Accountant-client privilege
From Freepedia
Accountant-client privilege is an privilege defined in U.S. tax law introduced in the Internal Revenue Service Restructuring and Reform Bill of 1998 (HR 2676). It is a very limited confidentiality privilege which applies to certain non-attorneys.
According to Internal Revenue Code Section 7525(a)(1):
- With respect to tax advice, the same common-law protections of confidentiality which apply to a communication between a taxpayer and an attorney shall also apply to a communication between a taxpayer and any federally authorized tax practitioner to the extent the communication would be a privileged communication if it were between a taxpayer and an attorney. (However, this rule) may only be asserted in (A) any non-criminal tax matter before the Internal Revenue Service, and (B) an non-criminal tax proceeding in Federal Court brought by or against the United States.
- ...For purposes of this subsection, ...the term 'federally authorized tax practitioner' means any individual who is authorized under Federal law to practice before the Internal Revenue Service...The term 'tax advice' means advice given by an individual with respect to a matter that is within the scope of the individual's authority to practice.
In addition, this section of the tax code does not apply to any written communication between a Federally authorized tax practitioner and a director, shareholder, officer, or employee, or agent, or representative, of a corporation in connection with the promotion of the direct or indirect participation of such corporation in any tax shelter. [Tax Shelter is defined in IRC 6662(d)(2)(C)]
A federally authorized tax practitioner includes an attorney, a certified public accountant, an enrolled agent, or an enrolled actuary.
This accountant-client privilege only applies to tax advice. It does not apply with respect to the preparation of tax returns, general business consultations or even to personal financial planning advice. In addition, the advice must be treated as confidential by both the accountant and the client. If it is divulged to third parties, then it is clearly not confidential.
Some legal and tax professionals feel that the privilege does not apply to state and local tax matters and that any written copies of such communications should be kept in separate files from other communications with the same clients.
