Circular 230
May 29, 2010 by RickBryan
For your reading pleasure is the infamous IRS Circular 230, which governs the conduct of practitioners in IRS matters. It applies to lawyers, CPAs, Enrolled Agents, Actuaries, Retirement Plan Agents and Appraisers. As a general matter, the rules of Circular 230 are intended to ‘raise the bar’ as to professional responsibility (conduct and ethics) among professionals representing clients in IRS matters. Circular230. This all sounds well and good, but part of the impact of Circular 230 is (to some extent) deprive people of the level of ‘zealous representation’ by their attorneys which is protected by the 4th, 5th, and 6th Amendments to the Constitution of the United States. While lying and making false or unsupported legal arguments is and was never a part of a person’s Constitutional rights vis-a-vis being represented by counsel, Circular 230 has the impact of, for example, playing poker with the IRS and being forced to turn all of your cards over for your opponent to see. Obviously if you’re playing poker and your cards are all face up while your opponent gets to hold their cards close to the vest, your odds of winning are decreased fairly significantly. Perhaps an overstatement; nevertheless Circular 230 is part of a ten year offensive by the IRS to stack the deck in their favor on matters of reasonable disagreements as to the interpretation of federal income tax laws. Even more significantly than the provisions of Circular 230 are the recent (10+ years) offensive by the Treasury Department to trim the boundaries of the attorney-client privilege. People have the general understanding that when they are speaking with an attorney, and revealing and disclosing their most personal and confidential matters, that those secrets and confidences will be kept confidential. Not only is that correct as a matter of New York state law, but more fundamentally it stems from the Bill of Rights. However the IRS takes the position, in various forms and formats, that when it comes to federal tax law, the attorney-client privilege is not as broad as in other areas of the law. This is significant not only as to the implications of the federal government whittling away constitutional protections by administrative regulation, which of course won’t stop with the Internal Revenue laws, but more significant in this area because the taxpayer simply cannot be represented adequately by lawyers alone. Lawyers need accountants and actuaries to ‘run the numbers’ and prepare various spreadsheets and perform mathematical computations. The lawyer then uses this information to develop a theory of the case and represent the client. If those accountants’ workpapers are placed face up on the table for the IRS to see, the direct result is a situation where the client is not receiving the same level of Constitutionally protected zealous representation in the area of federal tax law, as the client might receive in other areas of the law. The long range implications of the government’s position in this area should be troubling to citizens who believe that ours is a government ‘of the people, by the people, and for the people.’ When the government can make the rules of conduct as between attorney-client, AND can, at the end of the day, enforce those rules with a Glock 10mm Auto, we’re in real trouble.
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