Department of the Treasury (2010)

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United States

Department of the Treasury

Director, Office of Professional Responsibility,

Complainant-Appellant

Complaint No. 2010-19

(b)(3)/26 USC 6103

Respondent-Appellee

Decision on Appeal

Authority

Under the authority of General Counsel Order No. 9 (January 19, 2001) and a

delegation order dated March 2, 2011, I have been delegated the authority to decide

disciplinary appeals to the Secretary of the Treasury filed under Part 10 of Title 31,

Code of Federal Regulations (Practice Before the Internal Revenue Service (IRS),

reprinted by the Treasury Department and hereinafter referred to as Circular 230 - all

references are to Circular 230 as in effect for the period(s) at issue). This is such an

appeal from a Decision and Order on Default (Default Order) entered into this

proceeding by Chief Administrative Law Judge Susan L. Biro (the ALJ) on February 4,

2011.

Procedural History

This proceeding was commenced on November 10, 2010, when the ComplainantAppellant, Director of the Office of Professional Responsibility (OPR) filed a Complaint

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against Respondent-Appellee, (b)(3)/26 USC 6103 (“ (b)(3)/26

”). The Complaint

6103

(b)(3)/26 USC

alleges that

has

engaged

practice

before

the

IRS,

as defined by§10.2, as

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(b)(3)/26

USC

6103

a certified public accountant, and further, that

and that

(b)(3)/26 USC 6103

(b)(3)/26

USC 6103

(b)(3)/26

USC 6103

SAME

(b)(3)/26 USC 6103

(b)(3)/26

USC 6103

SAME

(count 1)

(count 2)

(count 3)

(count 4)

(count 5)

(count 6)

(count 7)

For counts 1-3,

states that

(b)(3)/26 USC 6103

(b)(3)/26 USC

6103

(b)(3)/26 USC

6103

(b)(3)/26 USC

6103

(b)(3)/26 USC

6103

. For counts 1-4, the Complaint

. (b)(3)/26 USC

6103

The Complaint contains three additional counts. Count 8 of the Complaint alleges that

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(b)(3)/26 USC 6103

on about April 30, 2007, OPR wrote (b)(3)/26

alleging that

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, giving him 30 days to respond. The Complaint states that his failure to respond

(b)(3)/26 USC 6103

constitutes a willful violation of§10.20(b) of

Circular 230, which requires practitioners to provide responsive information concerning

OPR inquiries.2 Count 9 of the Complaint alleges that on about August 30, 2009, OPR

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(b)(3)/26 USC 6103

again wrote (b)(3)/26

this time alleging that

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, giving him 30 days to respond. The Complaint states that his failure to respond

(b)(3)/26 USC 6103

constitutes a willful violation of§10.20(b) of

Circular 230. Count 10 of the Complaint alleges that on about January 5, 2010, OPR

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(b)(3)/26 USC 6103

again wrote (b)(3)/26

concerning

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giving him 20 days to respond. The Complaint states that his failure to respond

(b)(3)/26 USC 6103

constitutes a violation of§10.20(b) of Circular 230.

The Complaint states that with respect to

(b)(3)/26 USC 6103

10.51 of

Circular 230 for which (b)(3)/26 USC 6103 may be censured, suspended, or disbarred from

practice before the IRS. The Complaint states that with respect to counts 8-10 that the

(b)(3)/26 USC 6103

, which have

no bearing on the result herein.

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The file indicates that OPR sent (b)(3)/26

a letter about (b)(3)/26 USC 6103 dated February 7, 2007,

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informing him that if he did not respond within 30 days that OPR would initiate a disciplinary proceeding

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against him under Circular 230. I did not see anything in the file indicating that (b)(3)/26

responded to

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any of OPR’s correspondence nor did he answer the November 10, 2010 Complaint in this case or

participate in any way in this proceeding.

(b)(3)/26 USC 6103

failure to respond

was a willful

(b)(3)/26 USC

violation of§10.20(b) for which

may be censured, suspended, or disbarred

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from practice before the IRS.

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The Complaint requests that (b)(3)/26

be disbarred from practice before the IRS

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pursuant to§

§10.20, 10.50, 10.51, 10.52 and 10.70 of Circular 230.

(b)(3)/26 USC

6103

did not file an Answer to the Complaint and on December 20, 2010, OPR

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served on

a motion for default to which (b)(3)/26

[sic] did not respond. In

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(b)(3)/26 USC 6103

entering the Default Order, the ALJ found that (i) the counts for

are barred by the statute of limitations contained in 28 U.S.C.§2462 (b)(3)/26 USC 6103

(b)(3)/26 USC 6103

, (ii)

, and

(b)(3)/26 USC 6103

, (iii) the part of the count for

(b)(3)/26 USC 6103

was invalid because the Complaint did not allege

and there is no support for that finding in the record, and

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(iv) the three counts alleging (b)(3)/26

’s willful failure to respond to OPR in violation of

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§10.20 of Circular 230 were sustained. As to the sanction, the ALJ held that since the

(b)(3)/26 USC

counts for 6103

were not sustained, nor was the part of the count for (b)(3)/26 USC 6103

, that a sanction of indefinite suspension was commensurate with the

seriousness of the disreputable conduct that was found. Default Order at p. 10.

(b)(3)/26 USC

6103

OPR filed an appeal asserting that the Decision and Order was in error as (i) OPR

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(b)(3)/26 USC 6103

properly charged (b)(3)/26

with

, and that his failure to answer

6103

(b)(3)/

the Complaint constituted an admission of same, (ii)§2462 does not apply to

26 USC 6103

in OPR practitioner proceedings as the proposed discipline is remedial,

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and (iii) the sanction should be modified to disbar (b)(3)/26

rather than subject him to

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an indefinite suspension. On July 20, 2011, I issued an Order asking OPR to address

(b)(3)/26 USC 6103

two issues: why it took OPR so long from the time it identified

(b)(3)/26 USC 6103

[sic] to file the Complaint, and whether if§2462 bars counts for

the

underlying conduct could be considered for any purpose. OPR responded but

(b)(3)/26

USC 6103 did not respond to OPR’s brief in support of its appeal or its supplemental brief.

Findings of Fact

The Appellate Authority reviews the ALJ’s findings of fact under a clearly erroneous

standard of review. Section 10.78 of Circular 230. The ALJ’s findings of fact are well

supported by the record and are not clearly erroneous. However, because of the ALJ’s

conclusion that the statute of limitations barred the bringing of counts (b)(3)/26 USC 6103 ,

(b)(3)/26 USC 6103

she did not make a finding as to whether

. The record

(b)(3)/26 USC 6103

provides clear and convincing evidence that

these facts were pled by OPR and not denied by (b)(3)/26 USC 6103 , they are deemed

admitted. The record also provides clear and convincing evidence that

(b)(3)/26 USC 6103

. As this fact was

(b)(3)/26 USC

pled by OPR and not denied by

, it is deemed admitted.

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Analysis

The Appellate Authority reviews the ALJ’s findings as to issues that are exclusively

matters of law de novo. Section 10.78 of Circular 230. The application of§2462 is

exclusively a matter of law.

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In OPR v. (b)(3)/26

, Complaint No. 2010-09 (Decision on Appeal, May 26, 2011), I

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held that (i)§2462 was applicable to OPR disciplinary proceedings with regard to a

(b)(3)/26 USC 6103

count, (ii) the date that the§2462 limitations period commences

(b)(3)/26 USC 6103

running is

, and (iii) (b)(3)/26 USC 6103

(b)(3)/26 USC 6103

was not a continuing violation. In OPR v.

, Complaint No. 2010-12

(Decision on Appeal, October 12, 2011), I held that§2462 was applicable to OPR

(b)(3)/26 USC 6103

disciplinary proceedings with regard to a

(b)(3)/26 USC 6103

count. I also held that ordinarily

is the date that should be used to start the running of the statute of limitations and that

(b)(3)/26 USC 6103 violation is not a continuing one with an exception not applicable here.

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The holdings in (b)(3)/26

and SAME are not particular to their facts; I have not as of yet

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seen any circumstances whereby OPR will be able to describe proposed discipline so

that it will be characterized as remedial rather than penal for purposes of§2462. I affirm

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the ALJ’s finding that the counts (b)(3)/26

are not sustained.

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The application of§2462 has arisen in many of the cases coming to me on appeal since

the issue was first identified by Chief Judge Biro sua sponte. The reason that§2462

frequently arises is that OPR often does not file a Complaint until long after it initially

(b)(3)/26 USC 6103

identifies

violation so that in each case to which§2462 applies,

violations

are

than five years old.

(b)(3)/26 USC 6103

OPR sent (b)(3)/26 USC 6103 a letter dated February, 8, 2007, asserting that (b)(3)/26 USC 6103

and stating that it would not take action

(b)(3)/26 USC

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for 30 days during which

could submit a response, but that if (b)(3)/26

did

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not respond OPR would initiate a disciplinary proceeding under Circular 230. OPR sent

(b)(3)/26 USC

similar letters dated April 13, 2007; September 30, 2009; and January 5,

6103

(b)(3)/26

(b)(3)/26 USC 6103

2010.

, but (b)(3)/26 USC 6103

USC 6103 apparently

through the commencement of this proceeding, nor did he ever

respond to the OPR correspondence. The Complaint was filed November 10, 2010.

In response to my question as to why OPR waited so long after it had identified

(b)(3)/26 USC 6103

to file the Complaint in this case, OPR explained that it waited an

appropriate length of time under all the circumstances because its focus is to assure

that practitioners are fit to practice.

I find it inexplicable that OPR waited well over three and a half years after identifying

(b)(3)/26 USC 6103

[sic] to conclude that he was not a suitable person to practice

(b)(3)/26 USC 6103

before the IRS. This is particularly so given that with

, even after

(b)(3)/26

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6103

having been flagged by OPR,

and failed to respond to OPR’s repeated threats to bring a disciplinary action against him (b)(3)/26

he did not even attempt to set out mitigating circumstances. As I stated in USC 6103 , I find

that Johnson v. Securities and Exchange Commission, 87 F.3d 484, 488-90 (D.C. Cir.

1996), and the authorities cited therein are a controlling precedent, and thus§ 2462

(b)(3)/26 USC 6103

commences as to

(b)(3)/26 USC 6103

and commences as to

(b)(3)/26

as described in USC 6103 . OPR may continue to delay the

initiation of proceedings for extended periods, but one cost of its doing so is that it will be

unable to present counts (b)(3)/26 USC 6103 .

OPR also appeals the ALJ’s disallowance of

states that“ [r]espondent

(b)(3)/26 USC 6103

. Count 4

(b)(3)/26 USC 6103

and that

(b)(3)/26 USC 6103

of Circular 230. The

(b)(3)/26 USC 6103

ALJ held this allegation was not sufficient to allege

and further, that the record did not support such a

finding (Default Order at p. 8). OPR asserts that under§10.62(a) of Circular 230 its

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(b)(3)/26 USC 6103

pleading provided (b)(3)/26

with fair notice of a charge of

and

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that the record provided support for same. I find it unnecessary to address this issue for

two reasons. First, since several valid counts have been sustained in this case the

number of counts sustained is not of import and a Circular 230 proceeding that has found

a violation warranting discipline may consider (b)(3)/26 USC 6103 in determining the

(b)(3)/26 USC 6103

sanction whether or not it is part of a count or whether

. Second, as described below, I have concluded

that the appropriate sanction is disbarment without regard to sustaining this element of

(b)(3)/26 USC 6103 , so a decision on this issue is unnecessary. However, if would certainly

be prudent for OPR to consider the points made by the ALJ in framing future complaints

and proving up same in default motions.

Appropriate Sanction

The Appellate Authority reviews the sanction sought by OPR and imposed by the ALJ de

(b)(3)/26

novo. See, e.g., Director, OPR v. USC

6103 , Complaint No. 2007-12 (April 21, 2009) at p.

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3; Director of OPR v. (b)(3)/26

Complaint

No. 2006-23 (April 2008) at p. 3; Director, OPR

6103

(b)(3)/26 USC

(b)(3)/26

, Complaint No. 2007-08 (July 2008) at p. 4; Director, OPR v. USC

6103

6103 ,

(b)(3)/26

Complaint No. 2008-12 (January 20, 2010) at p. 6; Director, OPR v. USC

Complaint

6103

No. 2008-19 (May 26, 2009) at p. 4. I modify the suspension imposed by the ALJ for the

reasons stated below.

(b)(3)/26 USC 6103

The Complaint requests a sanction of disbarment, based on

(b)(3)/26

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6103

and

, but, as stated

(b)(3)/26 USC 6103

above, because of §2462, only the violations

(b)(3)/26 USC

and for

failure to respond to OPR in violation of§10.20 of Circular

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230 were found to be a basis for liability by the ALJ. Because fewer counts than

proposed were sustained, the Default Order imposes a different sanction - it provides for

an indefinite suspension which allows OPR "sole discretion”to determine when

(b)(3)/26 USC

6103

may be reinstated. Default Order at p. 10. OPR has appealed the indefinite

suspension and asks for a sanction of disbarment.

Initially, a practitioner whose sanction is initiated through a disciplinary proceeding, as

provided for in §10.60 et seq. of Circular 230, that is not resolved between the

practitioner and OPR consensually as provided for in §10.61 of Circular 230, should

have his case resolved by the ALJ as provided for in §10.76 of Circular 230, or by the

agency on appeal as provided for in §10.78 of Circular 230. The purpose of the

disciplinary proceeding is to have the sanction determined by the ALJ or the agency,

not by OPR. Section 10.82 of Circular 230 provides for an expedited suspension for a

duration within the control of OPR, but that section applies only under narrow and

specifically defined circumstances and is an interim measure that provides the

practitioner with the ability to obtain prompt resolution with a sanction determined by the

ALJ or agency as described above in a proceeding administered per§10.60 of Circular

230. I conclude that practitioners and OPR are entitled to a determinate sanction by

the ALJ under §10.76 of Circular 230 the application of which may be readily and

unambiguously understood and complied with by the practitioner and OPR, subject to

any specific conditions as provided in §10.79(d) of Circular 230.

(b)(3)/26 USC 6103

after he was contacted by OPR. As of the

(b)(3)/26 USC 6103

date of the institution of this proceeding,

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. Further, (b)(3)/26

has not responded to

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(b)(3)/26

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6103

OPR’s several attempts

or to offer an explanation for

(b)(3)/26 USC 6103 , in violation of§10.20(b) of Circular 230. (b)(3)/26 USC did not answer the

6103

Complaint in this case or otherwise participate in this proceeding. Under these

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circumstances, it is clear that (b)(3)/26

is not fit to practice before the IRS and I find

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that the appropriate sanction is disbarment.

In light of my conclusion above, it is unnecessary to reach the issue of the

(b)(3)/26

consideration, if any, to be given USC

barred by§2462. However, since I addressed

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(b)(3)/26

this issue in USC 6103 and asked OPR to brief the issue in this case, I thought it worth

clarifying that I have concluded that the same principle applies here. Specifically, I

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asked OPR whether assuming arguendo that I found that§2462 barred (b)(3)/26

6103

(b)(3)/26 USC

counts,

should be considered in determining the sanction to be

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imposed. OPR responded that it would be inappropriate “to consider past bad acts that

can no longer be charged directly in the complaint” but did not provide any authority for

(b)(3)/26

its position. OPR did state that time-barred USC 6103 may be examined to show the

(b)(3)/26 USC 6103

presence of

In several previous cases I deferred to OPR as to this position, but I declined to do so in

(b)(3)/26

and would have considered barred USC 6103 as an aggravating factor for sanction

purposes here had it been necessary. The record contains clear and convincing

(b)(3)/26 USC 6103

evidence as to

(b)(3)/26

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6103

Considering a practitioner’s

immediately before

those covered by timely counts is consistent with the law and regulations and helpful in

determining an appropriate sanction as to a practitioner’s fitness to practice.

(b)(3)/26

USC 6103

Specifically, Circular 230 provides that in determining sanctions, “[t]he sanctions

imposed by this section shall take into account all relevant facts and circumstances.”

See §10.50(d). It also provides that the rules of evidence prevailing in courts of law and

equity are not controlling, but that evidence that is irrelevant, immaterial, or wholly

repetitious may be excluded. See§10.73. OPR has sustained violations of Circular 230

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(b)(3)/26 USC 6103

for (b)(3)/26

that were timely brought.

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, even though barred as separate counts, constitute anterior events that may be

properly considered to shed light on the violations that were sustained. See Local

Lodge No. 1424 v. NLRB, 362 U.S. 411, 416-17 (1960); H. P. Lambert Co., Inc., v.

Secretary of the Treasury, 354 F.2d 819, 822 (1st Cir. 1965); Article II Gun Shop, Inc. v.

Gonzales, 441 F.3d 492, 496-97 (7th Cir. 2006), cert. denied, 2006 U.S. Lexis 8059

(b)(3)/26 USC 6103

(2006).

are relevant facts and circumstances in determining a sanction, and I do not see

any impediments to the consideration of them as aggravating factors in imposing a

sanction. I will consider anterior and posterior events in future cases if included in the

record and substantiated with clear and convincing evidence.

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I have considered all of the arguments made by OPR and (b)(3)/26

and to the extent

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not mentioned herein, I find them to be irrelevant or without merit.

Conclusion

For the reasons stated, I hereby determine that (b)(3)/26 USC 6103

is disbarred from

practice before the IRS. This constitutes FINAL AGENCY ACTION in this proceeding.

___________________________

Bernard H. Weberman

Appellate Authority

Office of Chief Counsel

Internal Revenue Service

(As Authorized Delegate of the

Secretary of the Treasury)

October 14, 2011

Lanham, MD

CERTIFICATE OF SERVICE

I hereby certify that the Decision on Appeal dated October 14, 2011 in Complaint No.

2010-19 was sent this day by UPS Next Day Air and by First Class U.S. Mail to the

addresses listed below:

UPS Next Day Air:

(b)(3)/26 USC 6103

Redacted

(b)(3)/26 USC 6103

First Class U.S. Mail:

Honorable Susan L. Biro

Chief Administrative Law Judge

U.S. Environmental Protection Agency

Office of Administrative Law Judges

Redacted

Washington, D.C. 20460

Karen L. Hawkins

Director, Office of Professional Responsibility

Internal Revenue Service

Redacted

Washington, DC 20224

Colleen A. Crane, Attorney

Internal Revenue Service

Office of Chief Counsel, General Legal Services

Redacted

Washington, DC 20224

_____________________________________________

Bernard H. Weberman

Appellate Authority

Office of Chief Counsel

Internal Revenue Service

(As Authorized Delegate of the

Secretary of the Treasury)

October 14, 2011

Lanham, MD

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.