Client-accountant privileges are privileges of confidentiality, or rather, a group of privileges, available under federal and state law. The accountant-client privileges can be classified into two categories: proof privileges and non-verification privileges.
Proof of privilege is one that may be as a general rule declared successfully in court. The non-proofing privilege is (A) which can not be retained in court, or (B) which, under the provisions of the privileged law, does not apply in the face of an order from an attractive disclosure court of communications claimed for its privileges. The verification and non-verification version of the accountant's client privilege is, as a general rule, the creation of Federal or state laws.
Under general English law, underlying American law, there is generally no client-accountant privilege. In the United Kingdom in particular, the Proceeds of Crime Act 2002 actually requires accountants (and lawyers, insolvency practitioners, etc.) who suspect their clients of tax evasion to report to authorities without informing clients that they have done so, subject to a maximum sentence of 14 years. This affects even accountants who uncover claims that may be unintentional for a fee. In Canada, the Federal Court of Appeal records American policy but refuses to give weight to it on the grounds that Parliament must choose to enforce similar rules in Canada.
Video Accountant-client privilege
Non-proof client-client privileges
Some countries have enacted non-affirmative accounting privileges.
For example, Texas has a privileged rule that requires a certified public accountant (CPA) not voluntarily disclose information communicated to the CPA by the client in connection with the engagement without the client's consent. However, such privileges are generally not applicable in the case of administrative summons by the Internal Revenue Service under 26 USCÃ, § 602, in the case of summons under the Securities Exchange Act of 1934, or in the case of a court order.
Maps Accountant-client privilege
The federal official tax privilege is a limited authentication privilege available under American federal tax law. This privilege is defined in an amendment to the Internal Revenue Code made by the Internal Revenue Reform and Restructuring Act of 1998:
- In respect of tax advice, the same common legal protection of confidentiality applicable to communications between taxpayers and lawyers shall also apply to communications between taxpayers and any federal official tax practitioners so long as communications shall be deemed to be preferential communications if it between a taxpayer and an attorney.
By law, the term "federal official tax practitioner" (or FATP) means an individual authorized by Federal law to practice before the Internal Revenue Service in which the practice is subject to Federal regulations under 31 USC Ã,§Ã, 330. The term ' tax advice 'means the advice given by the individual with respect to the problems that exist within the scope of the individual's authority to practice.
There are, however, some significant limitations to FATP privileges.
Not applicable in criminal proceedings or state lawsuits
Unlike the lawyer-client privilege, FATP privileges do not apply in criminal matters, and do not apply in the state tax process. Privileges may be affirmed only in "non-criminal tax matters before the Internal Revenue Service" and "non-criminal taxes processed in Federal courts brought by or against the United States."
Effect date of communication on FATP privileges availability
FATP privileges apply only to communications conducted on or after July 22, 1998. Privileges do not apply to written communications prior to October 22, 2004 between a federal tax official and a director, shareholder, officer, employee, agent or representative of a company in connection with the promotion of the direct or indirect participation of the enterprise in any tax shelter. Section 7525 was amended by the American Jobs Creation Act of 2004, so that the privilege does not apply to written communications made on or after October 22, 2004, involving a federal tax official who deals with the participation of everyone (not just corporations) at tax shelters. This is a further limitation of privileges.
Practitioner
The term FATP includes lawyers, CPAs, registered agents, or registered actuaries. FATP privileges generally do not apply to accountants who are not CPA or EA (unless they qualify as a registered actuary).
FATP privileges may not apply to unlicensed certified public accountants to practice in a country where clients live (for example, in situations where clients live in New Jersey but work in New York, where he consults with a CPA licensed in New York but not in New Jersey). Because CPAs are not licensed to practice in the country where clients live, communications may not be eligible for privileges.
Tax suggestions versus business suggestions
FATP privileges apply only to tax advice. Advice should be treated as confidential by accountants and clients to be protected by privilege. If the communication is disclosed to a third party, then it is not a secret. Privileges do not include general business consulting or personal financial planning advice.
Preparation of tax return
With respect to the communications involved in the preparation of tax returns, there is a division of authority. Many of the relevant legal cases were made prior to the creation of FATP privileges in 1998, and relate to the attorney-client privilege.
Most legal cases indicate that communication with respect to the preparation of tax returns is not covered. Based on the arguments received by the US Court of Appeals for the Ninth Circuit, communications relating only to preparing tax returns do not involve giving or receiving legal advice (see for example, United States v. Gurtner ). The US Court of Appeals for the Eighth Circuit, meanwhile, has stated that tax returns are not privileged. The freeze is based on the reason that the tax return is directed to disclosure to a third party, that is, the Internal Revenue Service, so there is no expectation of confidentiality, which defeats the claim that the return or related communications are privileged.
One minority view of finding privileges may apply to communications about what should be claimed upon return. Another minority view is that such communication can be considered as "legal" advice.
However, on balance, the weight of authority is that communication with respect to the preparation of tax returns may not be covered by privileges.
Note
See also
- The lawyer's privilege
Source of the article : Wikipedia
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