October 05, 2011

Summary of the Testimony of Leslie Shapiro - Center for Professional Responsibility

Summary of the Testimony of Leslie Shapiro

Before the Multidisciplinary Practice Commission

Immediately after lunch the Commission heard from Leslie S. Shapiro, former Director of Practices-IRS. He described the categories of practitioners authorized to represent taxpayers before the Internal Revenue Service pursuant to Treasury Department Circular 230 (31 C.F.R. subtitle A, part 10). They are attorneys in good standing who practice as attorneys before the IRS, duly qualified certified public accountants who practice as CPAs before the IRS, and enrolled agents who qualify for IRS practice by successfully completing four exams in tax law and procedure. Enrolled actuaries also qualify to deal with ERISA (Employee Retirement Income Security Act of 1974) issues relative to employee benefit plans. However, all categories must comply with the rules of conduct in Circular 230 and may be disqualified for failure to do so. Unauthorized practice of law is prohibited in Circular 230 (31 C.F.R. §10.32). Further, an attorney, CPA, enrolled agent or enrolled actuary may be disbarred or suspended from practice before the IRS or reprimanded for acts of disreputable conduct (31 C.F.R. §10.51).

He then responded to a "potpourri" of questions. When asked about differing views of conflicts of interest, Mr. Shapiro said that tax practitioners are sensitive to confidentiality. Attorneys, however, appear to be more sensitive to conflicts of interest. Circular 230 states that no tax practitioner can represent conflicting interests in practice before the IRS (31 C.F.R. §10.29) unless the conflict is brought to the client’s attention and, after full disclosure, there is consent to the practitioner’s continued representation. Mr. Shapiro acknowledged that conflicts screens are difficult to maintain and to enforce. He answered in the affirmative the Chair’s question of whether a conflict exists in the instance where the accounting firm has done an audit for a client and the accounting firm lawyer defends that client’s tax position before the I.R.S. He is unaware of mandated ethics courses for CPAs. Good standing of the lawyer or a CPA license is required in order to practice before the IRS. The Service does no further check of their professional credentials. Mr. Shapiro was of the opinion that all tax practitioners carry liability insurance. With respect to a nonlawyer’s referral of a matter to an attorney if criminal implications arise in the course of the representation, Mr. Shapiro acknowledged that he knows of instances where a tax practitioner hasn’t made such referral until it is too late - to the detriment of the client.