Privileged communications. Certain communications between attorneys or other authorized tax preparers and their clients are privileged. This means that customers can order their tax preparer to refuse to share communications and specific information with the government. The scope of the privilege dependence on the tax preparer’s status and their relationship with the client.
- There are two levels of privilege in the field of taxation:
- The attorney-client privilege exists between attorneys and their clients. Customers can use this privilege to protect confidential information and communications. The attorneys are professionally obligated to assert this privilege on behalf of their customers, unless the customer indicates otherwise.
- The privilege under Section 7525 of the Internal Revenue Code (Internal Revenue Code, IRC) applies to communications and information between certain federally licensed tax preparers and their clients. Specifically:
- For IRC Section 7525, federally authorized tax preparers are those that have one of the following designations:
- Certified Public Accountant (Certified Public Accountant, CPA).
- Enrolled Agent (Enrolled Agent, EA).
- Registered actuary.