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CHAPTER 8 - the IRS might consider to be a potential fraud...

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CHAPTER 8 EVIDENTIARY PRIVILEGES 1. Answer: Yes. This is the kind of confidential tax advice which would have been privileged if it had been rendered by an attorney. There is an argument that rendering tax advice for a proposed transaction is not within the normal scope of representation before the IRS under Circular 230 (i.e., not presenting evidence to the IRS with respect to a prior transaction). However, in the opinion of the authors, such a narrow reading of the privilege is not a likely result. Note that the AICPA position in the above text does not mention any such limitation to the allegedly privileged tax advice for “tax opinions. (A) Answer: No privilege. The accountant’s privilege is limited to a “noncriminal tax matter before the Internal Revenue Service. Code Sec. 7525(a)(2)(A). Therefore, the client would be well advised not to rely upon an accountant’s tax advice with respect to any matter with significant fraud potential. This appears to be a severe limitation because it is often difficult to predict what
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Unformatted text preview: the IRS might consider to be a potential fraud case. (B) Answer: No privilege. The accountant privilege is limited to noncriminal tax matters before the IRS or noncriminal tax proceedings in Federal court. 2. Answer: No. The client waived the privilege by distributing the document to a third party. 3. Answer: Yes under both assuming that the clients anticipation of litigation is reasonable. If the IRS subsequently summons the advice memorandum, it would be difficult for the IRS to convincingly argue that there was little prospect of litigation as of the date the advice was given. 4. Answer: This question is intended to encourage class participation and point out that the exceptions to accountant privilege are many and broad, including criminal matters, simple return preparation, and business as opposed to tax advice....
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CHAPTER 8 - the IRS might consider to be a potential fraud...

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