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Undesignated Order Reports Ethics Problem

Posted on Oct. 26, 2017

We welcome back guest blogger, and frequent blog commentor, Bob Kamman. Bob is a tax attorney practicing in Phoenix. Bob worked in several technical and administrative jobs in IRS Taxpayer Service during the late 1970s before leaving to study and practice law, and since then occasionally been involved in working with the IRS on taxpayer-rights issues. Frequent readers of the blog who regularly read the comments about our posts will find many insightful comments by Bob. He expresses concern today about something we have written about before which is what makes an order a designated order or an opinion precedential. He discusses an order which was not chosen by the judge issuing the order to be a designated order.  The title designated order does not give an order any greater status but does make it more likely to be noticed  Bob expresses the view that this is the type of order which should receive greater recognition since it involves attorney discipline.

The Tax Court does have a mechanism for publicizing the actions it takes against attorneys. I have discussed a case before in which an attorney was disciplined for much the same type of action, or inaction, as the case discussed below. If you follow the link in that post where the Tax Court revoked the right to practice of Mr. Aka, you can see that the Tax Court does issue press releases when this happens. Bob raises an interesting question of whether orders in these type cases referring the matter to the Tax Court disciplinary committee should receive more attention. The issue of how and when to warn potential consumers is one that the IRS and the Tax Court must consider while balancing the rights of the practitioner against an ethics complaint that has been raised but not resolved.  Keith

Does the Tax Court have a duty to warn taxpayers about apparent ethical violations of lawyers who practice before it?

That is the question raised Monday by an undesignated order involving conduct by an attorney referred to the Court’s Committee on Admissions, Ethics, and Discipline.  The Tax Court issued more than 100 orders that day, but called attention by “Designation” to only one — not this one.

If you rob a bank, the FBI will make sure the indictment is publicized, while acknowledging that you are innocent until found guilty in a court of law.  If you are a lawyer who does not show up in court so your client automatically loses, your behavior likewise deserves a greater degree of exposure than just an undesignated order.  Furthermore, shining a spotlight on cases like this would likely discourage such behavior by other practitioners.

Judge Gustafson did not see it that way. Here are excerpts from his order, which can be found in Docket No. 12194-16. I have removed the name of the lawyer and his clients.  They have enough problems without showing up in Google searches.

“On May 23, 2016, petitioners . . .filed a timely petition in this Court challenging the IRS’s notice of deficiency as to tax year 2013. The petition was signed by petitioners’ counsel . . .

“By notice served April 27, 2017, this case was scheduled to be tried at the Court’s session beginning September 18, 2017, in Detroit, Michigan, and the parties were to exchange exhibits and pretrial memoranda by September 1, 2017.

“However, on August 15, 2017, the IRS filed a motion to dismiss this case for failure to properly prosecute, alleging that [petitioners’ counsel] has been unresponsive and uncooperative in pretrial preparation. The Court immediately attempted to schedule a pretrial telephone conference with the parties, but [petitioners’ counsel] did not respond to voice-mail messages.

“By order served August 22, 2017, the Court ordered [petitioners’ counsel] to immediately telephone the Chambers of the undersigned judge (at 202-521-0850) for the purpose of scheduling a prompt telephone conference. Our August 21 order also directed the Petitioners to file with the Court and serve on the IRS a response to the IRS’s motion to dismiss, no later than September 5, 2017. The August 21 order were [sic] served on [petitioners’ counsel] and the Petitioners. [Petitioners’ counsel] and the Petitioners have filed no response.

“On September 7, 2017, the Court issued its order to show cause ordering [petitioners’ counsel] to appear at the calendar call on September 18, 2017, in Detroit, Michigan, and show cause why sanctions should not be entered under section 6672(a)(2) and why counsel should not be referred to the Court’s Committee on Admissions, Ethics, and Discipline. The Court’s September 7 order to show cause also advised the Petitioners to appear at the trial if they wished to continue to prosecute the case.

“On September 18, 2017, this case was called from the calendar at the Court’s Detroit, Michigan, trial session. There was no appearance by the Petitioners or [petitioners’ counsel], at the calendar call–or at any point during the trial session. The IRS appeared and was heard. The Court took under advisement the IRS’s motion to dismiss for failure to properly prosecute. As of this date the Court has received no response from [petitioners’ counsel], and the Petitioners have been nonresponsive despite our orders of August 21, 2017 (requiring them to file a response), and our order September 7, 2017 (advising them to appear at the trial session on September 18, 2017).

“The Court has an obligation to conduct its proceedings in a manner that secures the “just, speedy, inexpensive determination of every case.” Rule 1(d). A practitioner before this Court is required to carry out his or her practice in accordance with the letter and spirit of the Model Rules of Professional Conduct of the American Bar Association. Rule 201(a), Tax Court Rules of Practice and Procedure. Tax Court Rule 202(a)(3) specifically identifies as a ground for discipline any conduct that violates the letter and spirit of the Model Rules. For example, Model Rule 1.1 requires a lawyer to provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. Model Rule 1.3 requires a lawyer to act with reasonable diligence and promptness in representing a client. Model Rule 3.4(c) prohibits a lawyer from knowingly disobeying court rules and orders.

“[Petitioners’ counsel]’s failure to return the Court’s phone calls, noncompliance with the Court’s orders and rules, and his failure to appear when this case was called from the calendar at the trial session on September 18, 2017, are inconsistent with the obligations imposed upon him pursuant to the Court’s Rules of Practice and Procedure and the Model Rules of Professional Conduct of the American Bar association. . . .

“In view of the foregoing, it is . . .

“ORDERED that so much of the Court’s order to show cause why counsel should not be referred to the Court’s Committee on Admissions, Ethics, and Discipline, dated September 7, 2017, is hereby made absolute. It is further

“ORDERED that the IRS’s motion to dismiss for failure to properly prosecute is granted, and this case is dismissed for petitioners’ failure to properly prosecute this case. It is further . . .

“ORDERED AND DECIDED that there is a deficiency in income tax, an addition to tax, and penalty due from petitioners …as set forth in the notice of deficiency dated February 16, 2016,as follows:

Addition to Tax/Penalty Pursuant to I.R.C.
Year     Deficiency     §6651(a)(1)    §6651(a)
2013    $12,769.00     $2,554.00        $3,192.00″

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