So, your client calls you and says they have a great idea for reducing their tax liability. You steel yourself while raking the sand in your desktop Zen garden and practicing that box breathing technique you’ve been working on. Of course, it’s the most harebrained scheme you’ve ever heard—the kind that makes you imagine what your client would look like in a bright orange jumpsuit. You say it’s a bad idea before hanging up to reflect on your career choice—but what do you do now?
You would think the issue of the metes and bounds of attorney-client privilege would have been well worked out by now. But the question of whether a communication containing both legal and non-legal advice is subject to the privilege, where legal advice was a significant purpose behind the communication, is currently before the Supreme Court. Clearly, there remain some open questions.
Attorney-client privilege is held by the client where there is an attorney, a client, a communication, anticipated confidentiality, and legal advice—but not business advice or personal communication. Section 7525 of the Internal Revenue Code operates in a similar fashion to extend confidentiality to communications involving tax advice between a client and a federally authorized tax practitioner. The statutory language of Section 7525 explicitly sets the general rule as extending the same protections and confidentiality “which apply to a communication between a taxpayer and an attorney.” Tax...
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