While attending the ABA Criminal Tax Conference last month, the role of a Kovel accountant was explored. When it comes to fraud investigations, this landmark judicial decision regarding the creation of an attorney-client privilege for certain accountants and the services they provide warrants a closer look from many angles. The following is a summary of the judicial decision regarding the creation of an attorney-client privilege for certain accountants and the services they provide.
What Is a Kovel Accountant?
Forty years ago, in the landmark case of United States v. Kovel,1 the U.S. Court of Appeals for the Second Circuit extended the attorney-client privilege to include communications that an attorney has with an accountant to assist the attorney in understanding the client’s financial information and transactions. Louis Kovel, a former Internal Revenue Service revenue agent, declined to answer questions before a federal grand jury, and also later in a court hearing, under the theory that he “occupied the same status as a client” with his or her attorney. Based upon this position, the attorney-accountant privilege was recognized and the term “Kovel accountant” was created.
