ExpertHard1 markMultiple Choice
CPA · Question 09 · Area I: Ethics & Tax Procedures
In which of the following situations does the tax practitioner privilege under IRC §7525 apply?
In which of the following situations does the tax practitioner privilege under IRC §7525 apply?
Answer options:
A.
A criminal tax investigation regarding the client's failure to report income.
B.
A civil proceeding before the IRS regarding a non-tax shelter matter.
C.
Written advice regarding the promotion of a corporate tax shelter.
D.
A state tax court proceeding regarding sales tax liability.
How to approach this question
IRC §7525 limitations: Non-criminal only, Federal only, No tax shelters.
Full Answer
B.A civil proceeding before the IRS regarding a non-tax shelter matter.✓ Correct
The IRC §7525 privilege extends the common law attorney-client privilege to federally authorized tax practitioners. It applies only to non-criminal tax matters before the IRS or in federal court. It does not apply to criminal matters or tax shelters.
Common mistakes
Assuming the privilege is absolute like the attorney-client privilege (it is much narrower).
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