In the

United States Court of Appeals

For the Seventh Circuit

Nos. 99-3131 & 99-3317

IN THE MATTER OF GRAND JURY PROCEEDINGS,

Involving William Thullen and Kenneth Dvorak,

Witnesses Before the Special January, 1999-2

Grand Jury

APPEAL OF: BASAAM OSMAN

 and

CROSS-APPEAL OF: UNITED STATES OF AMERICA

Appeals from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 96 GJ 791--Marvin E. Aspen, Chief Judge.

Argued February 17, 2000--Decided July 18, 2000

 Before HARLINGTON WOOD, JR., COFFEY and RIPPLE, Circuit

Judges.

 RIPPLE, Circuit Judge. A grand jury

investigating alleged tax fraud by Dr. Basaam

Osman subpoenaed numerous documents from

accountants hired by his attorneys. Dr. Osman

sought to block production of the documents. He

claimed that the accountants were agents of law

firms representing him in the grand jury

investigation and, thus, that the documents were

subject to the attorney-client privilege. The

district court, after reviewing the disputed

materials in camera, required the production of

some of the documents. The court allowed others

to be withheld on the ground that the attorneyclient privilege was a shield to their

production. Dr. Osman appeals the district

court’s order determining that the attorneyclient privilege does not protect certain

documents in the possession of his accountants.

The United States cross-appeals, claiming that in

that same order, the district court erroneously

applied the privilege to other documents. For the

reasons set forth in the following opinion, we

vacate the judgment of the district court and

remand this case to permit the district court to

make further findings as to whether the documents

in question are subject to the attorney-client

privilege.

I

BACKGROUND
 Dr. Basaam Osman is currently under

investigation for tax fraud by a grand jury in

the Northern District of Illinois. The grand jury

is investigating fraud allegedly perpetrated by

Dr. Osman in connection with both his personal

and medical business tax filings between 1985 and

1997. We begin by setting forth, in summary

fashion, the history of this investigation.

 In 1994, the Criminal Investigations Division of

the Internal Revenue Service ("IRS") initiated a

criminal investigation of Dr. Osman, focusing on

the years 1985 to 1993. Dr. Osman retained the

law firm of von Mandel & von Mandel to represent

him. The von Mandel law firm then hired an

accounting firm, Terrell, Weiss & Sugar Ltd., to

assist it in defending Dr. Osman. The initial

criminal investigation evolved into a civil

audit. In May 1995, Dr. Osman, with the

assistance of the von Mandel and Terrell firms,

provided the IRS with tax returns for the years

1985 to 1993. Von Mandel’s professional

representation of Dr. Osman ended later that same

year.

 In 1996, however, a grand jury investigation of

Dr. Osman began. The initial scope of this

investigation was to consider allegations that

Dr. Osman failed to file individual and corporate

tax returns after the IRS had concluded its

earlier audit. For this investigation, Dr. Osman

retained the law firm of Cotsirilos, Stephenson,

Tighe & Streicker. The Cotsirilos law firm then

hired another accounting firm, Czurylo, Thullen &

Rodgers, to assist in the representation of Dr.

Osman.

 In November 1998, a grand jury subpoena sought

the production of all correspondence to or from

the two accounting firms that had been written in

the course of their work on Dr. Osman’s matters.

The two accounting firms produced over 2000

documents, but each withheld certain documents

based on Dr. Osman’s claim of attorney-client

privilege. The Terrell accounting firm withheld

51 pages of material; the Czurylo accounting firm

retained 78 pages.

 In March 1999, Kenneth Dvorak and William

Thullen testified before the grand jury. Dvorak,

an accountant with the Terrell firm, testified

that he had prepared Dr. Osman’s tax returns for

the years 1985 to 1993 and explained that his

accounting firm was hired by the von Mandel law

firm for the sole purpose of preparing tax

returns. Thullen, an accountant with the Czurylo

firm, testified that he was hired by an attorney

with the Cotsirilos firm for the sole purpose of

preparing tax returns.
 The Government then filed a motion to compel

production of the withheld documents. In a

proceeding involving the accounting firms and the

Government, but not Dr. Osman, the district court

ordered the accountants to produce the documents.

Dr. Osman filed an emergency motion to intervene,

and tendered the documents themselves for in

camera review by the district court. In August,

the district court entered an order requiring the

production of specific pages of the withheld

documents: 37 Terrell pages in their entirety, 2

Terrell pages in redacted form, 50 Czurylo pages

in their entirety, and 2 Czurylo pages in

redacted form. The district court allowed Dr.

Osman to retain the remaining pages of the

documents. In its order, the district court

explained that it relied on a document-bydocument in camera examination of the contested

materials to decide whether the attorney-client

privilege applied to particular pages. It did not

provide an explanation of why each particular

page was or was not privileged.

 Dr. Osman, confronted with this district court

order, produced all of the documents ordered

disclosed except for 8 pages of the Terrell

documents. He now appeals, asking that he be

allowed to retain those 8 pages. The Government

cross-appeals, arguing that it is entitled to

view the 12 Terrell pages and 26 Czurylo pages

that the district court allowed Dr. Osman to

continue to withhold and that it should be

allowed to view the redacted pages in their

entirety.

II

DISCUSSION

 Dr. Osman claims that the documents in the

possession of the accounting firms are protected

by the attorney-client privilege. There is no

accountant-client privilege. See United States v.

Arthur Young & Co., 465 U.S. 805, 817-19 (1984);

Couch v. United States, 409 U.S. 332, 335 (1973);

United States v. Frederick, 182 F.3d 496, 500

(7th Cir. 1999), cert. denied, 120 S. Ct. 1157

(2000). However, material transmitted to

accountants may fall under the attorney-client

privilege if the accountant is acting as an agent

of an attorney for the purpose of assisting with

the provision of legal advice. "’[W]hat is vital

to the privilege is that the communication be

made in confidence for the purpose of obtaining

legal advice from the lawyer. If what is sought

is not legal advice but only accounting service .

. . or if the advice sought is the accountant’s

rather than the lawyer’s, no privilege exists.’"

United States v. Brown, 478 F.2d 1038, 1040 (7th

Cir. 1973) (quoting United States v. Kovel, 296

F.2d 918, 922 (2d Cir. 1961))./1
 Although the violation of the attorney-client

privilege is a serious matter, our case law has

recognized consistently that the privilege is in

derogation of the search for the truth and,

therefore, must be strictly confined. See United

States v. White, 970 F.2d 328, 334 (7th Cir.

1992) (citing cases). In applying this principle,

we have held that material transmitted to an

attorney or the attorney’s agent for the purpose

of using that information on a tax return is not

privileged. The preparation of tax returns is an

accounting service, not the provision of legal

advice. See Frederick, 182 F.3d at 500-01; United

States v. Lawless, 709 F.2d 485, 487 (7th Cir.

1983). On the other hand, information transmitted

to an attorney or to the attorney’s agent is

privileged if it was not intended for subsequent

appearance on a tax return and was given to the

attorney for the sole purpose of seeking legal

advice. See Frederick, 182 F.3d at 500-01.

Documents used in both preparing tax returns and

litigation are not privileged. See id. at 501.

 Dr. Osman, as the party seeking to establish the

privilege, bears the burden of demonstrating that

all of the requirements for invoking the

attorney-client privilege have been met. See

United States v. Evans, 113 F.3d 1457, 1461 (7th

Cir. 1997); Lawless, 709 F.2d at 487. The inquiry

into whether documents are subject to a privilege

is a highly fact-specific one. "Only when the

district court has been exposed to the contested

documents and the specific facts which support a

finding of privilege under the attorney-client

relationship for each document can it make a

principled determination as to whether the

attorney-client privilege in fact applies."

Holifield v. United States, 909 F.2d 201, 204

(7th Cir. 1990). An assertion of privilege

therefore must be made on a document-by-document

basis. See White, 970 F.2d at 334; Lawless, 709

F.2d at 487.

 The district court correctly recognized the

important role that in camera inspection of

disputed documents often plays in a determination

of the existence of the privilege. See United

States v. Zolin, 491 U.S. 554, 568-69 (1989)

(citing, inter alia, Lawless). Indeed, it

sometimes may be apparent from the face of a

document that it is not privileged because the

document contains information that necessarily

would have been submitted for the preparation of

a tax return. See Lawless, 709 F.2d at 488.

However, when the circumstances suggest that a

document might be privileged, it is important

that the district court consider the totality of

those circumstances in making its determination

as to whether the privilege must be recognized.
For instance, a document that appears privileged

may have lost that privilege through disclosure

or transmittal to a third party. See In re

Pebsworth, 705 F.2d 261, 262 (7th Cir. 1983); see

also United States v. Hamilton, 19 F.3d 350, 353

(7th Cir. 1994); Powers v. Chicago Transit Auth.,

890 F.2d 1355, 1359 (7th Cir. 1989). Similarly,

the purpose of a document may not be apparent on

its face, and it may be necessary to rely on the

testimony of those involved in the production and

handling of a document to determine the purpose

for which it was produced. See Motley v. Marathon

Oil Co., 71 F.3d 1547, 1550-51 (10th Cir. 1995);

United States v. Rockwell Int’l, 897 F.2d 1255,

1264-65 (3d Cir. 1990). In short, in camera

review, although important, often cannot

determine definitively whether a document was

transmitted in such a way as to destroy any

privilege or was created for an unprivileged

purpose.

 In assessing the district court’s order in this

case, we necessarily are bound by the record

before us. Accepting, as we must, that

limitation, we cannot determine how the district

court evaluated the testimony of the accountants.

The accountants testified that they were hired

solely to prepare tax returns, but their

assertion is disputed by Dr. Osman. The district

court’s order does not discuss the accountants’

testimony or Dr. Osman’s response to it. Nor do

we have specific findings concerning whether any

of the documents at issue were generated for the

purpose of preparing tax returns or transmitted

to a tax preparer for the purpose of preparing a

return. Finally, the record before us does not

address the possibility that a document created

for a privileged purpose might have been handled

in a manner that destroyed that privilege.

 We therefore must remand this matter to the

district court to permit that court to enter more

extensive findings on whether, in light of the

purpose, use, or transmission of these documents,

any privilege exists./2 In making these

findings, the district court should consider the

"totality of the circumstances" surrounding each

document. See Diversified Indus., Inc. v.

Meredith, 572 F.2d 596, 610 n.3 (8th Cir. 1978)

(en banc) ("The totality of the circumstances

indicates that the communications were

privileged."). In the course of deciding whether

particular documents are privileged, the district

court should enter specific findings regarding

the purpose and history of each document in order

to allow for meaningful appellate review./3 

Conclusion

 For the foregoing reasons, the judgment of the
district court is vacated, and the case is

remanded for further proceedings consistent with

this opinion.

VACATED AND REMANDED

/1 Accord Linde Thomson Langworthy Kohn & Van Dyke,

P.C. v. Resolution Trust Corp., 5 F.3d 1508,

1514-15 (D.C. Cir. 1993); United States v.

Bornstein, 977 F.2d 112, 117 (4th Cir. 1992);

United States v. Davis, 636 F.2d 1028, 1043 (5th

Cir. Unit A 1981); United States v. Cote, 456

F.2d 142, 144 (8th Cir. 1972).

/2 Other courts of appeals have taken the same

course in similar circumstances. See Bornstein,

977 F.2d at 116-17 (remanding for a determination

of whether papers were produced to assist

individual in his capacity as a lawyer or in his

capacity as an accountant/tax preparer); Rockwell

Int’l, 897 F.2d at 1264-65 (requiring the

district court, on remand, to determine whether

material was legal advice).

/3 The district court may determine, in its

discretion, to consider additional testimony on

this subject.