Enrolled Agent - Client Privilege

Are our communications confidential?

Under 26 U.S. Code § 7525, clients of Enrolled Agents (EAs) have specific confidentiality privileges in their communications, which are analogous to the attorney-client privilege. The main aspects of these privileges are:

General Rule

• Confidentiality Protections: The same common law protections of confidentiality that apply to attorney-client communications also apply to communications between taxpayers and federally authorized tax practitioners (including EAs) concerning tax advice.

Limitations

• Scope of Privilege: This confidentiality privilege is limited to:
  • Noncriminal Tax Matters: Privilege applies in any noncriminal tax matter before the IRS.
  • Noncriminal Tax Proceedings: Privilege applies in any noncriminal tax proceeding in Federal court brought by or against the United States.

Definitions

• Federally Authorized Tax Practitioner: This term includes individuals authorized under federal law to practice before the IRS and whose practice is regulated under section 330 of title 31, United States Code. This includes EAs.
• Tax Advice: This refers to advice provided by a federally authorized tax practitioner regarding matters within the practitioner’s authority to practice before the IRS.

Exclusions

• Tax Shelters: The confidentiality privilege does not extend to written communications related to the promotion of participation in tax shelters. Specifically:
  • Promotion Communications: Any written communication between a federally authorized tax practitioner and any person, including directors, officers, employees, agents, or representatives of the person, or any other person holding an interest in the person, that promotes the direct or indirect participation in any tax shelter, as defined in section 6662(d)(2)(C)(ii), is not protected.

This statute ensures that clients can discuss their tax matters with EAs with a degree of confidentiality, fostering open communication while maintaining certain limitations, especially concerning tax shelters.