Video: Privileged Communication in Tax Practice

In this lesson, Nick Palazzolo, CPA, delves into the intricacies of privileged communication within the realm of tax practice. He sheds light on the differences between client-attorney privilege and tax practitioner-client privilege, illustrating the conditions under which these privileges apply and the extent of the confidentiality they offer. Nick clarifies the unique roles of CPAs, enrolled agents, and enrolled actuaries in the context of privileged communication. Furthermore, he identifies situations in which such privileges might not protect the information, such as when discussing matters unrelated to tax advice or engagements surrounding tax shelters. By the end of the lesson, Nick ensures a comprehensive understanding of when and how these privileges protect communications, an essential knowledge point for navigating the legal landscape of tax practice.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Privileged communication. Well, there's a client attorney privilege. You've probably heard of that, whether it's through a TV show or just general knowledge about how the legal system works, but we also have tax practitioner client privilege. Well, communications between a taxpayer and their attorney, as well as communications between a taxpayer and a federally authorized tax practitioner, such as an enrolled agent, which is someone who can conduct taxes, right? We talked about them a little bit. You'd have to take a test and, but really anyone can provide taxes. Remember, all you need is a PTIN, that number, but enrolled agent gives a little more credibility. CPA gives a little more credibility. Enrolled actuary, this is someone who's going to be a little more math oriented. Someone who's a little bit different, maybe considered privileged under certain circumstances. Well, first talking about the attorney client privilege, because attorneys can be involved in this whole tax preparation process. Well, the attorney client privilege protects confidential communications between a taxpayer and their attorney that are made for the purposes of obtaining legal advice. This privilege is going to apply to communications made to an attorney who is licensed to practice law in the relevant jurisdiction and who's acting in a legal capacity. The privilege belongs to the taxpayer who may choose to waive it. Now, similarly, the tax practitioner client privilege protects confidential communications between a taxpayer and their federally authorized tax practitioner that are made for the purpose of obtaining tax advice. This privilege is going to apply to communications made to a practitioner who is authorized to practice before the IRS and who is acting in a professional capacity. The privilege belongs to the taxpayer who may choose to waive it. It's important to note here that the

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Federal Tax Procedures

Module: 2 Concepts, 35 Videos

Common Law Duties and Liabilities to Clients and Third Parties Overview

1:52

Introduction to Common Law Duties and Liabilities to Clients and Third Parties

1:35

Legal Liabilities of Tax Preparers

7:08

Example of a Breach of Contract