Tax Advisers Lose Another Layer of Client-Adviser Privilege

In the continuing battle between tax advisers and the IRS regarding turning over taxpayer records of those involved in tax shelters, it seems the advisers are losing. A federal appeals court ruled yesterday that BDO Seidman must turn over the names of clients who purchased certain tax shelters from the firm.

BDO has been embroiled in a privacy-based legal battle with the IRS for over a year. "BDO Seidman and the IRS disagree as to what documentation the service is entitled to under the law," said a BDO spokesman last summer.

Several rulings and appeals led up to yesterday's decision by a three-judge panel of the United States Court of Appeals for the Seventh Circuit, which covers Illinois, Wisconsin and Indiana.

The panel cited a finding in the tax code that fundamentally requires BDO to have kept records and report to the IRS the names of those who invested in tax shelters.

Legal observers agree that this move is a big blow to privacy advocates who want to keep the nature of communications between advisers and their clients just that - private.

"I don't think that investors are going to be able to hide behind some kind of privilege," Elliott H. Kajan, a tax lawyer at Kajan Mather & Barish in Los Angeles, told the New York Times.

Lee Sheppard, a writer for Tax Notes, said the BDO decision "means that if you filed a tax return with a tax shelter then your name is not a secret any more and you have no reason to believe that the guys who sold you the tax shelter will keep it secret." She continued, "The fact that there is no confidentiality to what you put on a tax return" is a big victory for the government.

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.