(a) (1) With respect to tax advice, the protections of confidentiality that apply to a communication between a client and an attorney, as set forth in Article 3 (commencing with Section 950) of Chapter 4 of Division 8 of the Evidence Code, also shall apply to a communication between a taxpayer and any federally authorized tax practitioner to the extent the communication would be considered a privileged communication if it were between a client and an attorney. A federally authorized tax practitioner has the legal obligation and duty to maintain confidentiality with respect to such communication.
(2) Paragraph (1) may only be asserted in any noncriminal tax matter before the Franchise Tax Board.
(3) For purposes of this section:
(A) “Federally authorized tax practitioner” means any individual who is authorized under federal law to practice before the Internal Revenue Service if the practice is subject to federal regulation under Section 330 of Title 31 of the United States Code, as provided by federal law as of January 1, 2000.
(B) “Tax advice” means advice given by an individual with respect to a state tax matter, which may include federal tax advice if it relates to the state tax matter. For purposes of this subparagraph, “federal tax advice” means advice given by an individual within the scope of his or her authority to practice before the federal Internal Revenue Service on noncriminal tax matters.
(C) “Tax shelter” means a partnership or other entity, any investment plan or arrangement, or any other plan or arrangement if a significant purpose of that partnership, entity, plan, or arrangement is the avoidance or evasion of federal income tax or the avoidance or evasion of the tax imposed under Part 10 (commencing with Section 17001) or Part 11 (commencing with Section 23001).
(b) The privilege under subdivision (a) does not apply to any written communication between a federally authorized tax practitioner and any person, or any director, officer, employee, agent, or representative of the person, or any other person holding a capital or profits interest in the person in connection with the promotion of the direct or indirect participation of the person in any tax shelter (as defined in Section 6662(d)(2)(C)(ii) of the Internal Revenue Code as modified by substituting the phrase “income or franchise tax” for “Federal income tax”), or in any proceeding to revoke or otherwise discipline any license or right to practice by any governmental agency.
(c) This section shall be operative for communications made on or after the effective date of the act adding this section.
(Added by Stats. 2009, Ch. 411, Sec. 2. (AB 129) Effective October 11, 2009.)
Last modified: October 25, 2018