The New Accountant-Client Privilege Provision: A Partial Step Forward for Nonattorney Practitioners

National Public Accountant, Vol. 44, p. 41, July 1999

2 Pages Posted: 29 May 2008

See all articles by Francine J. Lipman

Francine J. Lipman

University of Nevada, Las Vegas - William S. Boyd School of Law

James E. Williamson

San Diego State University - College of Business Administration

Abstract

For years accountants have argued that nonattorney tax preparers' communications with their clients should be protected by the same privilege that applies to attorney-client communications. Accountants argue that without such privileged confidentiality, clients might be reluctant to disclose information that tax practitioners must have to properly prepare their clients' tax returns. Accountants also believe that to properly represent their clients in tax controversies, their accountant-client communications must be protected. Without such privilege, nonattorney tax practitioners are often hesitant to probe into areas that should be analyzed, because of their legitimate concerns that their accountant-client communications are not protected. On the other side of the debate, extending the attorney-client privilege to non-lawyers has generally been, and was recently opposed by the American Bar Association. During the summer of 1998, Congress ended this debate when it passed and President Clinton signed into law the Internal Revenue Service Restructuring and Reform Act of 1998. New Section 7525 of the Internal Revenue Code of 1986, as amended, extends the attorney-client privilege to CPAs and enrolled agents and actuaries in certain federal noncriminal tax matters for communications made after July 22, 1998. Specifically, the new accountant-client privilege extends to taxpayers confidentiality protection for "tax advice" given by CPAs and enrolled agents and actuaries in matters before the IRS or in cases before a federal court in which a federal tax is involved. While tax practitioners may have initially believed that they made significant strides in their quest for protection for their client communications, the new accountant-client privilege is limited and significantly narrower than the attorney-client privilege. This article explores and explains the privilege and its meaningful limitations.

Keywords: accountant-client privilege, privilege, accountant-client communications

JEL Classification: K10, K41

Suggested Citation

Lipman, Francine J. and Williamson, James E., The New Accountant-Client Privilege Provision: A Partial Step Forward for Nonattorney Practitioners. National Public Accountant, Vol. 44, p. 41, July 1999. Available at SSRN: https://ssrn.com/abstract=1138427

Francine J. Lipman (Contact Author)

University of Nevada, Las Vegas - William S. Boyd School of Law ( email )

4505 South Maryland Parkway
Box 451003
Las Vegas, NV 89154
United States

James E. Williamson

San Diego State University - College of Business Administration ( email )

School of Accountancy
San Diego, CA 92182-8230
United States
619-594-6021 (Phone)

HOME PAGE: http://www.sdsu.edu

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