Describe the accountant-client privilege.
What will be an ideal response?
Many states grant protection to accountants' working papers and also to conversations, letters, and memorandums between accountants and their clients. However, federal courts do not always recognize such state statutes. A privilege of confidentiality has not been recognized in federal tax cases. An accountant may be forced by a subpoena to make available to the Internal Revenue Service (IRS) working papers involving a client who is being investigated. The accountant may also be forced to testify about the client's records and about conversations that the accountant had with the client. The same is true in investigations made by the Securities and Exchange Commission (SEC). In 1998, a federal statute extended the attorney-client privilege to a "federally authorized tax practitioner." That term encompasses a nonlawyer who is nevertheless authorized to practice before the Internal Revenue Service. The new privilege protects communications between a taxpayer and this federally authorized tax practitioner to the extent the communication would be considered a privileged communication as if it were between a taxpayer and an attorney. It does not protect work product. Further, nothing in the statute suggests that these nonlawyers are entitled to privilege when they are doing other than lawyers' work.
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