Tax Advice Privilege Case Study

Code Summary: Code Section 7525 discusses the rights of confidentiality that a taxpayer would have between his or her tax practitioner that is a federally authorized tax practitioner. In order to be a federally authorized tax practitioner, the practitioner must be authorized to practice before the Internal Revenue Service. The code section states that the communication between the taxpayer and the tax practitioner with respect to tax advice is protected under the same confidentiality protections that would exist between a taxpayer and an attorney. Some exceptions to this confidentiality do exist however. A taxpayer and tax practitioner are not protected if the details of the communication involve tax shelters, which is an investment strategy

After reviewing John and Jane Smith’s points of view, it will be your turn as a tax professional to decide on the best course of action from a tax

Code section 7525 generally gives taxpayers protections of confidentiality with respect to tax advice. Since there is no accountant-client privilege under the common law, code section 7525 states that the confidentiality privilege that applies to a communication between a taxpayer and an attorney is applied to a communication between a taxpayer and an accountant as well. Although accountant-client privilege is derived from attorney-client privilege, the protection of the discussion between an accountant and a taxpayer is more limited. For example, code section 7525 provides protection for communications between a taxpayer and a federally authorized tax practitioner, which means that the tax practitioner should be a certified public accountant (CPA); however, all active attorneys are federally authorized tax practitioners. Furthermore, there are two more limits on what matters and communications are covered by code section 7525. First limitation is that accountant-client privilege just applies to noncriminal tax matters before the Internal Revenue Service and noncriminal tax proceedings in federal court, and it does not apply to written communications between a taxpayer and a CPA in regards to the promotion of a tax shelter. For example, an opinion letter that was written by a CPA to a client in connection with a tax shelter is not privileged under code section 7525.

Instructions: You should prepare a legal memorandum to your client providing tax advice on the proposal set forth here. Be sure to include citations to code sections, regulations and other authorities that you rely upon in reaching your conclusion. The paper generally runs about two to three pages and is due the last day of class or May 10, 2011..

TaxTime123 is an accounting firm that is located in Sacramento, California. They have many years of experience of providing a wide variety of accounting services to their clients. TaxTime123 offers reliable and dependable services. Their service rates are affordable. Client satisfaction is in the forefront of all that they do.

       The penalty is waived if the taxpayer uses Form 8275 to disclose a return position that is reasonable though contrary to the IRS position.

IRC section 6694 regulates all tax practitioners as a results of their tax return preparation. It imposes a penalty on a tax return preparer when any position taken by a tax preparer on a return if there is an understatement of tax.

As the overall businesses of the business cannot be reserved nor will be the specific tasks of the employees easy to regulate, there's a good amount of reasoning behind the thought of hiring another person to complete the job.

As stated by Schroeder, el. (2005), my professional responsibilities as a CPA include independence, scope of services, confidentiality, practice development, and differences on accounting issues. It is my responsibility to keep my professional judgment unbiased and base my opinions on factual information and to keep my personal interest separate from the clients work. It is my responsibility not to indulge any client with nonaudit services not relating to the financial audit. It is my responsibility to keep the clients information confidential and only report information that is deemed necessary for investors and outside users. It is my responsibility to not enter in to any advertisement that would be misleading or untrue. It is my responsibility to determine and discuss with the client any differences in accounting issues that related to how transactions are

If you prepare your own taxes, what software do you use? How long does it take you?

After the passage of the 16th Amendment, the nature and process of taxation changed many times. An author for the Virginia Law Review wrote in 1972, “Developing and maintaining an appropriate tax structure for a nation as economically complex and dynamic as the United States is a mammoth task” (Graetz, p. 1401). Because of this complexity, the nature of the Tax Code would need to be altered to keep up with what the country requires at a given time. Several significant changes have been made to the Tax Code, but none more significant than the passage of the Tax Reform Act of 1986 (TRA 86). TRA 86 was one of the most polarizing changes in tax law and where the current Code gets its name (Spilker et all., 2016, p. 2-11). It brought about more revisions than most people and businesses could keep up with, and it brought to light the deficiencies in implementing amendments to the Code, namely a disturbing lack of awareness from taxpayers of the alterations. Many businesses benefited from the changes—mostly large, well-established firms, but small mom-and-pop stores who have less stake in tax planning suffered (Scholes, Wilson, Wolfson, 1992, p.181). This negative effect would have been avoided if taxpayers had taken precautions and been aware of the impending changes in tax laws and if those changes had been communicated clearly to them.

This revenue procedure applies to a qualifying small business taxpayer as defined in section 5.01 with average gross receipts of $10,000,000 or less that is not

Since deciding to attend law school, I have sought a position at a large company where I could utilize my education and work ethic to build a career. Additionally, I have looked for an environment that would allow me to continue to develop both personally and professionally. In working as an attorney for the past two years, I have found a great interest in the field of taxation. Though approaching taxation from a legal perspective has exposed me to a variety of tax issues, I have realized that my interest lies in the numbers behind the taxes.

“Privilege.” What really is a privilege? Do you even consider yourself privileged? Well, the word “privilege” means “a special right, advantage, or immunity granted or available only to a particular person or group of people” and whether or not you consider yourself privileged really depends on how you define the word and whether you take it for granted or not.

Thank you for stopping by my office on Monday to discuss the relevant inquiries you and your wife Jane have while planning your 2011 tax return. I am only responding to the issues we discussed. I am confident that I can provide the best guidance to minimize your tax liability for I have been in practice for 5 yrs. As you know, there will be a billing for this consultation, but no tax return will be prepared unless an agreement is met.