Company Cannot Claim Attorney-Client Privilege

Company Cannot Claim Attorney-Client Privilege

May 05, 1999 | By Keith Martin in Washington, DC

A company could not claim attorney-client privilege for documents prepared by its accountant who is also a lawyer.

The documents were prepared in connection with work on the company’s tax returns. A US appeals court held in late April that documents prepared by accountants are not privileged from disclosure if the IRS wants them on audit. It said the fact that the adviser was also a lawyer would not shield the documents if he was doing work normally done by accountants.

In 1998, Congress created a special statutory privilege for accountants, like the attorney-client privilege, but this new privilege does not apply to any advice accountants give relating to corporate tax shelters. The judge mentioned this provision, but said it would not have changed his analysis even if the documents in question had been prepared after July 21, 1998 when the new statutory privilege took effect. The case is United States v. Richard A. Frederick.