Magazine article The CPA Journal

Limits of Documentary Privilege against Self-Incrimination

Magazine article The CPA Journal

Limits of Documentary Privilege against Self-Incrimination

Article excerpt

The Fifth Amendment to the U.S. Constitution declares that "[no person] shall be compelled in any crimfinal case to be a witness against himself." The privilege against self-incrimination applies to individual corporate or partnership officers acting in that capacity as well as to individual CPAs, who may legally refuse to testify against themselves when criminal sanctions could result from their forced testimony. This right protects individuals when the state accuses them of a crime.

The privilege against self-incrimination applies in both federal and state criminal cases. Although this privilege protects individuals, it does not protect corporations. Partnerships and, presumably, limited liability partnerships (which is Andersen's business form) cannot avail themselves of the privilege. Courts tend to examine the nature of the organizes tion, and if it cannot be said to embody or represent the purely personal or private interests of its constituents, but rather represents their common or group interests only, courts do not allow the privilege.

Documentary Privilege Following Boyd v. U.S.

In 1886 in Boyd v. United States [116 U.S. 616 (1886)], the U.S. Supreme Court held that private papers were entitled to protection under the Fifth Amendment's privilege against self incrimination. In effect, Boyd held that the privilege applied not only to testamentary (oral) statements but also to documentary (written) communications.

Following Boyd, the lower federal courts interpreted the privilege as protecting a person from being forced to produce "personal" papers, but not the papers of an organization which the person happens to be keeping. Even after Boyd, courts avoided conferring the privilege beyond the individual, and also limited the types of documents under its protection. Books and records a person usually keeps, which are kept under professional rules, or are required by law to be kept, did not enjoy the privilege. Other documents that the courts have not considered privileged include the papers and records of a corporation, partnership, or other collective entity.

Subsequent to Boyd, the privilege had also been litigated with respect to documents produced and held by an accountant, called working papers. Several cases have dealt with the definition of working papers. One Seventh Circuit case, U.S. v. Zakutansky [401 F.2d 68, 71 (7th Cir. 1968)], involved an accountant's notes and adding machine tapes assembled by the accountant while preparing the client's income tax return. Such documents were held to be working papers even though the accountant was not engaging in a "certified public audit." Another case [US. v. Pizzo, 260 F.Supp. 216 (S.D.N.Y 1966)] also involved an accountant's "records" incident to preparing the client's income tax return. There the court held that work papers means any papers "where you have records recorded on it and the common form of work papers are columnar paper."

Another question is, "Who owns the work papers?" In one case [U.S. v. Tsukuno, 341 F.Supp. 839 (N.D. Ill. 1972)] dealing with a federal tax matter, an accountant had prepared "records" on behalf of the client, and the IRS issued a summons for them while they were in the accountant's possession. There were two sets of records: the work papers developed by the accountant and used in determining the client's tax liability, and the taxpayer's personal books and records in the accountant's possession and used to calculate the taxpayer's taxes.

In examining the first group, the court held that an accountant's work papers were presumptively the property of the accountant rather than the taxpayer and were not within the scope of the privilege against self-incrimination. The court's ruling in Tsukuno indicated that the agreement between the accountant and the client could determine who owns the accountant's work papers. Given the presumption accorded accountants in this case, perhaps it might be wise for the accountant not to draw the client's attention to this issue during negotiations, thereby reserving working-saver title for the accountant. …

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