Sam Rohrer's Tax Plan May Violate Attorney Client Privilege

"Mr. CUTLER. Okay. Off of the banks and actually briefly on to attorney's fees and things. How do you envision the collection of this tax for attorney hours? It is my understanding the contingent fee agreements will not be included; however, fee-for-service items will.
Mr. ROHRER. Right.
Mr. CUTLER. For example, the drafting of a will, the probate of a will, and things like that. Is that correct?
Mr. ROHRER. That is correct.
Mr. CUTLER. What system will be in place in order to verify that in fact the attorneys are submitting the correct amount of tax without violating the attorney-client privilege?
Mr. ROHRER. Well, to the same extent that, oh, other financial entities, the bank— I mean, they themselves right now, when they file their income tax, how does the IRS (Internal Revenue Service) or the State Department of Revenue determine that they have in fact included everything without violating client privilege? And the only reason for saying that is this: There are entities within the system now under already currently collected taxes – it does not have to be a sales tax – for which there are privacy matters that are protected, and that is one here that I would have no question whatsoever that between, if this were to pass, that between the attorneys in that case or a financial planner – the same thing would apply to a financial planner or an accountant or anybody else – that that data, personally identifiable data – which is the main concern, that you have a name of something – in fact is protected, where at the same time you have evidence that a certain service at a certain cost in fact was provided. So I think those things already exist in other areas that can be transferred over.
Mr. CUTLER. It is my understanding, to further the example of the financial institutions, that in those cases, if there is a question, an audit can in fact be called. Is that correct?
Mr. ROHRER. You mean with the Department of Revenue now?
Mr. CUTLER. Correct.
Mr. ROHRER. The Department of Revenue does have the ability to conduct audits on areas of tax where they have to enforce the law, yeah.
Mr. CUTLER. And while I realize that there is a certain expectation of privacy for financial institutions, I would assume in that case that the Department of Revenue would in fact have access to the records and the number of hours worked just in order to verify the amount taxable. Is that correct?
Mr. ROHRER. Well, I am not sure how much they actually are getting into it. I am not an expert on the degree of what they look for, but I know enough that there are aspects of information under income tax. I mean, our medical facilities provide and pay taxes, and the medical data is protected by law. So there are barriers that are put in place already with protected information in regard to tax that are shielded even in the case of an audit. So what I am saying is that to the extent that we protect currently health data, which is protected under Federal law, that the same would apply to what would be construed to be personally identifiable information that should not be a part of an audit per se.
Mr. CUTLER. Mr. Speaker, I am very familiar with HIPAA (Health Insurance Portability and Accountability Act of 1996), I actually worked with that in my prior employment, but I also do know that there are certain circumstances where that information can in fact be opened up, whether it be with a financial institution or a health-care institution. And I guess that is my concern, because all of these protections that we are discussing, whether they be HIPAA or whether they be financial safety measures, they are all by statute. However, the attorney-client privilege is above statute. It is something that is grounded in our law and it is required for the free exchange of information and, quite frankly, the confidence to obtain good representation to make sure that the attorney truly understands the issue that is before them and that they can adequately represent their client. So while I understand that statutes might provide some of that protection, I am not sure that same protection would still exist in this audit. "

House Journal January 28, 2008