WHEN WAS the last time you bought a new car with cash? Not a check or a money order, but bills -- tens, twenties, hundreds. How about that trip to Paris? Did you walk into the travel agency and plunk down a stack of C notes? Most of us don't have enough in our bank accounts to make large purchases in one fell swoop, but some people keep that kind of money around in mattresses, old jelly jars and even safe deposit boxes. And they prefer to pay cash for everything, usually for one of two reasons: they have obtained the money illegally (often in the drug trade) and they don't want the government to find out about it, or they have earned the money but they prefer not to pay taxes and don't want the government to find out about it. Naturally, the government wants to find out about it.
Last year, Congress passed a law requiring businesses to report to the IRS any cash transaction involving more than $10,000. The legislators cited IRS data indicating that $249 billion in legally earned income was not being reported, resulting in lost tax revenues of $55 billion. Unreported illegal income costs the Treasury another $9 billion a year. Monitoring large cash transactions was designed to stem some of these staggering losses. But one group -- lawyers -- has already raised objections and asked Congress for an exemption from the law. Their theory is that the requirement threatens the confidential relationship between attorneys and clients because the government might use the report of a large cash fee as evidence in a tax-evasion case or a criminal prosecution. Cynics might also conclude that compliance would highlight the lawyer's own taxable income as well.
The confidentiality of communications between attorneys and clients is recognized in American law in order to promote the trust and confidence essential to the relationship, especially in criminal cases. Lawyers may not be required to reveal the substance of matters communicated to them by a client in professional confidence. But the privilege is not without exception, and its scope is always being tested in the courts. Many courts have held that, as a general rule, neither the identity of a client nor information about the legal fees paid by a client should be considered confidential information.
There is no indication that Congress intended to exclude lawyers from the cash-reporting requirement when the law was passed last year. And there are ample grounds for concluding that legal-fee payments fall within the targeted group of transactions. The law is a reasonable one, and it should stand. Let the lawyers, as they are well able to do, take their case for an exemption to court.