Title

Section 7525’s Last Gasps: The Tax Practitioner Privilege and the Selective Waiver Doctrine

Abstract

Congress blundered badly by defining the Federally Authorized Tax Practitioner privilege by cross-reference to the attorney-client privilege. The relationship between a client and a FATP is wholly different from that between a client and an attorney, and the application of attorney-client principles to the FATP privilege has given rise to confused (and sometimes contradictory) judicial opinions.

This paper attempts to stem the confusion with respect to one aspect of the FATP privilege. The proper application of the selective waiver doctrine to the FATP privilege remains an open question, though courts seem poised to reject it. They have rejected it numerous times in the context of attorney-client privilege claims, and generally find the doctrine incompatible with that privilege's basic purposes.

This paper argues that courts should accept the selective-waiver doctrine with respect to the FATP privilege, notwithstanding any contrary jurisprudence on the attorney client privilege. Part II briefly discusses the selective waiver doctrine, and outlines the reasons most commonly cited for its adoption or rejection. Part III describes the FATP privilege and details the IRS's and practitioners' common assumption that the selective waiver doctrine will not apply to it. Part IV argues that section 7525's text demands instead that the doctrine always apply to the privilege. Part V examines statements in section 7525's legislative history that may contradict this conclusion.

Disciplines

Evidence | Tax Law

Date of this Version

September 2006