Frequently, the editors of Small Business Tax Strategies will caution readers to consult with their tax pros. It is usually sound advice. But you should be aware of certain limitations.
Strategy: Don’t tell your CPA anything you wouldn’t want the IRS to know. A 1998 law effectively authorizes a “CPA-client privilege,” but the privilege is hardly bullet-proof. In fact, it’s riddled with exceptions.
Notably, the confidentiality part of the privilege doesn’t extend to communications concerning the preparation of your tax return. Nor does it offer any protection if you ever become embroiled in a criminal tax proceeding with the IRS. Furthermore, tax advice on state and local matters isn’t covered. The CPA-client privilege, to the extent it applies, is only available on the federal level.
Also, there are several situations where you might inadvertently waive your rights. For instance, you could lose the benefit of the privilege if you share the information with a third party.
Tip: Talk to your tax pro about what is covered and what isn’t. Have this conversation before confiding completely in him or her.
- Small Business Tax Deduction Strategies No matches