Which of the following communications between a CPA and a client would generally be protected by the tax practitioner privilege under IRC §7525?

Answer options:

Written advice regarding the promotion of a tax shelter.

Communications regarding a criminal tax investigation.

Tax advice regarding a non-criminal tax matter before the IRS.

Communications regarding the preparation of the tax return itself.

How to approach this question

IRC §7525 extends the attorney-client privilege to tax practitioners but with major exceptions: Criminal matters and Tax Shelters.

Full Answer

C.Tax advice regarding a non-criminal tax matter before the IRS.✓ Correct

IRC §7525 extends the common law attorney-client privilege to tax advice furnished by a federally authorized tax practitioner. However, it does not apply to criminal tax matters or to written advice regarding the promotion of a tax shelter.

Common mistakes

Assuming the privilege applies to criminal investigations or return preparation work.

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