When the Internal Revenue Service launches a criminal tax investigation, prosecutors rarely rely on the taxpayer’s own records alone. Instead, the IRS Criminal Investigation division (IRS-CI) targets the taxpayer’s accountant or tax preparer.
In Illinois, receiving notice that the IRS has issued a third-party summons to your accountant is not a routine administrative audit issue – it is frequently the first sign that federal agents are actively building a case for Tax Evasion (26 U.S.C. § 7201) or Filing False Returns (26 U.S.C. § 7206).
The Danger: Accountants Have ZERO Privilege in Criminal Cases
Many business owners and high-net-worth individuals make the catastrophic mistake of assuming their conversations with their CPA are private. They are not.
While federal law extends limited confidentiality to communications with tax practitioners under 26 U.S.C. § 7525, this protection applies strictly to civil tax matters.
- No Criminal Privilege: The statutory privilege explicitly disappears in criminal tax investigations and grand jury proceedings.
- Workpapers Are Subpoenaable: An accountant’s personal notes, internal workpapers, emails, and financial ledgers can be seized by the IRS via summons.
- Accountants Become Government Witnesses: When faced with federal grand jury subpoenas or threat of prosecution, tax preparers almost always comply with federal agents, turning your long-time accountant into the prosecution’s primary witness against you.
The 20-Day Clock: Petitioning to Quash an IRS Summons
When the IRS serves a third-party summons on your accountant under 26 U.S.C. § 7609, it must provide you with formal notice.
DEADLINE TO REMEMBER: You have exactly 20 days from the date the notice is mailed or served to file a formal Petition to Quash in federal district court.
If you fail to act within this 20-day window, the IRS gains unrestricted access to your accountant’s files and testimony. A skilled federal criminal defense lawyer can file a petition to quash to challenge the summons, block overbroad demands, and intercept government overreach before indictment.
Protecting Yourself: The Kovel Privilege Solution
If you suspect you are under federal tax scrutiny or if your accountant has been summonsed, do not speak to your accountant directly about the investigation. Any explanations or admissions you make to them can be subpoenaed by the IRS.
Instead, immediate defense intervention allows us to retain a specialized forensic accountant under a Kovel Agreement (United States v. Kovel). When a forensic accountant is employed directly by your defense team to assist with legal strategy, the attorney-client privilege extends to their work, keeping your financial defense strictly confidential.
Aggressive Federal Criminal Defense in Cook and Lake Counties
If you or your business received notice of an IRS third-party summons or federal grand jury inquiry, time is critical. At Pissetzky Law LLC, we defend clients against IRS-CI, DOJ Tax Division, and federal white-collar indictments across Chicago and Northern Illinois.