By Andrew Delaney
I hate doing my taxes. Things I would rather do include but are not limited to listening to Rebecca Black’s “Friday” on repeat—and that song is obnoxiously atrocious. If I had to choose between doing my taxes or covering myself in honey and standing on a fire-ant anthill, all I’d want to know is how long I’d have to stand on the anthill. Taxes suck. Usually, I file a six-month extension and spend October 14th cursing the world. So they do get done eventually (though never cheerfully). I can empathize at least a little bit with respondent here.
Respondent failed to timely file her personal Vermont income tax returns for tax years 2006, 2008, 2009, and 2010. This eventually led to disciplinary action, with disciplinary counsel arguing that in renewing her law license in 2009 and 2011, respondent made “false averments on her attorney licensing renewal statements . . . that she was in good standing with respect to all taxes owed.”
This all went down when, in 2007, the Department of Taxes starting sending notices to respondent. She ignored them. Eventually, the Department of Taxes told the Court Administrator about it, and then the Court Administrator passed it along to disciplinary counsel. Disciplinary counsel sent a letter saying, more or less, that the Department of Taxes’ notice clearly and convincingly established that respondent had failed to file 2008 and 2009 tax returns.
Eventually, respondent replied that she’d paid all the taxes due and contested all the Department of Taxes’ allegations. Shen claimed that the letter from disciplinary counsel was her first notice she wasn’t in good standing. Between computer crashes, a car crash, and a concussion, her ability to handle administrative duties was affected. But she had a plan in place with the Department of Taxes to get her returns filed and she didn’t owe anything.
The Department of Taxes continued to believe that respondent was not in good standing with her taxes. It filed a civil collection action and that was settled and dismissed. But the Department of Taxes continued to claim that respondent was not in good standing.
With all this floating about, respondent nonetheless electronically renewed her law license in 2009 and 2011 and in so doing certified that she was "in good standing" with respect to “any and all taxes due to the State of Vermont.”
In 2013, disciplinary counsel filed a request for a finding of probable cause in connection with respondent’s failure to file Vermont personal income tax returns for the years 2006, 2008, 2009, and 2010, alleging that the failure to file returns was a violation of the Vermont Rules of Professional Conduct. Disciplinary counsel separately alleged that the in-good-standing representation in the licensing-renewal statement was also a violation. The assigned panel found probable cause on the failure-to-file-taxes front, but not on the in-good-standing-being-a-misrepresentation front.
Disciplinary counsel gave the in-good-standing-being-a-misrepresentation argument another shot, and the panel again declined the invitation to find probable cause. So, disciplinary counsel went forward on the violation for which the panel had found probable cause.
The parties stipulated that respondent’s failure to timely file her tax returns was a violation of the Rules of Professional Conduct (8.4(c)), and agreed a public reprimand was warranted. The stipulation contained the following paragraph:
For each of the tax years in question, Respondent did not owe any taxes, and in some years she was entitled to a refund. Any monies paid were the result of penalties, late fees and interest on those fees.The panel imposed a public reprimand pursuant to the stipulation and recommendation.
The SCOV ordered review of this one because it can, that’s why. It requested briefing on two issues: “(1) the effect in this case of filing an attorney license renewal form certifying that a licensee is in good standing with respect to the payment of all state taxes; and (2) whether, in this case, a suspension of licensee, as urged by the Office of Disciplinary Counsel, is appropriate.”
The SCOV affirms the panel’s conclusion that there wasn’t a wrongful certification, and concludes that the public reprimand (not suspension) is the appropriate sanction here.
The SCOV notes that it accepts the panel’s findings unless they’re way out in left field. Because the facts are stipulated, there’s no factual conflict. And so, the panel’s findings are upheld so long as they’re clearly and reasonably supported by the evidence. Although the SCOV makes its own determination as to what sanctions are appropriate, it gives some deference to the Board’s recommendation.
The SCOV looks first to the attorney-licensing Administrative Order (41). The “good-standing” as to taxes requirement is met if taxes have been paid; are under an agreement with the department; are under appeal; if an abatement request has been filed for good cause; or a court challenge has been filed.
The reason for the certification in the attorney-licensing-renewal statement is to comply with this statute, which requires good standing with respect to taxes to maintain, among other things, professional licenses.
The conflict here is that when the statute was originally enacted, the Administrative Order and the statute contained the same in-good-standing definition. Now (since 1997), the statute includes a provision that requires that “all returns have been filed.” As a somewhat-frightening aside, any statement subscribed to under this statute and not “true and correct as to every material matter” is a heavy-duty felony, carrying a potential $10K fine and up to 15 years in prison.
The parties agreed that the in-good-standing definition that controls here is the Administrative Order’s version. And by its plain language, there’s no requirement that an attorney file all returns to be considered in good standing with respect to taxes. The SCOV rejects disciplinary counsel’s request to read a timely-filing-of-returns element into the in-good-standing definition.
So, the SCOV concludes that there wasn’t a violation when respondent filed her renewal certifications—that under the plain language of the Administrative Order, there was no violation. The SCOV therefore affirms the panel’s decision not to find probable cause on that front.
The SCOV next looks at the public-reprimand sanction. The SCOV notes that the parties agreed to that sanction, the panel imposed it, but the SCOV wanted to stir the pot (the SCOV requested that the parties address whether suspension is a more-appropriate sanction).
When reaching the stipulation, the parties agreed that remorse and personal problems were mitigating factors, and a prior disciplinary offense, a pattern of misconduct, and substantial experience in the practice of law were aggravating factors.
Disciplinary counsel takes the position that suspension would be appropriate if the in-good-standing-with-respect-to-taxes representation was a misrepresentation but otherwise supports the stipulation. The SCOV—because it concludes that there was no misrepresentation—goes with a public reprimand being the appropriate sanction.
We get a quick history lesson on the Vermont Rules of Professional Conduct (based on the ABA Model Rules) and the purpose of the rules and corresponding ABA Standards for sanctions (not to punish attorneys but to protect the public and maintain confidence in the legal system). Lawyers are responsible for complying with the rules, and are not to engage in conduct that may call into question the lawyer’s fitness to practice law.
Crimes generally fit the bill, and failure to file an income tax return is a crime. The SCOV notes that when a lawyer doesn’t do what everybody else has to do (whether they like it or not), it reflects badly on the legal profession and tends to damage the public’s faith in the system.
Suspension under the ABA Standards is appropriate for non-serious conduct that “seriously adversely reflects on the lawyer's fitness to practice” or “when a lawyer knowingly engages in conduct that is a violation of a duty owed as a professional, and causes injury or potential injury to . . . the legal system.”
There are four factors that help determine the appropriate sanction: “(a) the duty violated; (b) the lawyer’s mental state; (c) the potential or actual injury caused by the lawyer’s misconduct; and (d) the existence of any aggravating or mitigating factors.”
Respondent had a duty to file her taxes and she knowingly or intentionally failed to file them. Though respondent’s actions didn’t injure any clients, they did injure the legal profession.
Respondent stipulated to three aggravating factors— a prior disciplinary offense, a pattern of misconduct, and substantial experience in the practice of law. The parties, as noted above, also stipulated to two mitigating factors—remorse and personal problems. Between multiple computer crashes and a serious car crash, the parties found enough mitigation to lower the sanction from suspension to a public reprimand.
The panel acknowledged that respondent’s conduct could’ve warranted a suspension because it could’ve been charged as a crime and similar cases had resulted in suspension. The panel found, however, that given the circumstances—multiple computer crashes and a serious car crash—the public reprimand was the appropriate sanction. The SCOV agrees and affirms.
So what do you think? All I know is that I’m going to be making damned sure I file my taxes on time (with proper extensions, procrastination, and a healthy dose of expletives of course).
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