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Ask the Advocate: Privileges of confidentiality

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. It extends the common-law, attorney-client privilege of confidentiality to tax advice (oral or written) furnished to a taxpayer-client (or potential taxpayer-client) by any individual authorized under federal law to practice before the IRS on federal tax matters.
. It does not modify or expand the attorney-client privilege of confidentiality; other than to extend it to federally authorized tax practitioners.
. The new confidentiality privilege applies only to non-criminal tax matters before the Franchise Tax Board.
. Certain written tax communications involving the promotion of a corporate tax shelter are not protected.
. Only the taxpayer-client may assert or waive the confidentiality privilege, not the tax practitioner. The privilege only applies in court cases and/or litigation, not in audit or other administrative proceedings, and then, only in limited circumstances.

This confidentiality privilege applies only to the extent that communications would be privileged if they were between a taxpayer and an attorney. Consequently, the confidentiality privilege does not apply to any communication between practitioners and their clients if the communication would not have been privileged between an attorney and a client. Because information disclosed to an attorney for the purposes of preparing a tax return or providing accounting services is not privileged under present law, such information would not be privileged if it were disclosed to a practitioner.

Communications protected by the confidentiality privilege must be based on facts of which the practitioner is informed by the taxpayer, for the purposes of securing the practitioner's professional advice in confidence.

For example, if a certified public accountant is retained to prepare a tax return, the return preparation services will not be protected.

The confidentiality privilege does not apply to any written communication between a federally authorized tax practitioner and a director, shareholder, officer, or employee, agent or representative of a corporation in connection with the promotion of the direct or indirect participation of the corporation in any tax shelter, or in any proceeding to revoke or otherwise discipline any license or right to practice by any governmental agency.

In short, the confidentiality privilege does not apply to certain written communications regarding corporate tax shelters.

Nonfilers can now use Internet to resolve accounts

As part of our effort to expand our e-government services, we now provide individuals the option to resolve their nonfiler accounts through the Internet.

Individuals can now contact us from home, work, or anywhere they have access to the Internet, to resolve their account or gain additional information needed to file their late return.

Here's how it works: When these individuals receive a nonfiler notice from us, they can log on to our new nonfiler webpage at To ensure their confidentiality, only those individuals who have a nonfiler notice will be able to enter this specific webpage.

Next, the webpage will prompt them to enter a unique 15-digit notice number (like a pin number). When they enter the correct notice number, our Information & Action Guide will appear. At this point users can access a variety of options for resolving their nonfiler account. We tried to provide information and services that these individuals would need to resolve their account, all in a single location. For example, they can:

. Get information that can assist them in filing a tax return,
. Get information on available payment options , 
. Download tax forms,
. Correct a misreported social security number, or;
. Email us with their questions.

Also, individuals who received a nonfiler notice from us can now use the webpage to request additional time to reply to the notice. We've found that about one-third of all telephone calls we receive as a result of our nonfiler notices are individuals requesting more time. They can now request more time via the Internet or by calling into our automated telephone service.

The telephone number when calling from within the United States is (866) 204-7902. When calling from outside the United States the number is (916) 845-7954 (not toll-free).

We began mailing nonfiler notices for the 1999 tax year in May. If one of your clients gets one of our nonfiler notices, check out the webpage!

July/August 2001

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