Posted in Parts I, II and III.
Tax advisers may rely on the practitioner-client privilege of Sec. 7525 and the work product doctrine to protect certain communications and materials from IRS summons and discovery.
Despite careful measures to protect privileged communication, exceptions may override the practitioner privilege. Two exceptions that have long applied to the attorney-client privilege, the crime-fraud exception and the return preparation exception, also apply to the practitioner privilege. Two additional exceptions, the tax shelter exception and the criminal-proceeding exception, are unique to the practitioner privilege.
Neither the attorney-client privilege nor the practitioner privilege applies to communications between a client and adviser in furtherance of a crime or to perpetuate a fraud. 18 The Seventh Circuit has pointed out that advice relating to future wrongdoing rather than past wrongdoing does not come under the privilege. 19 This is true even if the tax practitioner is unaware of the client’s criminal or fraudulent intent. Read more