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Tag Archive for Section 7525

Kovel Agreements: The Solution To Well-Meaning But Useless Tax Practitioner – Client Privilege?

Contrary to popular belief, there is no accountant-client privilege recognized in federal law. However, in 1998, Congress enacted a limited privilege for tax advice. Section 7525 extends the same common law protections of confidentiality that apply to communications between a taxpayer and an attorney to communications between a taxpayer and any “federally authorized tax practitioner.” IRC § 7525(a)(1).

Thus, if the communication would be considered privileged if it was between a taxpayer and an attorney, then so too will it be privileged if it is between the taxpayer and a federally authorized tax practitioner. IRC § 7525(a)(3)(A). The term, “federally authorized tax practitioner” applies to any individual who is authorized to practice before the IRS. For example, it includes CPAs, enrolled agents, and enrolled actuaries. Read more