1. Conditions for Confidentiality
2. Understanding Disclaimers
3. Website Disclaimers
4. Email Disclaimers

Privileged and confidential communication is the interaction between two parties having a legally protected, private relationship. Law cannot force such parties to disclose the content of communication made between them. An individual involved in a privileged communication can legally prevent the other party from disclosing the communication.

The most common example of privileged communication is the communication made between an attorney and his client. Other examples of privileged communication include anything discussed between doctor and patient, accountant and client, and husband and wife. In some states, communication taking place between reporters and their source of information is also considered to be privileged.

The party receiving privileged information must keep it private and confidential, unless the discloser waives the privilege. If the recipient fails to keep the communication confidential, they may lose their professional license.

Conditions for Confidentiality

Tax advisers and accountants must understand when a certain communication is considered privileged and when it's not.

The Internal Revenue Service (IRS) has the legal power to call for information while collecting taxes or examining a tax return. The courts have held that the summons power of the IRS includes the authority to obtain any confidential information shared by or with a taxpayer.

However, some types of communication can be still considered privileged and beyond the authority of summons enforcement, if it meets certain criteria. An accountant can protect his client's information by ensuring that these conditions or criteria are met.

There are basically two privileges that apply to the tax advice of an accountant:

  • The practitioner-client privilege under section 7525.
  • The work product privilege under the Federal Rules of Civil Procedure.

Section 7525 grants attorney-client privilege protection to a client taking tax advice from a federally authorized tax practitioner. However, such protection applies only in noncriminal proceedings before the IRS. It does not protect against disclosure to other regulatory bodies. Also, the protection does not apply to written communications pertaining to participating in a tax shelter.

The work product privilege protects the material collected for litigation. This protection can be removed if the adverse party proves that the material in question is indispensable to the case and it cannot be obtained in any other manner.

Both of these protections are subject to confidentiality rules, meaning that if the communication is disclosed to a third party, the privilege may be waived.

Note that both the privileges are for the client. Hence, only the client can decide to waive these privileges. It's up to the taxpayer to decide whether he wants to pass on that information to the IRS. The taxpayer may also choose to waive the privilege to defend himself against certain penalties, say for instance, by claiming reliance on the counsel's advice.

Understanding Disclaimers

Every now and then, we come across disclaimers and license agreements. Two common places we find them are on:

  • Websites
  • Emails

Website Disclaimers

Website disclaimers are usually intended to defend the website owner against legal suits for losses resulting from the use of information provided on the website. These disclaimers may warn the website visitors against using the information provided on the website as a substitute for legal or medical advice. They may also caution the visitors against disclosing confidential information in the contact form.

The Virginia State Bar Committee on Legal Ethics issued its opinion on the confidentiality of messages sent through websites. The committee opined that anyone sending an email message from a website should not expect confidentiality since it's similar to leaving a voice message for an attorney found on Yellow Pages.

Thus, according to this opinion, Virginia lawyers need not include a confidentiality disclaimer on their websites. However, the opinion cautions lawyers that they may be bound by confidentiality if they offer free evaluation and ask their website visitors to provide information pertaining to their case.

Once the disclaimer is placed on a website, whether the visitors read or follow the disclaimer is immaterial.

Email Disclaimers

Email disclaimers may have originated from disclaimers placed in fax transmissions. Lawyers put a disclaimer in fax messages saying that the communication was meant only for the intended recipient. When they started using email, the disclaimer passed on to digital communication, to prevent any damage from misdirected emails.

Today, almost 80 percent of emails from lawyers contain one or the other form of disclaimer. Most of the email disclaimers declare that the message is privileged and confidential and is meant only for the intended recipient of that email. Some disclaimers may also require the unintended recipient to notify the sender and/or delete the email.

If you need help with privileged and confidential communication, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.