College of William & Mary Law School William & Mary Law School Scholarship Repository William & Mary Annual Tax Conference Conferences, Events, and Lectures 29 The Office of Professional Responsibility - Mission and Structure (Slides) Repository Citation "The Office of Professional Responsibility - Mission and Structure (Slides)" (29). William & Mary Annual Tax Conference. Paper 33. http://scholarship.law.wm.edu/tax/33 Copyright c 29 by the authors. This article is brought to you by the William & Mary Law School Scholarship Repository. http://scholarship.law.wm.edu/tax
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THR"N HYPOTHETICAL #1 Billie Jean represents the Estate of Michael Johnston in a tax assessment before the IRS, Billie Jean has hired Liz Tyler, a certified real estate appraiser, to appraise the Neverland Patch, Michael Johnston's property, It is Liz's practice to retain the final report and all documentation. However, all drafts and notes are destroyed after Liz signs the final appraisal. Billie Jean noticed that in a draft appraisal Liz relied on a comparable real estate transaction. However, this comparable real estate transaction was not included in the final report that was eventually submitted to the IRS. The Neverland Patch was valued considerably higher in the final report as compared to the draft as a result of the fact that the comparable real estate transactions were omitted from the final report. ANSWER #1 - A practitioner must advise clients of any noncompliance, error or omission in a submission to the IRS. 1.21. Therefore, the practitioner must, at the very least, advise their client on the omissions and the effect of this on the valuation of the property. Furthermore, a practitioner must exercise due diligence, which is presumed if a practitioner relies on the work product of another. However, a practitioner must use reasonable care in engaging and supervising the work of another-in this case Liz Tyler. 1.22. In this case, the attorney was not relying on Liz Tyler because they had actual knowledge of misconduct. Therefore, the attorney should not be afforded the presumption. - Due diligence is a broad term that has been open to interpretation. Administrative Law Judge's have shown a willingness to interpret "due diligence" broadly as seen in the OPR v. John Sykes decision. If the attorney is found to have not exercised his or her due diligence, the attorney could be subject to 1.51 sanctions. A practitioner may be sanctioned under 1.51 if the practitioner willfully violates Circular 23.
HYPOTHETICAL #2 Howard Cheatem of the law firm Dewey, Cheatem & Howe also holds an accounting degree and is a licensed CPA in the Commonwealth of Virginia. Before working for the law firm, Mr. Cheatem was a principal at the now-defunct accounting firm Awful Anderson. While at the accounting firm, Cheatem issued several written legal opinions to clients on the tax-exempt status of their organizations-all under the Awful Anderson name. Thurston Howe IIl, a partner at the law firm, represents Cheatem in an ethics matter before the IRS Office of Professional Responsibility (OPR) that concerns a written legal opinion Cheatem issued while he was at Awful Anderson. Gill Bates of the Gill and Belinda Bates Foundation has also asked Howe to represent the foundation before the IRS on a matter regarding the tax-exempt status of the Foundation. Gill informs Howe that the foundation received a "more likely than not" written memorandum opinion on the tax-exempt status of the foundation that was issued by Awful Anderson. Cheatem's name does not appear on the written memorandum issued by Awful Anderson but the opinion issued is very similar to the one at issue in the OPR matter. ANSWER #2 A practitioner shall not represent a client before the IRS if the representation involves a conflict of interest. 1.29. It may be a conflict of interest if representation of one client will be directly adverse to another client-if the representation of the Bates Foundation could be adverse to the representation of Cheatem. in this case, Thurston Howe IlI representation of Cheatem may hinder the representation of the Bates Foundation and vice versa. While there may not be an actual conflict of interest because it is uncertain whether Cheatem authored the specific memorandum at issue, there is a potential conflict of interest because the representation of one client will be directly adverse to the other. However, the representation of both clients may be appropriate if the practitioner satisfied three requirements-if the practitioner reasonably believes that they will be able to provide competent representation, the representation is not prohibited by law, and each client waives the conflict via informed written consent. 1.29(c).
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