What is a Kovel accountant?

The term Kovel accountant is based upon the case of United States v. Kovel, 296 F.2d 918  (2d Cir. 1961).  Kovel accountants are hired when a tax attorney is concerned that conduct by his client, or in some cases lack of conduct, could result in criminal tax charges being brought. The tax attorney needs to understand from a numbers point of view what the exposure might be. For example the Kovel accountant may need to prepare schedules of unreported bank deposits, and determine the potential amount of any tax liability.

Because the tax lawyer or the client must disclose privileged information to the Kovel accountant in order for the accountant to assist the tax attorney in advising the client the court in Kovel held that the attorney client privilege extends to communications with the accountant. The court likened the situation to an attorney who must hire an interpreter to translate for a client who speaks a foreign language.

That being said not ever accountant hired by a tax lawyer is a Kovel accountant, and great care must be taken to preserve the attorney client privilege.