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

Answer options:

Advice regarding a criminal tax investigation.

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

Written advice regarding the promotion of a tax shelter.

Workpapers prepared for the purpose of preparing a tax return.

How to approach this question

Identify the specific scope and exclusions of the IRC §7525 privilege.

Full Answer

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

IRC §7525 extends the common law attorney-client privilege to federally authorized tax practitioners (CPAs, Enrolled Agents) in non-criminal tax matters before the IRS or in federal court. It does NOT apply to criminal tax matters, nor does it apply to written advice regarding the promotion of tax shelters.

Common mistakes

Assuming the CPA privilege is identical to attorney-client privilege (it is not; criminal exclusion is a major difference).

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