## Facts

- A criminal-defense law firm received more than $10,000 in cash from a client as legal fees.
- Federal law (26 U.S.C. § 6050I) required the firm to file an information return (Form 8300) reporting, among other items, the payer’s identity.
- The firm filed Form 8300 reporting receipt of the cash but deliberately left blank the lines requesting the client’s name and identifying information.
- The firm asserted that identifying the client would prejudice the client and violate constitutional protections (Fifth and Sixth Amendments) and professional responsibility duties.
- The IRS assessed a $25,000 civil penalty under 26 U.S.C. § 6721(e) for “intentional disregard” of the reporting requirement.
- The firm paid the penalty, sought a refund, and then sued; the district court granted summary judgment to the government, finding a voluntary, conscious, and intentional failure to comply and no “reasonable cause.”
- The firm appealed to the Second Circuit.

## Issues

1. Whether “intentional disregard” under 26 U.S.C. § 6721(e) is established when a filer knowingly and deliberately fails to provide required Form 8300 information based on a claimed good-faith belief that noncompliance is legally justified.
2. Whether the firm proved “reasonable cause” and lack of “willful neglect” sufficient to avoid the penalty despite the intentional omission.

## Decision

- The Second Circuit affirmed summary judgment for the United States and upheld the $25,000 penalty.
- The court held that “intentional disregard” is shown when a taxpayer knows what the law requires and deliberately chooses not to comply (or is plainly indifferent), even if motivated by an asserted good-faith legal position.
- The court held the firm did not establish “reasonable cause” for omitting the client’s identity.
- The court rejected the firm’s reliance on attorney–client privilege, the Fifth Amendment, the Sixth Amendment, and ethics rules as bases to withhold the required identifying information.

## Legal Principles

- For civil penalties under 26 U.S.C. § 6721(e), “intentional disregard” is satisfied when the filer is aware of a reporting obligation and voluntarily, consciously, and intentionally fails to comply.
- A subjective good-faith belief that noncompliance is legally justified does not negate “intentional disregard” when the filer knowingly withholds required information.
- The “reasonable cause” exception (and absence of willful neglect) is not met where the failure is a deliberate objection to, or test of, a clear reporting requirement rather than a genuine misunderstanding or inability to comply.
- Client identity and fee payment information are generally not protected by attorney–client privilege absent exceptional circumstances; routine Form 8300 reporting ordinarily does not violate the Fifth or Sixth Amendments.
- Statutory reporting schemes are to be challenged through available administrative and judicial processes, not by unilateral noncompliance.

## Conclusion

The court upheld a civil penalty against a law firm that knowingly omitted a client’s identifying information from Form 8300, ruling that deliberate noncompliance constitutes “intentional disregard” under § 6721(e) and that asserted constitutional, privilege, and ethics concerns did not amount to reasonable cause.


Gerald B. Lefcourt, P.C. v. United States, 125 F.3d 79 (2d Cir. 1997)