Attorney-Client Privilege Tax Return Preparation
Attorney-Client Privilege Streamlined Filing: We have summarized the attorney-client privilege & confidentiality for Streamlined Offshore filings, since it is a very important aspect of the submission procedure.
The Streamlined Procedures are a form of tax amnesty.
These programs were introduced (as a stand-alone program) in 2014 to assist with delinquent FBAR reporting, and disclosure of previously unreported foreign accounts, assets, investments, and income.
We developed this website for the purpose of helping clients understand and navigate how the streamlined process works.
More and more clients are approaching us, and letting us know about how some less experienced copycat law firms are trying to mislead them on how the tax return preparation process works.
Referring Streamlined Tax Return Preparation to an Outside CPA is Dangerous
A misunderstanding of the attorney-client privilege can jeopardize client confidentiality. This especially true when the attorney handling the case refers their clients to an outside CPAs with a false understanding what protection is provided – if any – under Kovel.
There are two main issues:
- Is tax return preparation privileged?
- Are legal communications with a non-attorney privileged?
There is no attorney-client privilege for tax preparation, and communications with a non-attorney are not covered by the attorney-client privilege either.
The most important issue is to cost-effectively and efficiently submit the tax and legal application, while protecting the attorney-client privilege — before the streamlined program comes to an end.
The Attorney-Client privilege Tax Return Preparation rules are crucial in Streamlined Offshore cases.
The IRS Streamlined Program is one of the more popular “tax amnesty” programs used by taxpayers worldwide. When a person hires a Tax Attorney for an international tax matter, the client requires both tax and legal representation.
. Tax Attorney representation in the streamlined program has 3 main components to it:
- Detailed tax return preparation
- Legal representation
- Audit and Examination protection
Were you Referred by to an Outside CPA by your Attorney?
If your attorney refers you to an outside CPA, your attorney-client privilege and confidentiality is at risk.
Here is a common example of how it works:
- The Attorney misrepresents the purpose of Kovel to the client, and artificially reduces the fees.
- The Attorney sends the client off to a pre-selected CPA for tax preparation (based on the Attorney’s ability to profit from the selection).
- The client has more tax questions, so the client asks the tax attorney (since they are usually retained on a flat-fee).
- Since the attorney is not dually-licensed, & without advanced tax credentials, the Attorney is unable to answer tough client questions.
- The client speaks with the CPA, who charges hourly in addition to Attorney’s Fees and the discussion leads to more “legal matters.”
- The client has now risked losing the Attorney-Client privilege confidentiality.
What About a Kovel Accountant Agreement?
When you speak with less experienced Streamlined Offshore attorneys, they will reference something called “Kovel.”
A Kovel letter does not extend attorney-client privilege to tax preparation.
Why? Because there is no attorney-client privilege for tax return preparation.
When is Kovel Used?
Kovel is not used by experienced counsel in Streamlined Offshore Procedure matters.
That is because Kovel protection is extremely narrow (presuming it is not rejected by the court). A Kovel letter is used in very-limited situations, in which an attorney wants to try to extend the attorney-client privilege on matters involving highly-complex accounting/tax situations only.
Kovel is not statutory law, courts can reject Kovel, and Kovel does not provide confidentiality in routine tax matters — such as when an accountant prepares tax returns.
If the communications/materials were made for the purpose of obtaining accounting services, or if the advice sought was really the accountant’s rather than the attorney’s, no privilege exists.
Can a Kovel Agreement be Rejected?
Yes. A Kovel Letter is not statutory law, and can be rejected by courts.
We Specialize in Streamlined & Offshore Voluntary Disclosure
Our firm specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Our lead attorney is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
Interested in Learning More about our Firm?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
We specialize in FBAR and FATCA. Contact our firm today for assistance with getting compliant.