Attorney-client privilege affords taxpayers great relief when dealing with the IRS. Communications between a taxpayer and their attorney are privileged and are non-discoverable to the IRS or any other taxing agencies. Accountants however do not hold such a privilege. Statements, denouements or omissions given to your accountant (whether CPA or EA) are open to discovery; meaning that the IRS can compel them to divulge those potentially incriminating secrets.
The Kovel letter, named after United States v. Kovel, enables an attorney to hire an accountant to prepare your returns and brings them under the attorney-client privilege umbrella. Kovel is premised upon the notion that the accountant’s communications were “made in confidence for the purpose of obtaining legal advice from the lawyer.” See United States v. Adlman. Thus said, in order to effectively retain the Kovel, the accountants communications should be addressed directly to the attorney.