Over the last few months, the IRS and prosecutors have been ramping up efforts to go after tax violators.  In Connecticut alone, there have already been 8 arrests and criminal prosecutions, not to mention innumerable civil tax audits.  The common thread to people and businesses getting into trouble is that they did not consult an attorney as soon as they received an audit notice.  

The difference between having an attorney and not is that nearly all communications with the attorney are covered by the attorney-client privilege.  That means no-one including the IRS and prosecutors can get their hands on those communications and use them against you.

If you rely solely upon your tax preparer or new advocate with the government, none of your communications are privileged.  That means the IRS and prosecutors can ask your accountant for their emails and other documents exchanged with you.  For example, you receive an audit notice and email your tax preparer about it.  That email is discoverable.  If you emailed your attorney for legal advice on how to approach the audit and discussed your position on items being audited, that email is protected by the attorney-client privilege and not discoverable.

The best approach to an audit is a team approach where you have an attorney retained so the privilege is established and the attorney engages either your tax preparer or others as experts to help.  This approach allows for all the communications between your attorney, you and the expert accountants to remain privileged and protected from being used against you.  Tax preparer and accountants should be consulting an attorney and having their clients retain counsel at the beginning of an  audit so that the privilege is established and communications protected.  Proceeding otherwise would be negligent.