Kovel Letters

On a typical business day, a couple of IRS special agents (i.e. criminal investigations) showed up at a taxpayer’s house. You know you are in the presence of an IRS special agent if you see a badge and a gun. The taxpayer immediately begins to ask the reason for the IRS special agents’ visit. The agents assured the taxpayer it was ok to talk. Moreover, the agents suggested the taxpayer talk with a CPA.

Why didn’t the IRS agents suggest that the taxpayer speak with a tax attorney instead of the CPA? The likely answer is the IRS agents know that the taxpayer does not have the same communications privilege with the CPA when it comes to criminal tax matters (as opposed to a tax attorney).

If you have a tax problem, you should always talk to a tax attorney first. Communications are protected by the powerful confidential attorney-client privilege. When clients seek legal advice, those confidential communications to the attorney are protected. In the above scenario, the CPA may be forced to testify as to the communications that took place between the CPA and taxpayer if an element of criminality exists (or where there is a criminal investigation). This would not be the case for the tax attorney. Tax attorneys have the ability to extend the “attorney-client privilege” to other individuals or professionals like a CPA who are engaged by the attorney to assist in representation. This is facilitated through a “Kovel Letter” also known as a “Kovel Agreement.” Kovel, 296 F.2d 918 (2d Cir. 1961).

Nehemiah Jefferson, Esq., LL.M., is President of America’s Tax Attorney LLC. The tax resolution and advisory firm provides comprehensive Tax Preparation, Tax Representation, Tax Litigation, and Tax Consultation services to individuals, businesses, and tax professionals nationwide. He earned his Bachelor’s degree from The Florida State University, his Juris Doctor from John Marshall Law School (Atlanta), and LL.M. in Taxation from the University of Alabama. Attorney Jefferson is licensed to practice law in the State of Florida, The District of Columbia, and is a member of the United States Tax Court Bar. He may be reached at (877) 575-7765 or [email protected].