Attorney-Client Privilege (Tax Return Preparation)

Attorney-Client Privilege (Tax Return Preparation) (Golding & Golding, Board-Certified Tax Specialist)

Attorney-Client Privilege Tax Return Preparation: The Attorney-Client privilege tax return preparation analysis for IRS Streamlined Offshore is very important. In 2014, the IRS developed the Streamlined Filing Offshore Procedures. The program was developed as an alternative to traditional voluntary disclosure and in response to increased IRS enforcement of foreign accounts compliance. Since the representation involves both legal and complex tax preparation, clients benefit immensely from retaining a dually-licensed Attorney & Enrolled Agent or Attorney/CPA. We have been contacted numerous times by clients who were misled by inexperienced counsel who misrepresented the nature of Kovel (see below), and put their attorney-client confidentiality at serious risk. 

By using an outside CPA, the client (unnecessarily) jeopardizes their attorney client privilege. 

Attorney-Client Privilege Tax Return Preparation (Streamlined Offshore)

We summarize Attorney-Client privilege tax return preparation rules for you. The IRS has increased enforcement of offshore reporting. The 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:

When it comes to streamlined disclosures, attorney-client privilege and tax return preparation, clients benefit greatly from using a dually-licensed attorney with advanced tax credentials and certifications — which is considered a prerequisite for this specialized area of tax law.

How to Find Qualified Streamlined Offshore Counsel

Experienced tax attorneys in this field will have the following credentials/experience:

  • Board Certified Tax Law Specialist credential
  • Master’s of Tax Law (LL.M.)
  • Dually Licensed as an EA (Enrolled Agent) or CPA
  • 20-years experience as a practicing attorney
  • Extensive litigation, high-stakes audit and trial experience

Why is Hiring Dually-Licensed Counsel Important?

The purpose of hiring a dually-licensed counsel is not to create attorney-client privilege for tax return preparation.

Rather, the purpose of hiring a dually-licensed attorney is to PROTECT the attorney-client privilege.

When you speak with a dually-licensed Tax Attorney/EA or Tax Attorney/CPA, you are in no jeopardy of breaking the attorney-client privilege on anything related to the legal aspect of the submission.

And, most experienced dually-licensed tax attorneys charge a flat-fee for both tax and legal representation, to provide comprehensive tax and legal support throughout the process.

What some less-experienced attorneys fail to understand, is that it is human nature to want to speak with someone you are working with, about all aspects of your case — this includes an outside CPA.

If your attorney refers you to an outside CPA, your attorney-client privilege and confidentiality is at risk. We see it all the time, and it goes like this:

  • 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.

By hiring a dually-licensed tax attorney, the client is protected from making legal statements to a non-attorney, since the entire matter is handled in-house — thereby eliminating the chance of jeopardizing the attorney-client-confidentiality privilege.

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.

Golding & Golding (Board-Certified Tax Law Specialist)

We specialize exclusively in international tax, and specifically IRS offshore disclosure.

We have successfully represented clients in more than 1,000 streamlined and voluntary offshore disclosure submissions nationwide and in over 70-different countries. We have represented thousands of individuals and businesses with international tax problems.

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants and Financial Professionals worldwide.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Sean M. Golding 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 Golding & Golding 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 Streamlined Counsel?

How to Hire Experienced Streamlined Counsel?

How to Hire Experienced Offshore Counsel?

Generally, experienced attorneys in this field will have the following credentials/experience:

  • Board Certified Tax Law Specialist credential
  • Master’s of Tax Law (LL.M.)
  • Dually Licensed as an EA (Enrolled Agent) or CPA
  • 20-years experience as a practicing attorney
  • Extensive litigation, high-stakes audit and trial experience

Interested in Learning More about Golding & Golding?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant. 

Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.

Golding and Golding, Board-Certified Tax Law Specialist

Golding and Golding, Board-Certified Tax Law Specialist

Golding & Golding: Our international tax lawyers practice exclusively in the area of IRS Offshore & Voluntary Disclosure. We represent clients in 70+ different countries. Managing Partner Sean M. Golding is a Board-Certified Tax Law Specialist Attorney (a designation earned by < 1% of attorneys nationwide.). He leads a full-service offshore disclosure & tax law firm. Sean and his team have represented thousands of clients nationwide & worldwide in all aspects of IRS offshore & voluntary disclosure and compliance during his 20-year career as an Attorney.

Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.
Golding and Golding, Board-Certified Tax Law Specialist