Tax Shelter Exception to Confidentiality Privileges Relating to Taxpayer Communications

Prior to the AJCA, under the Code the common law privilege that applies to communications between a taxpayer and his or her attorney also applied to written communications between a taxpayer and a Federally authorized tax practitioner. This rule did not apply to communications about corporate tax shelters.

New Law

Under AJCA Section 813, the corporate tax shelter rule under Sec. 7525 is applicable to all tax shelters. Thus, written communications about tax shelters are not subject to the Codes confidentiality provision. Oral communications are still subject to the privilege.

Effective Date

The provision is effective for communications made on or after Oct. 22, 2004.

From Paul Manning, Washington, DC