IRS Chief Counsel Slams Attorneys Over Ethical Lapse

by Glen Shapiro, LawAndTax-News.com, New York

12 February 2003

According to a recent report from the CCH News service, the IRS Chief Counsel's Office earlier this month issued a notice to its attorneys reminding them to to observe their ethical obligations when pursuing cases before the courts.

This warning comes as a result of the aggressive stance assumed by Chief Counsel attorneys in a recent case against J.A. Dixon, during which the news service revealed, the IRS legal professionals 'pushed the bounds of ethical conduct by committing fraud on the court in order to secure a large deficiency award. Dixon was an especially high-stakes matter for the IRS since it represented a test case involving a tax-sheltered 'investment program' that allegedly relied on sham transactions to generate tax benefits for a large number of participants.'

According to the Chief Counsel's notice, the conduct of the lawyers 'fell far short' of the standard of ethics expected of IRS attorneys. The Office warned that: 'misconduct, such as that described in Dixon will neither be condoned nor tolerated...and anyone engaging in future misconduct should be forewarned that the Office will take appropriate disciplinary action, including possible termination of employment.'

However, CCH revealed that little action was taken against the IRS counsel members in question, and that in fact they were suspended without pay for just two weeks as a result of their misdemeanour.

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