Tag Archive for Kovel Agreement

What Is A Kovel Accountant? A Deep Dive

Kovel Agreement

The Internal Revenue Service (IRS) has broad statutory authority to investigate and audit taxpayers.[i]  In many cases, the IRS attempts to fulfill this statutory authority through seeking communications made between taxpayers and third parties, such as tax return preparers and CPAs.  Oftentimes, the IRS is authorized to obtain these communications.

However, there are methods to protect communications made between taxpayers and accountants.  One such method is referred to as a Kovel agreement.  Under that agreement, the taxpayer engages a tax attorney who, in turn, engages the services of a tax accountant.  When done properly, federal courts have recognized that communications amongst these parties are not subject to disclosure under the theory that such communications are protected by the attorney-client privilege.

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Don’t Get Cracked

In the Emmy award-winning “Regular Show” episode Eggscelent (see video below), Mordecai had to eat a 12-egg omelet in under an hour to win a funny-looking trucker hat for his good friend Rigby. Lawyers often face their own eggscelent challenge, but the stakes are quite a bit higher. My colleague Larry A. Campagna, who is a partner at a Houston law firm which represents people accused of financial crimes, introduced the concept of the “eggshell audit” in a series of articles first published in the summer of 2012. His tips for dealing with these situations are every bit as insightful today as they were two and a half years ago.

As a preliminary matter, an eggshell audit is an event at which the client and representative are aware of red flags that may draw the attention of government Read More

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