Figures: tax year 2026
A certified public accountant (CPA) may hold a confidential tax memorandum that the Internal Revenue Service (IRS) cannot compel in one proceeding. The same memorandum may lack that privilege in another proceeding while remaining subject to restrictions on voluntary disclosure.
The American Institute of Certified Public Accountants (AICPA) imposes professional confidentiality duties on covered members. Four protections summarize the rules regarding privileged communications and information handling, separating protection against compulsion from obligations governing disclosure.
KEY: When no privilege applies, the practitioner must still evaluate the disclosure rules. That conclusion alone does not permit voluntary disclosure of client information.
A federally authorized tax practitioner is an individual permitted under federal law to practice before the IRS under the applicable federal regulatory framework. Protection concerns tax advice within that individual's permitted subject matter.
- Attorneys, eligible CPAs, and enrolled agents can qualify; an attorney's separate attorney-client privilege does not exclude the attorney from this definition.
- An enrolled actuary's qualifying advice must remain within the actuary's limited practice authority.
Common mistakes
- Credentials decide everything. A return preparer's title does not establish practice eligibility, qualifying advice, or the required forum.
- Every shelter discussion fails. The exclusion tests written communications connected with promotion of participation, rather than a transaction label alone.
- A lawyer copy creates protection. Adding counsel as a recipient does not convert existing preparation records into privileged legal communications.
Bottom line
- Privilege can block compelled evidence; confidentiality, return-information restrictions, and privacy duties independently govern information handling.
- Federal practitioner privilege requires qualifying confidential advice and a permitted noncriminal federal tax setting.
- Written communications connected with promoting participation in a tax shelter are excluded under the statutory conditions.
- Attorney-client privilege can protect legitimate legal advice in criminal matters, while crime-fraud, waiver, and other governing limitations remain relevant.
Exam shortcut
Start with the requested action: testimony, production, voluntary sharing, internal use, or return of client records. Identify the rule that addresses that action. Underline who advised, why the communication was created, who received it, and where it is demanded. Apply the federal forum screen before evaluating a claimed practitioner privilege. Read “written” and “promotion” together when shelter facts appear. A transaction label supplies a research cue, not every required element.
The full lesson (about 5,210 words, 35 min read) adds 4 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- I.D2
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