.6(b)(6) to the extent reasonably necessary to obey the order.

Background and rules framework

The opinion interpreted RPC 1.6 (Model Rule 1.6, confidentiality of information), reading "information relating to the representation" broadly to cover a client's identity in appropriate circumstances, together with the RPC 1.6(b) exceptions and the duty to communicate under RPC 1.4 (Model Rule 1.4) and the definition of informed consent in RPC 1.0(e) (Model Rule 1.0). The committee flagged that Washington had not adopted the Model Rule 1.6(b)(6) "to comply with other law" exception, leaving only the court-order route to disclosure.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.6 / Washington RPC 1.6, 1.6(a), 1.6(b) (confidentiality; exceptions)
• Model Rule 1.4 / Washington RPC 1.4, 1.4(a)(1), 1.4(b) (communication)
• Model Rule 1.0 / Washington RPC 1.0(e) (informed consent)

Statutes:

• 26 U.S.C. section 6050I (cash-transaction reporting; IRS Form 8300)
• 26 U.S.C. sections 7602, 7402(b), 7604, 7609 (IRS summons and judicial enforcement)

Cases:

• United States v. Blackman, 72 F.3d 1418 (9th Cir. 1995), client identity and fee arrangements ordinarily not privileged; reporting on Form 8300

See also

• WSBA Ethics Op. 175: Confidentiality After a Client's Death
• ABA Formal Op. 93-375: Disclosing Client Information in a Bank Exam
• NY State Bar Op. 866: Disclosing Confidences to Prevent Harm

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1536

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Advisory Opinion: 194
Year Issued: 1997
RPC(s): RPC 1.6. 1.4, 1.0
Subject: 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 requires the disclosure of the identity of a client making cash payments of more than $10,000 to the lawyer, when the client’s identity is confidential client information under RPC 1.6?

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 “information relating to the representation of a client” that is confidential under RPC 1.6(a). 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 reporting information about the cash transaction, including the name, address, and tax identification number of the person from whom the cash was received.

RPC 1.6(a) sets forth the general rule prohibiting the disclosure of confidential client information:

A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b).

Commentary to RPC 1.6 explains that the term “information relating to the representation” should be “interpreted broadly.” RPC 1.6, cmt. [19]. Such information includes, but is not necessarily limited to, “confidences” and “secrets” as defined under the prior version of RPC 1.6(a). Id. “Confidence” refers to “information protected by the attorney-client privilege under applicable law,” while “secret” refers to “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.” Id.

The rule permits disclosure of otherwise confidential client information under limited circumstances, including “to prevent the client from committing a crime,” “to secure legal advice about the lawyer's compliance with” the ethics rules, and “to comply with a court order.” RPC 1.6(b)(2), (4), (6).

RPC 1.4(b) requires the lawyer to “explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.” Also, the lawyer must “promptly inform the client of any decision or circumstance with respect to which the client’s informed consent, as defined in Rule 1.0(e), is required” by the ethics rules. RPC 1.4(a)(1). “Informed consent” “denotes the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.” RPC 1.0(e).

Where payment information that is required to be reported on IRS Form 8300 is “information relating to the representation of a client” under RPC 1.6(a), the lawyer must not disclose to the Treasury Department, through the filing of IRS Form 8300 or otherwise, any information pertinent to the client’s identity when the client has not given informed consent to the disclosure, unless disclosure is otherwise permitted under RPC 1.6(b). Unlike most jurisdictions, Washington has not adopted the provision of ABA Model Rule 1.6(b)(6) permitting disclosure of otherwise confidential information “to comply with other law.” Under RPC 1.4, the lawyer must inform the client that when the client pays the lawyer more than $10,000 in cash, but does not consent to reporting this information to the IRS, the lawyer will comply with the requirement that IRS Form 8300 be filed as required by law, omitting the identity of the client.

The lawyer must also inform 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. An assertion by a lawyer of the inability to disclose information on IRS Form 8300 because of the confidentiality requirements of RPC 1.6 may result in the service of a summons upon the lawyer seeking the withheld information pursuant to 26 U.S.C. §7602. 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), 7604, 7609. The lawyer’s advice to the client regarding issuance and enforcement of an IRS summons should include reference to federal cases interpreting the application of the privilege in this context. E.g., U.S. v. Blackman, 72 F.3d 1418, 1424-25 (9th Cir. 1995) (explaining that absent extraordinary circumstances, client identity and the nature of the fee agreement between the lawyer and the client are not protected from disclosure by the attorney-client privilege, and indicating that “[a]ttorneys should inform clients proffering cash in excess of $10,000 for fees that they will normally be obliged to disclose fee-payer identity and the nature of the fee arrangement in filing Form 8300”), cert. denied, 519 U.S. 911 (1996).

If a summons is served upon a lawyer, the lawyer must continue to decline to disclose confidential client information 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 fully the issue of disclosure, and raise all nonfrivolous claims that the information is protected from disclosure by lawyer-client privilege or other applicable law. See RPC 1.6, cmt. [13] (also noting that in the event of an adverse ruling on privilege, “the lawyer must consult with the client about the possibility of appeal to the extent required by Rule 1.4”); Blackman, supra. If ordered to disclose by a judge, a lawyer may then do so in compliance with RPC 1.6(b)(6), which permits a lawyer to reveal client confidential information to the extent the lawyer reasonably believes necessary “to comply with a court order.”

The lengths to which a lawyer must go to protect the attorney-client privilege and confidentiality of the client raise the collateral issue of the lawyer’s entitlements to fees and expenses from the client for these efforts. The lawyer’s right to recover fees and expenses in this context is a legal issue on which we express no view, but we note that this may be an appropriate subject for advance negotiation and agreement between the client and lawyer. Nevertheless a lawyer has an ethical obligation to take steps necessary to protect information relating to the representation of a client under RPC 1.6 even if the lawyer will not be compensated for those efforts.

[amended 2009]