Former IRS Attorney Supports Microsoft Privilege Claims

1. I am an partner at Baker & McKenzie, LLP. I am admitted to the practice of law in New York and Connecticut, and represent Microsoft Corporation ("Microsoft") pro hac vice in these consolidated cases. I joined Baker & McKenzie following 16 years as an attorney with the Internal Revenue Service ("IRS"). For the last six of those 16 years, I served as a Special Trial Attorney, and was responsible for litigating some of the largest, most complex, and most sensitive cases then pending before the United States Tax Court. My current practice focuses upon large case tax litigation and administrative tax controversies.

2. I submit this declaration in support of Microsoft's assertion of attorney-client privilege, work product protection, and the 26 U.S.C. § 7525 federally authorized tax practitioner privilege.

3. On October 30, 2014, the IRS served a summons on Microsoft, requesting that Microsoft produce documents (the "Designated Summons"). Attached as Exhibit A is a true and correct copy of Microsoft's privilege log for documents responsive to the Designated Summons that remain in dispute (the "Designated Summons Privilege Log").

4. On November 17, 2014, the IRS served a third-party summons on KPMG LLP ("KPMG"), requesting that KPMG produce documents (the "KPMG Summons"). Attached as Exhibits B and C are true and correct copies of Microsoft's privilege logs for documents responsive to the KPMG Summons that remain in dispute (the "KPMG Central Files Privilege Log" and the "KPMG Personal Files Privilege Log"). The KPMG Central Files Privilege Log and the KPMG Personal Files Privilege Log are also attached as the Appendix to the Declaration of Brett A. Weaver.

5. On November 19 and 20, 2014, the IRS served additional summonses on Microsoft, requesting that Microsoft produce documents ("Related Summonses 2 and 3"). Attached as Exhibit D is a true and correct copy of Microsoft's privilege log for documents responsive to Related Summonses 2 and 3 that remain in dispute (the "Related Summonses 2 and 3 Privilege Log").

6. In preparing this declaration, I have reviewed each of the privilege logs attached as Exhibits A through D, as well as each of the documents identified in these privilege logs. I am familiar with the work that was performed by Microsoft's in-house lawyers, its outside legal counsel, and its other 26 U.S.C. § 7525 federally authorized tax practitioners reflected in these documents.

7. For each of the 174 documents over which Microsoft asserts attorney-client privilege, work product protection, or the 26 U.S.C. § 7525 federally authorized tax practitioner privilege, the privilege logs attached as Exhibits A through D identify, for each document: (1) the beginning and ending Bates numbers; (2) the date the document was generated, labeled, or transmitted; (3) the sender or author; (4) the recipients; (5) description of subject matter stated with particularity, (6) description of type or nature of the document; and (7) an explanation as to the basis for each assertion of privilege. Each privilege log follows the particular format Microsoft employed when meeting and conferring with the government concerning Microsoft's privilege claims.

8. Attached as Exhibit E is a list of the Microsoft in-house lawyers and outside legal counsel that were involved in providing the legal advice for which Microsoft has claimed the attorney-client privilege and that remain in dispute.

9. I have reviewed the 12 documents over which Microsoft asserts attorney-client privilege. Each privileged document relates to either: (i) requests for legal advice from attorneys made by Microsoft employees; or (ii) the communication of legal advice from attorneys to Microsoft employees.

10. To the extent that the documents over which Microsoft asserts attorney-client privilege address nuances of and contractual provisions relating to Microsoft's business operations, the legal advice addressed those items that had tax consequences under applicable United States tax laws.

11. To the best of my knowledge, Microsoft never waived its attorney-client privilege over any of these 12 documents.

12. Attached as Exhibit F is a list of the Arthur Andersen, KPMG, EY, and PWC lawyers and certified public accountants that were involved in providing the tax advice for which Microsoft has claimed the 26 U.S.C. § 7525 federally authorized tax practitioner privilege and that remain in dispute.

13. I have reviewed the 164 documents over which Microsoft asserts the 26 U.S.C. § 7525 federally authorized tax practitioner privilege. Each privileged document relates to either: (i) Microsoft's requests for tax advice from federally authorized tax practitioners (as defined in 26 U.S.C. § 7525(a)(3)(A); or (ii) the communication of tax advice to Microsoft from federally authorized tax practitioners (as defined in 26 U.S.C. § 7525(a)(3)(A)).

14. To the extent that the documents over which Microsoft asserts the 26 U.S.C. § 7525 federally authorized tax practitioner privilege address nuances of and contractual provisions relating to Microsoft's business operations, the tax advice addressed those items that had tax consequences under applicable United States tax laws.

15. To the best of my knowledge, Microsoft never waived the 26 U.S.C. § 7525 federally authorized tax practitioner privilege over any of these 164 documents.

16. I have reviewed the 170 documents over which Microsoft asserts work product protection. These documents were prepared by Microsoft or its representatives, and reveal mental impressions, strategies, assessments of strengths and weaknesses, and assessments of positions by Microsoft representatives. Anticipation of litigation permeates these documents, affecting both the issues discussed and the level of detail of the analysis.

17. To the best of my knowledge, Microsoft never waived work product protection over any of these 170 documents.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on this 12th day of September, 2016 in New York, New York.