Unauthorized Practice Rule 5 - Tax Practice
UPR 5-101. Holding Out as a Tax Expert.
- (A) A non-lawyer shall not hold himself out as authorized to furnish to another advice or service under circumstances which imply his possession of legal knowledge or skill in the application of any law, federal, state or local, dealing with taxes, except:
- (1) A non-lawyer may hold himself out as an expert in the preparation of tax returns.
- (2) A certified public accountant or a person duly enrolled may hold himself out as authorized to practice before the Internal Revenue Service, as those terms are defined by the then applicable federal regulations and to the extent permitted therein.
- (3) A person admitted to practice before the United States Tax Court may hold himself out as such to the extent permitted by the rules of such Court.
- (4) As permitted by UPR 5-102.
UPR 5-102. Practicing Law in Tax Matters.
- (A) A non-lawyer shall not furnish to another for compensation, direct or indirect, advice or service under circumstances which require his use of legal knowledge or skill in the application of any law, federal, state or local, dealing with taxes, except:
- (1) A non-lawyer may prepare tax returns.
- (2) A certified public accountant or a person duly enrolled may practice before the Internal Revenue Service, as those terms are defined by the then applicable federal regulations and the extent permitted therein.
- (3) A non-lawyer may render such advice or service in connection with his representation of his employer or others before a tribunal, judicial, administrative, or executive, (i) in the presentation of facts, figures or factual conclusions, (ii) as authorized before the Internal Revenue Service, in (2) above, or (iii) as permitted by the rules of practice of the United States Tax Court.
- (4) A non-lawyer may render such advice or service incident to an engagement to provide products or services which he is otherwise authorized to provide, where such advice or service arises out of the providing of such other products or services and was not the principal purpose of the engagement.
- (5) A non-lawyer may render such advice or service to his regular employer other than in aid of such employer's unauthorized rendition of legal advice or services to another.
Unauthorized Practice Considerations.
UPC 5-1. Taxation affects almost every phase of modern life. The giving of tax advice necessarily involves many branches of law and requires a familiarity with many non-tax legal principles on which the tax issues depend. In addition, the legal and accounting phases of tax practice are often so interrelated and overlapping that they are difficult to distinguish.
UPC 5-2. The preparation of a tax return does not necessarily involve the practice of law. It may often be accomplished by one having only incidental legal knowledge.
UPC 5-3. A non-lawyer otherwise entitled to do so may hold himself out as a tax return preparer or as enrolled to practice before the Internal Revenue Service; but he may not hold himself out as qualified to deal with difficult and involved questions of tax law, wholly apart from any engagement to prepare tax returns or practice before the Internal Revenue Service.
UPC 5-4. In general, tax planning is not considered to be the unauthorized practice of law. Attempting to resolve uncertainties as to the interpretation or application of tax or general law to a particular transaction, however, involves the practice of law unless it is incidental to a tax return preparer's engagement or the regular course of conducting a licensed business, for example, an investment business, or is limited to an analysis of merely the facts and assets of an estate.
UPC 5-5. Only a lawyer may prepare legal instruments for others or take the necessary steps to create, amend or dissolve a partnership, corporation or other business entity. Suggesting that any such legal work should be reviewed by the taxpayer's lawyer will not cure any unauthorized practice. In general, a lawyer working for a corporation not engaged in the practice of law as a registered law corporation is not entitled in the course of his employment to provide such services for customers or patrons of his employer.
UPC 5-6. Non-lawyers authorized by statute or Treasury Department regulations to represent taxpayers may do so in accordance with the existing law, rules and regulations governing such practice.
UPC 5-7. When a taxpayer is being investigated for a possible criminal violation of the tax laws, he should be promptly advised to seek advice from a lawyer. The lawyer-client privilege is a unique relationship to which the taxpayer is entitled at the earliest stage of the investigation.
UPC 5-8. Nothing herein is intended to modify or limit the right of a certified public accountant to certify, attest or express an opinion that financial data comply with conditions established by law or contract. Certified public accountants are members of a profession regulated by law who must meet certain minimal education requirements and observe certain rules of professional conduct. As such, certified public accountants engaged in the practice of their profession are entitled to a greater degree of latitude in the resolution of issues involving overlapping legal and accounting principles.
Updated: April 20, 2010