LEGAL GUIDE
Written by attorney Steven J. Fromm | May 31, 2011

CPAs & TAX PRACTITIONERS: BEWARE OF NEW AGGRESSIVE SANCTIONS BY IRS-OPR

The Internal Revenue Service’s Office of Professional Responsibility (OPR) just sent out a strong warning to CPA and other tax practitioners. The OPR won an agency appeal against a Florida certified public accountant, who challenged the length of the expedited suspension sought by OPR, after he pled guilty to a tax misdemeanor, according to the published Decision on Appeal.

Lawrence Legel, a Ft. Lauderdale practitioner who was represented by counsel, voluntarily waived his right to a trial in Federal District Court and pled guilty to a violation of section 7203 for assisting with a client’s efforts to hide income from the IRS. When OPR initiated an expedited proceeding to indefinitely suspend him, Legel recanted his admission of guilt, alleging prosecutorial misconduct and coercion by his criminal defense attorney.

In a subsequent administrative hearing on the suspension, rejecting OPR’s recommendation of a 36 month suspension, Administrative Law Judge Susan Biro, imposed a lighter suspension of 24 months and calculated the start date for the suspension from the date Legel was placed on probation in the criminal proceeding. Legel’s probation commenced one year before OPR took action to suspend him from practice before the IRS. OPR appealed both the length and commencement date of the suspension.

On March 31, 2011, the Treasury Appellate Authority (TAA) ruled that tougher 36 months was the appropriate suspension period under the circumstances, and that the correct date from which to calculate the period of suspension is the date on which OPR imposed its suspension under the expedited procedure provisions of Circular 230. As a result, he ended up with the longer 36 month suspension and the later commencement date, the date OPR imposed its suspension, not when he was placed on probation.

According to the published Decision on Appeal, the Appellate Authority stated that “Legel’s lack of concern with telling the truth in sworn testimony in the [criminal proceeding] and in his testimony in the disciplinary proceeding, and his lack of remorse…both weigh very heavily against suitability [to practice before the IRS]." This is a warning to any tax practitioner involved in such matters.

“The Appellate Authority makes it clear in his decision that he considers a conviction of knowingly and willfully assisting in the failure of another to pay income tax to be a very serious charge that strikes at the heart of the agency’s mission and is directly contrary to the duties of one who practices before the IRS," said OPR Director Karen L. Hawkins.

Her final wake up call to all tax practitioners is that “Convicted practitioners can expect OPR to continue its aggressive use of the expedited suspension procedures in Circular 230 to quickly and efficiently remove them from practice for the taxpaying public’s protection."

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