“For non-compliant taxpayers, a tax practitioner's ethical duties are well summarized by the IRS see: IRS Offshore Voluntary Disclosure Program; Frequently Asked Questions and Answers 2014 (Effective for OVDP submissions made on or after 7/1/14, updated 2/8/16), see FAQ #47. The advice due client is contained in Circular 230 (Treas. Dept) Sec. 10.21 re: non-compliant taxpayers and penalty issues for non-compliance.
A practitioner has an ethical duty under Sec. 10.21 to advise the taxpayer of their tax non-compliance and their penalties (both civil and criminal) for tax non-compliance. For CPAs if the taxpayer does not remedy their noncompliance the CPA is not authorized to prepare & file their tax returns forward (important issue for your firm).”
“Under the Crime-Fraud Exception to the Attorney-Client Privilege, a client's communications to their attorney is not privileged if made with the intention of committing or covering up a ‘crime or fraud’.
Tax crimes (e.g. felonies) for willful evasion of tax, obstruction of tax collection, filing a false tax return may be not privileged under the Crime-Fraud Exception.”
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Our author, Gary S. Wolfe, has more than 34 years of experience, specializing in IRS Tax Audits and International Tax Planning/Tax Compliance, and International Asset Protection.