Representing Clients in Tax Court

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I mentioned in a recent post that I attended the Pro Bono and Tax Clinic Committee meeting program at the ABA Tax Section meeting on September 20, 2013.  At that meeting two new leaders in the Office of Chief Counsel, IRS came and spoke.  Drita Tonuzi now heads the Procedure and Administration Division of Chief Counsel’s Office.  This national office division gives advice on the procedural issues in the Internal Revenue Code and heavily influences the litigation positions taken by the Chief Counsel attorneys in the field.  Drita replaces Deborah Butler who retired last spring after a long career with Chief Counsel, and almost 15 years as head of Procedure and Administration.  Before assuming her current position, Drita served as the Deputy Division director of the Large Business and International Division of Chief Counsel’s office and before that she worked in the Manhattan field office.

Deborah Moe accompanied Drita to the meeting.  Deborah has recently moved to Washington to serve as the Deputy Division director of the Small Business/Self Employed Division of Chief Counsel’s office.  She came to this position from Denver where she was the Area Counsel for SBSE.  I knew her when she worked in the General Litigation Division of the National Office about 30 years ago giving advice to me on collection issues.

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In the meeting they raised to the group the opportunity to comment on a Chief Counsel Notice issued on January 23, 2013.  See the Notice here. Both the issue in the notice and the process bear examination.  The issue concerns the form and manner in which a representative handles a case in Tax Court. See the ABA’s Model Rule 4.2 here and Pennsylvania cases applying the rule here, here, and here.  The process leading to the comments at the meeting demonstrates the importance of groups like the ABA and the willingness of Chief Counsel executives to listen to concerns that bubble up.

Input on guidance that agencies issue is a crucial aspect of ensuring that the agency gets the rules right in the first instance. Getting agency input has been challenging when it comes to issues that relate to the low-income community, where, but for the ABA, tax clinics and TAS, there is little formal or informal mechanism to generate input. My colleague Les wrote about this issue in his article, Increasing Participation in the Rulemaking Process. See his article here.

On May 16, 2012, Professor Barbara Lock, the director of the low income taxpayer clinic at the University of Idaho complained on the listserv hosted by the American Bar Association Tax Section for the low income taxpayer clinicians that her local Chief Counsel office refused to work with her in a Tax Court case in which she had a valid Power of Attorney (POA) because she had not entered an appearance in the Tax Court case.  That comment caught my interest because my clinic regularly uses a POA to represent clients in Tax Court cases.  We do not enter a formal appearance in Tax Court cases unless we file the petition or we get to a point in the case where we determine the formal appearance is necessary.  I knew that many other clinics used the same practice.  While I had not experienced difficulty with this practice in working with the Philadelphia office of Chief Counsel, concern existed that if one clinician was experiencing problems with this practice perhaps others were as well.

Low income clients present a number of challenges.  One of the biggest challenges is simply the ability to maintain contact over a period of time.  When a low income taxpayer comes to our clinic seeking assistance in a Tax Court case, we obtain a POA in order to obtain information from the IRS.  In many cases our perspective client does not really understand the issues in the case and only through obtaining information from the IRS can we piece together what has happened.  We do not want to enter an appearance until we can understand the case.  Even after understanding the case, we prefer to operate with a POA rather than an entry of appearance in many cases out of concern about our ability to maintain client contact.

Based on the issue raised in the listserv, the Pro Bono and Tax Clinic committee of the ABA Tax Section had a panel discussion of this issue at its meeting in the Fall of 2012.  Professor Scott Schumacher at the University of Washington moderated a panel of Chief Counsel and IRS executives in a discussion of the issue of client representation in Tax Court.  Nina Olson had a similar panel discussion in the annual meeting of Low Income Taxpayer clinicians held in December 2012.  Nina added to the panel she created Jim McCauley who is ethics counsel to the Virginia State Bar.  Chief Counsel’s office issued Notice CC-2013-005 on January 2013 seemingly as a reaction to the public discussions of the issue during the fall of 2012.

Jim McCauley raised the discussion to another level by bringing his expertise to bear on an issue that tax practitioners may view with blinders.  He reminded the audience of the requirements of rules of professional conduct with respect to contact with a party represented by counsel.  He explained why the Form 2848 causes the Tax Court petitioner to achieve the status of represented party and why the government’s lawyers then have a duty to recognize that status.  Notice CC-2013-005 improved the prior situation in some Chief Counsel field offices by making clear that the attorneys should work with attorneys who have a power of attorney rather than an entry of appearance but the Notice did not go as far as Mr. McCauley’s comments suggested it should.

At the recent Tax Section meeting Drita invited comments on Notice CC-2013-005 because she was aware that concerns still existed.  She received comments from the audience concerning the need for Chief Counsel attorneys to recognize representatives with POAs and the need to recognize representatives operating with POAs even when they have not entered an appearance in the Tax Court case.  The discussion also expressed concern about practices in Appeals where Appeals Officers appear to ignore, at times, the POA or the entry of appearance or both and speak directly to a represented taxpayer.

The discussion was very positive.  Notice CC-2013-005 moved the bar from the prior situation by directing Chief Counsel attorneys to recognize representatives operating with a POA rather than an entry of appearance.  Notice CC-2013-005 did not go far enough because it failed to fully recognize the state bar ethical issues present in this situation.  The fact that Drita raised the issue on her own and sought comments from the audience was a very positive development reflecting the relationship she seeks to develop between her office and practitioners.  I hope that in the near future the issue raised by one clinician in a post on a listserv will result in a Notice that recognizes the appropriate breadth of practice available to representatives operating in Tax Court with a POA.

Comments

  1. Enrolled Agents and CPAs who assist their clients with Appeals resolution of tax disputes prior to TC trial have raised this concern for many years. We are pleased Counsel’s Office and Appeals is becoming sensitized to the issue. My view is the Court is overwhelmed with the number of cases entering it that could have been resolved by Exam or Appeals prior to issuance of a (premature) SND.

  2. Rachael Rubenstein says:

    I attended a Tax Court Calendar call yesterday as a pro bono attorney in San Antonio, Texas. The Chief Counsel attorneys were cooperative with the pro bono attorneys. Prior to calendar call, a meeting was held with the judge, the pro bono attorneys, and the managing (IRS) counsel. At this meeting, the managing counsel announced that under the “new rules,” he would provide a copy of the Government’s pretrial memorandum to any pro bono attorney assisting a pro se petitioner, provided that the petitioner gave verbal permission. This was a huge deal in terms of understanding what issues were in controversy.

    No 8821s or 2848s were needed when the pro bono attorneys assisted/negotiated on behalf of the pro se petitioners, again verbal permission was sufficient. The whole experience was extremely efficient and cordial (while still remaining appropriately adversarial). Most cases settled in a fair manner.

    This was my first time participating in the calendar call as a volunteer attorney, and I don’t think the experience could have gone better (despite the imminent shut down). My hunch is that the success of the program has a lot to do with the collaborative relationship forged by the San Antonio Coordinator for the Pro Bono Committee of the Section of Taxation of the State Bar of Texas, Elizabeth Copeland; the Managing Counsel, T. Richard Sealy III; and the Associate Area Counsel, Daniel N. Price. Additionally, the presence of a local IRS Appeals Officer familiar with most of the attorneys in attendance also seemed to streamline settlement negotiations. Lastly, the meeting with the Special Trial Judge (requested in a letter sent by Elizabeth two weeks prior to the calendar call) appeared very valuable in terms of establishing how beneficial the Court viewed the role of the pro bono attorneys, considering the Court would only be in town for a day ½ and there were 16 pro se cases set for trial.

    I am not sure if this information is helpful to anyone in their attempts to work with Area Chief Counsel. Regardless, some may find it refreshing to hear a positive story involving practitioners and Chief Counsel attorneys working together to achieve fair resolutions for taxpayers in need of assistance.

    I applaud the efforts of clinicians, practitioners, TAS, the Pro Bono/Tax Clinic committee of the ABA Tax Section, and the IRS Chief Counsel Office in their attempts to work together and come up with solutions aimed at making Tax Court calendar calls across the country better for all parties involved.

    P.S. I am loving this blog – thanks for launching it!!

    • The Tax Court pro bono program run by the Texas State Bar is a model program. Elizabeth Copeland was recognized a few years ago by the ABA Tax Section with the Janet Spragens Pro Bono Award for her work on this program. If you want to volunteer at one of the Tax Court calendar calls to assist pro bono taxpayers, contact the ABA Tax Section Pro Bono Counsel Laura Newland at O: 202-442-3425
      M: 202-688-5164
      F: 202-662-8682
      laura.newland@americanbar.org

  3. Eric Rasmusen says:

    The previous email made me wonder about something, tho I’m not a lawyer, so maybe all lawyers know this: what does it mean to “represent” a client before any appearance is made in court? Does it require a written agreement? A clear oral agreement? (e.g. “Doe will represent Roe in his tax problems”) How about a pro bono lawyer advising a pro se taxpayer?

    • These questions could result in a very lengthy response. I will attempt to answer them briefly. Many lawyers represent clients in tax matters before an appearance is made in court. The vast majority of representation occurs on tax matters outside of court but this question comes in the context of a court case in which the lawyer has not entered an appearance but does have a power of attorney. What it means in this context is that the lawyer does represent the client before the agency but not in the court proceeding itself. The client has given the lawyer permission to speak on their behalf before the Appeals Office or Chief Counsel but the lawyer does not have the ability to speak on the client’s behalf to the court. As far as the court is concerned the client is pro se since no attorney has entered an appearance.

      Lawyers representing a client in this situation, and almost any situation, would execute a scope of representation letter with the client. A lawyer representing a client pro bono would also create a scope of representation letter in most cases. My clinic does that in the cases on which we work all of which are pro bono. When a lawyer assists at Tax Court calendar call, such a written agreement does not exist. Many times in that setting the lawyer is giving brief advice and not taking on the person as a client.

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