Bermuda Court Denies US Tax Information Exchange Due to Attorney-Client Privilege

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Saturday, September 1, 2001
Bruce Zagaris
On May 18, 2001, the Supreme Court of Bermuda denied a U.S. request for exchange of tax information in a celebrated case because of the taxpayers involved and the involvement of the interaction of the Convention with the attorney-client privilege. In a decision by the Honorable Vincent W. Meerabux, Puisne Judge, the court held that the breach of legal professional privilege required Bermuda to deny the request for tax information by the U.S. On January 6, 2000, the Minister of Finance issued notices to produce information under the U.S.A.-Bermuda Tax Convention Act 1986 (hereafter the Act) and served the notices on the Hemisphere Management Limited, the Bank of N.T. Butterfield & Son Ltd. and The Bank of Bermuda Limited. The taxpayers concerned, Almon Braswell, a U.S. taxpayer, Gero Vita International Inc. and G.B. Data Systems Inc. brought an action to block the request. The three applicants were in the business of alternative natural health remedies. Mr. Braswell figured prominently as well as a recipient of a Presidential pardon at the end of the Clinton Administration in criminal matters. He and the corporations in which he has an interest will now benefit from this decision in the civil tax litigation with the IRS…[more]