Abstract

Four years ago, I presented a paper at a symposium on professionalism jointly sponsored by the University of Kansas Law School and the Kansas Bar Association. That paper espoused the view (contrary to what appears to be the popular view among tax scholars) that tax lawyers owe no special duty to the "tax system" other than to abide by the law and the applicable standards of professional conduct. During the four-year interim since my last visit to Kansas, however, we have witnessed the deleterious effect of the IRS Restructuring and Reform Act of 1998 (RRA '98) on IRS enforcement and collection activities, and consequently on taxpayer compliance. Almost daily, new corporate accounting scandals and abusive tax avoidance transactions are being reported in newspapers across the country. Thus, I have been invited to reconsider my earlier position specifically in light of RRA '98.

The problem with abusive tax schemes lies not with the wage earners and lower income taxpayers, but rather with the upper income individual and corporate taxpayers who have money to shelter and resources to hire the best professional advice on how to avoid paying taxes. The sophistication of these taxpayers and their advisors has enabled them to exploit the tax system through the use of elaborate tax avoidance schemes. These schemes would not have been possible without the help of tax professionals. Yet, these schemes have hurt the professionals' clients, damaged the national economy, and undermined the federal tax system. What does this say about a duty to the tax system, and what difference does it make whether or not tax practitioners have a discrete duty to the tax system? Should the duty of lawyers practicing tax law be different from the duty of other tax practitioners? If there is a discrete duty to the tax system, it will affect how tax practitioners interact (or should interact) with the Service. In addition, if there is such a duty, it should be a normative one in which clear expectations are firmly established, and the ability of all tax practitioners to comply is feasible in practice. But this has not been the case, and that has led to our present problems.