Privileged Communications, Confidentiality, and Privacy Acts

Question 1

Which institutions have approved the client - accountant testimonial privilege

Answer 1

The congress have statutorily enacted in 15 states through section 7575. although the federal and state courts have not recognized any sort of common law statutory privilege with regards to client - accountant confidential communications

Question 2

What are the Consequences of breaching confidentiality

Answer 2

IRS can file a civil suit

Criminal prosecution by the Dept of Justice

Loss of CPA licence

Question 3

What are the exceptions to the confidentiality requirement of a CPA?

Answer 3

1) can be disclosed to other professionals on a need to know basis
2) In case of an ethics examination
3) peer review
4) enforceable court order
5) GAAP calls for disclosure

Question 4

What is the tax practitioner’s privilege as per section 7525 of the IRC?

Answer 4

7525 allows the clients of tax practitioners some amount of testimony privilege (accountant cannot testify in courts against clients) subject to certain exceptions

1) criminal proceedings
2) written communication of advice regarding tax shelters
3) tax advice regarding state and local matters
4) any tax matter that is not in front of the IRS or federal courts brought by or against the United States

Question 5

What are the IRC provisions 6713 and 7216?

Answer 5

6713 - civil liabilities for each incident of unauthorized use or disclosure and 7216 criminal liabilities and potential imprisonment for knowingly or recklessly making unauthorized use

Question 6

What are Generally Accepted Privacy Principles?

Answer 6

1) Manage - define, establish, communicate, adhere
2) Notice - to clients about privacy policies procedures, information collected for what purposes, storage and disclosure
3) Choice and consent - clients must be explained to about and implicit / explicit consent obtained to collect, store, use and disclose information
4) Collection - Information to be collected for only purposes consented for
5) Use - Information for purposes consented for
6) disclosure - not for any other purposes other than consented for or obliged for
7) Access - clients allowed access to their information for update and confirmation
8) Disclosure to third parties - only with consent
9) security for privacy - must ensure that client information is safeguarded, limited personnel and authorised access
10) client information is accurate complete
11) complaint redressal -hearing, investigate and address any violation of client privacy