OPR - Robert Alan Jones Sanctioned

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OPR - Robert Alan Jones Sanctioned

Postby jcolvin2 » Tue Oct 07, 2008 8:18 pm

January 16, 2007

THE DEPARTMENT OF THE TREASURY
OFFICE OF PROFESSIONAL RESPONSIBILITY
INTERNAL REVENUE SERVICE
WASHINGTON D.C.

DIRECTOR, OFFICE OF
PROFESSIONAL RESPONSIBILITY
Complainant
v.
ROBERT ALAN JONES
Respondent

COMPLAINT NO. 2005-13

DECISION

JOSPEPH GONTRAM, Administrative Law Judge. The Director, Office of Professional Responsibility (the Complainant or OPR) instituted the present case through a complaint alleging that Robert Alan Jones (the Respondent or Jones) should be suspended from practice before the Internal Revenue Service for a period of twenty-four months. A hearing was held in Las Vegas, Nevada on September 11 and 12, 2006 with both parties being present and represented by counsel.

I. Issues and Contentions

Jones is charged with having violated various provisions of 31 C.F.R., Part 10. These regulations have been issued pursuant to 31 U.S.C. § 330, which authorizes the Secretary of the Treasury to regulate the practice of representatives before the Department of the Treasury and to require that representatives demonstrate the necessary qualifications and competency to advise and assist persons in presenting their cases. The statute also provides that the Secretary of the Treasury may suspend or disbar from practice before the Department a representative who is incompetent, disreputable, or violates regulations prescribed under the statute. The regulations in 31 C.F.R., Part 10 are contained in Circular No. 230 titled "Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Actuaries, and Appraisers before the Internal Revenue Service." (Circular No. 230).

The complaint alleges that Jones failed to exercise due diligence in violation of 31 C.F.R. § 10.22(a)(1), (2) and (3), and engaged in disreputable conduct in violation of 31 C.F.R. § 10.51, including subsections (d) and (j), by signing and filing with the IRS numerous powers of attorney forms (Form 2848) which falsely identified one or more of three cosigners as Enrolled Agents. The three cosigners, who falsely claimed to be enrolled agents on the Forms 2848, were Employee 1, Employee 2 and Employee 3.

The cited regulations provide as follows:

§ 10.22 Diligence as to accuracy.
(a) In general. A practitioner must exercise due diligence --

(1) In preparing or assisting in the preparation of, approving, and filing tax returns, documents affidavits, and other papers relating to Internal Revenue Service matters;

(2) In determining the correctness of oral or written representations made by the practitioner to the Department of the Treasury; and

(3) In determining the correctness of oral or written representations made by the practitioner to clients with reference to any matter administered by the Internal Revenue Service.

§ 10.51 Incompetence and disreputable conduct.
Incompetence and disreputable conduct for which a practitioner may be censured, suspended or disbarred from practice before the Internal Revenue Service includes, but is not limited to -- . . .

(d) Giving false or misleading information, or participating in any way in the giving of false or misleading information to the Department of the Treasury or any officer or employee thereof, or to any tribunal authorized to pass upon Federal tax matters, in connection with any matter pending or likely to be pending before them, knowing such information to be false or misleading. Facts or other matters contained in testimony, Federal tax returns, financial statements, applications for enrollment, affidavits, declarations, or any other document or statement, written or oral, are included in the term information. . . .

(j) Knowingly aiding and abetting another person to practice before the Internal Revenue Service during a period of suspension, disbarment, or ineligibility of such other person.

The complaint also alleges that Jones failed to exercise due diligence in violation of 31 C.F.R. § 10.22(a)(1), (2) and (3), and engaged in disreputable conduct in violation of 31. C.F.R. § 10.51, including subsection (d), by signing and filing with the IRS several powers of attorney (Forms 2848) that the named taxpayers had not signed, but whose signatures had been "cut and pasted" onto the Forms 2848.

31 C.F.R. § 10.30(a) provides as follows:

§ 10.30 Solicitation.
(a) Advertising and solicitation restrictions.

(1) A practitioner may not, with respect to any Internal Revenue Service matter, in any way use or participate in the use of any form of public communication or private solicitation containing a false, fraudulent, or coercive statement or claim; or a misleading or deceptive statement or claim. . . .

Jones disputes that he violated the provisions of 31 C.F.R. Part 10. Jones contends that Employee 1 and Employee 2 refer to themselves as "enrolled agents" with the IRS because (1) they had practiced before the IRS in the past as enrolled agents and (2) the IRS has changed its rules and forms, without affording notice to Employee 1 and Employee 2, resulting in the improper and unlawful disqualification of Employee 1 and Employee 2 as enrolled agents. Alternatively, Jones contends that Employee 1 and Employee 2 were entitled to refer to themselves as "enrolled agents" in IRS filings because the respective organizations to which they belonged, the Society Number 1 and the Public Accountants Society of State 1, allowed Employee 1 and Employee 2 to call themselves enrolled agents.

Finally, Jones contends that he should not be held responsible for the truth or accuracy of the statements made by Employee 1, Employee 2, or Employee 3 on the Forms 2848, but rather, those individuals are solely responsible for the truth and accuracy of statements they made about their qualifications. Jones contends that to hold him liable for the truthfulness or accuracy of cosigners' representations about their qualifications places an unreasonable and unlawful burden on him.

The Complainant seeks to suspend Jones for a period of twenty-four months. As required by 31 C.F.R. § 10.76(a), the following findings must be and have been proven by clear and convincing evidence.

II. Findings and Conclusions

Jones is a licensed attorney with offices in Las Vegas, Nevada. He is a member of the Bar of the District of Columbia as well as various individual federal courts, including the United States Tax Court. His practice is almost exclusively devoted to IRS matters. He represents numerous clients in IRS matters, and he regularly engages accountants to work with him in representing these clients. Among the accountants who work with or for Jones are Employee 1 and Employee 2. Employee 1 and Employee 2 are not certified public accountants; they are public accountants.

A. Misrepresentations regarding the status of Employee 1, Employee 2 and Employee 3

Jones frequently cosigns Forms 2848 with Employee 1, Employee 2, and Employee 3. Twelve such powers of attorney, relating to eleven different taxpayers, were received in evidence in the present case. Jones cosigned every such power of attorney with Employee 1, Employee 2, and/or Employee 3.1 The dates of the powers of attorney received in evidence extend from July 30, 2003 to April 24, 2004. Jones does not seriously dispute that he filed with the IRS many more such powers of attorney. Indeed, he admits that Employee 1 and Employee 2's names "appear on many Powers of Attorney (Form 2848) issued by my office," and that Employee 3's name appears on various such forms. (R Exh. 3, pp. 2, 3, and 4).2
Forms 2848 contain two parts, the first part (Part I) being the power of attorney, which is signed by the taxpayer, and the second part (Part II) being the declaration of the representative, which is signed by the representative(s). By signing Part II of Form 2848, the representative attests to the following, among other things:

Under penalties of perjury, I declare that: . . .

I am aware of regulations contained in Treasury Department Circular No. 230 (31 CFR, Part 10), as amended, concerning the practice of attorneys, certified public accountants, enrolled agents, enrolled actuaries, and others; . . .
I am one of the following: . . .

a Attorney . . .

b Certified Public Accountant . . .

c Enrolled Agent -- enrolled as an agent under the requirements of Treasury Department Circular No. 230.

On the Forms 2848 cosigned by Employee 1, Employee 2, and Employee 3, they attested that they were Enrolled Agents (EAs) by placing the letter "c" on the designation lines in the forms next to their signatures. Jones cosigned these powers of attorney forms, and he signed all but two of the forms3 after or concurrent with Employee 1, Employee 2, and Employee 3.
Employee 1, Employee 2, and Employee 3 are not EAs under the requirements of Circular 230. An EA must apply to and be accepted by the Director of Practice after "demonstrate[ing] special competence in tax matters by written examination . . ." 31 C.F.R. § 10.4. Employee 1, Employee 2, and Employee 3 had not applied to the IRS for EA certification, had not taken the IRS written examination for the certification, and had not been recognized by the IRS as EAs.

Jones makes parallel contentions regarding Employee 1 and Employee 2's alleged status as EAs.4 Jones claims that the respective organizations to which Employee 1 (National Society of Public Accountants) and Employee 2 (Public Accountants Society of State 1) belong allow members to call themselves EAs. Accordingly, Jones claims that the representations on the Forms 2848 regarding Employee 1 and Employee 2's status as EAs were not false.

It is unnecessary to decide whether the private organizations to which Employee 1 and Employee 2 belonged allowed members to call themselves EAs because the Forms 2848 in this case defines an EA as someone who is enrolled as an agent under the requirements of Treasury Department Circular No. 230. Employee 1 and Employee 2's organizations do not and cannot give license to members to call themselves EAs contrary to Department of Treasury regulations and contrary to the forms signed by Jones. Employee 1 and Employee 2 do not satisfy the requirements of EAs as set forth in the forms and regulations, and Jones knew they did not when he signed the Forms 2848 with Employee 1 and Employee 2.

Jones asserts that Employee 1 and Employee 2 were EAs under his personal definition of that term. Jones testified (Tr. 429.):

I define an enrolled agent as somebody who has been designated by their state or national society as an enrolled agent. I do not examine as a case of first impression, the qualifications that are represented to me to see if the Director of Practice will later disagree with that.

Thus, Jones elected to disregard the meaning of the term Enrolled Agent as it is defined on Form 2848 and as it is set forth in the regulations. By substituting his own definition of Enrolled Agent for the definition on Form 2848, Jones contends that (1) the Forms 2848 he signed, which listed Employee 1 and Employee 2 as Enrolled Agents, did not contain false information, and (2) even if the forms did contain false information, he did not participate in providing this information to the IRS knowing that such information was false. These claims are not credible and are rejected. As noted above, when Jones signed the Forms 2848, he knew that Employee 1 and Employee 2 falsely claimed to be Enrolled Agents on those forms. He cannot, credibly at least, claim that he lacked knowledge of those falsehoods because of his personal, and secret, definition of Enrolled Agent. Moreover, even if Jones did believe that his personal definition of Enrolled Agent were somehow controlling, the Forms 2848 that he, Employee 1, and Employee 2 signed provided a different definition for Enrolled Agent. Jones knew Employee 1 and Employee 2 were not Enrolled Agents under that definition without regard to Jones's personal definition of Enrolled Agent.

Even if Jones believed that his definition of enrolled agent was better or more reasonable than the definition of Enrolled Agent on Form 2848 and in the regulations, he knew that under the IRS's definition Employee 1 and Employee 2 were not EAs. He nevertheless signed the Forms 2848 with the knowledge that Employee 1 and Employee 2 were falsely claiming to be EAs under the definition provided in the form, viz., "Enrolled Agent -- enrolled as an agent under the requirements of Treasury Department Circular No. 230."

Jones also claims that Employee 1 and Employee 2 had attested in other Forms 2848 that they were EAs, but the IRS did not challenge such statements and permitted Employee 1 and Employee 2 to practice before the IRS as EAs while representing other taxpayers. However, even if IRS agents had dealt with Employee 1 or Employee 2 as EAs, such dealings would have been a direct result of Employee 1 and Employee 2's misrepresentations on the forms that they were EAs. Thus, Jones's claim devolved into the injudicious and unwarranted proposition that Employee 1 and Employee 2 misrepresented their status to the IRS, and the IRS, by relying on the misrepresentations, is now bound by or estopped by Employee 1 and Employee 2's false statements that they were EAs. This claim is rejected.

Jones asserts that the IRS has changed its Forms 2848 over the years, and that the form in effect during the period of October 1982 and October 1983 (R Exhs. 10 and 11) allowed a representative to fill in a blank line identifying the representative's qualifications to represent the taxpayer. Jones claims that this blank line allowed public accountants to represent taxpayers because public accountants could place "public accountant" on the blank line. This claim is rejected. A public accountant is not entitled to represent taxpayers before the IRS. Simply because the power of attorney form, during a one year period, allowed the representative to list his or her qualifications does not and would not allow unqualified persons to represent taxpayers.

Moreover, the Form 2848 in effect from October 1982 to October 1983 is the only such form that has allowed representatives to list the representative's qualifications to represent taxpayers. All other such forms, including the forms signed by Employee 1, Employee 2, and Jones in the present case, do not allow the representative to list his or her qualifications, but rather, require the representative to choose from a list of qualifications provided on the form. Employee 1 and Employee 2 do not fulfill any of the listed qualifications on the form. Accordingly, Employee 1 and Employee 2 misrepresented their qualifications by falsely stating that they were EAs, and Jones signed and submitted the forms to the IRS with the knowledge of the misrepresentations.

Moreover, the fact that a form allows a representative to list his or her qualifications does not give license to any person, and without regard to qualifications, to claim entitlement to representative status. Jones does not claim that the regulations were changed in 1982-1983 or that the regulations at any time permitted public accountants to represent taxpayers. Under Jones's contention, any person could claim the right to represent taxpayers before the IRS by merely listing some training, education, or aptitude. In addition, and without regard to the flawed logic of Jones's claim, a blank line on a twenty year-old form does not authorize aspiring representatives to falsely state their qualifications on current forms that do not contain a blank line on which to state qualifications.

In addition, Jones's contention makes the Form 2848 control the law rather than the opposite. The regulations that list the required qualifications for taxpayer's representatives do not permit public accountants to represent taxpayers, unless the public accountants have become EAs. 31 C.F.R. Part 10. However, Jones contends that a Form 2848, which was in existence for one year from October 1982 to October 1983, and which contained a blank line for a representative to list his or her qualifications, effectively changed the regulations and suddenly, and without warning or authorization or specific reference, allowed public accountants to represent taxpayers before the IRS. Jones cites no authority for this novel and unwarranted proposition, and it is rejected.

Because the current Form 2848 does not have a blank line on which representatives can list qualifications, Jones claims that Employee 1 and Employee 2 are being unfairly denied the right to represent taxpayers before the IRS, a right that Jones claims existed from 1982 to 1983. Nevertheless, Jones has not filed any lawsuit or proceeding on behalf of Employee 1 and Employee 2 to assert or rectify the alleged denial of their right nor has Jones raised this claim to the IRS prior to the commencement of the present proceeding. Moreover, and as noted above, Employee 1 and Employee 2 never possessed the qualifications, and therefore never had the right, to represent taxpayers before the IRS, whether in 1982, 1983, or the present. Accordingly, nothing has been taken from or denied to Employee 1 and Employee 2 that they ever lawfully possessed or had a right to claim.

Employee 1 and Employee 2 claim to have spoken to different employees of the IRS and that these employees told Employee 1 and Employee 2 to list themselves as EAs on the Form 2848, despite the fact that Employee 1 and Employee 2 were not EAs. Employee 1 and Employee 2 claim that the IRS employees advised them to falsely state their qualifications on the Forms 2848 because there was no blank line on the current form, or, indeed, on any form since 1983, that would enable them to list their "qualifications" as public accountants. Employee 1 and Employee 2 provided no corroboration for this bald claim. Considering their demeanor and other aspects of their testimony, Employee 1 and Employee 2 were not credible witnesses.

Moreover, Employee 1 and Employee 2's claims that they were both told at different times and by different IRS agents to falsify their qualifications on the Form 2848 is neither plausible nor credible. Indeed, the contentions are so incredible that Jones's reliance on these claims in asserting his due diligence, 31 C.F.R. § 10.22, demonstrates a reckless disregard of Employee 1 and Employee 2's qualifications to practice before the IRS, and a reckless disregard for the accuracy of Forms 2848 signed by Jones.

Jones admits that Employee 3, his office manager, is not an EA and he makes no claim that she is entitled to call herself an EA. Nevertheless, Jones signed Forms 2848 in which Employee 3 falsely listed herself as an EA, and these forms were submitted to the IRS. Jones explains his conduct of signing Forms 2848 that falsely represented Employee 3 to be an Enrolled Agent by claiming that (1) Employee 3 listed herself as an EA merely as a matter of convenience and in order to permit her to schedule conferences between Jones and the IRS, and (2) Employee 3 did not represent clients before the IRS, and therefore, Jones's conduct did not violate 31 C.F.R § 10.51(j).

A representative who knowingly signs and submits to the IRS a form that contains false information is not excused because the falsehood was uttered in order to allow the representative's office to operate more conveniently. The mere fact that the representative's motivation was not more nefarious does not make the deceptions in his false Forms 2848 any less deceptive. Motivation is not an element of the offenses described in 31 C.F.R. §§ 10.22 and 10.51(j).

Jones contends that Employee 3 did not represent clients before the IRS, and therefore, she did not "practice" before the IRS. Accordingly, Jones contends that he did not violate 31 C.F.R. § 10.51(j) which prohibits aiding and abetting another person to "practice" before the IRS during a period of ineligibility of such other person. However, Jones admits that he listed Employee 3 as an EA on the Forms 2848 because the IRS is such a "stickler" in discussing a taxpayer's case that it will not talk to a person about a taxpayer's case unless such person is on the Form 2848 as a representative. (Tr. 405.) Thus, Jones acknowledges that he signed and submitted the false forms in order to evade and negate attempts by IRS personnel to comply with the law. See, e.g. 26 U.S.C. § 6103.

Moreover, Jones's evasive techniques are designed to enable Employee 3 to practice before the IRS because the falsehoods entice and permit IRS agents to discuss matters relating to Jones's clients with Employee 3. Indeed, Employee 3 stated the following regarding Jones's legal practice in her affidavit to the Director of Practice before the present proceeding was instituted:

The client is instructed that licensed attorney Robert Alan Jones will be the primary taxpayer representative, but that accountants assigned to his or her, or their entities, tax issues will also represent them before the IRS, including specifically . . . Ms. Employee 3.

Employee 3 is an accountant and is a member of the State 2 Society of Public Accountants. She possesses similar qualifications as Employee 1 and Employee 2. It is not credible that Employee 3 did not, on occasion if not frequently, engage in discussions with IRS agents about substantive matters in a client's case. Such substantive discussions would constitute practice before the IRS.

In addition, Jones's contention equated "practice before the IRS" with practicing law or representing clients. However, the regulation is not limited to practicing law or representing clients. The regulation more broadly prohibits aiding and abetting unlicensed persons from practicing before the IRS. Moreover, "practice before the IRS" is defined in the regulations to include "all matters connected with a presentation to the Internal Revenue Service . . . [including] corresponding and communicating with the Internal Revenue Service." 31 C.F.R. § 10.2(d). Accordingly, when Employee 3 was communicating with IRS personnel regarding the scheduling of a conference or meeting on behalf of a client whose taxes were under examination, and under the present circumstances in which she and Jones had signed Forms 2848 in which she claimed to be an EA and to represent the taxpayer, she was practicing before the IRS.

Also, Jones and Employee 3 knew that the IRS agents would not talk to Employee 3 about scheduling a taxpayer's case unless Employee 3 was authorized to represent the taxpayer pursuant to the Form 2848. Accordingly, Jones knew that Employee 3 was engaged in activities that only a representative could perform, and to this extent, Jones knew that Employee 3 was practicing before the IRS.

Accordingly, Employee 3 did practice before the IRS by discussing and scheduling client's cases with the IRS, and Jones knowingly aided and abetted her practice by signing and submitting to the IRS a Form 2848 in which Employee 3 falsely stated that she was an Enrolled Agent. In any event, Jones does not dispute that Employee 1 and Employee 2 practiced before the IRS and that he signed the Forms 2848 in which Employee 1 and Employee 2 were falsely listed as EAs. Moreover, Jones knew when he signed the Forms 2848 that Employee 1, Employee 2, and Employee 3 were not EAs according to the forms. Jones knowingly aided and abetted Employee 1, Employee 2 and Employee 3 to practice before the IRS during periods when they were not eligible to practice, and accordingly, Jones violated 31 C.F.R. § 10.51(j).

Jones also contends that he should not be held responsible for the truth or accuracy of statements made by Employee 1, Employee 2 or Employee 3 on the Forms 2848, but rather, those individuals are solely responsible for the truth and accuracy of statements they made about their qualifications. Jones contends that to hold him liable for the truthfulness or accuracy of cosigners' representations about their qualifications places an unreasonable and unlawful burden on him. This argument misapprehends the misconduct for which Jones in charged under 31 C.F.R. §§ 10.22 and 10.51.

Under 31 C.F.R § 10.22, Jones is not held responsible as an insurer and without regard to fault against false statements made by third parties who sign documents with Jones. Rather, Jones is held responsible for exercising "due diligence" in preparing and determining the correctness of documents filed with and representations made to the IRS. Accordingly, under 31 C.F.R. § 10.22, Jones is not responsible for the accuracy of Employee 1, Employee 2, and Employee 3's statements on the Forms 2848, but rather, for failing to exercise due diligence in determining the correctness of Employee 1, Employee 2, and Employee 3's statements.

Moreover, Jones's argument concerning an unreasonable and unlawful burden on him fails to address the fact that he admittedly knew Employee 3 was not an EA, yet he signed the Forms 2848 in which she claimed to be an EA. Such intentional misconduct violates Jones's duty of due diligence without regard to the burden placed on him concerning the accuracy of statements made by other persons who signed the forms with Jones.

Jones contends that his conduct was, at most, negligent. He further contends that he may not be disciplined for negligent conduct, and that OPR's attempt to discipline him for negligent conduct fails to accord him proper notice and violates rule-making procedures. Accordingly, Jones contends that his conduct may not be disciplined.

It is not necessary to address Jones's legal argument on rule-making and fair notice because his contention regarding negligence is misplaced. The regulations that Jones is charged with violating proscribe the lack of due diligence (§ 10.22); knowingly giving false or misleading information, or participating in the giving of false or misleading information (§ 10.51(d)); knowingly aiding and abetting an ineligible person to practice before the Internal Revenue Service (§ 10.51(j)); and using or participating in the use of public communication containing a false statement or claim (§ 10.30(a)). Jones does not claim that these regulations fail to give proper notice or were improperly issued. In addition, even if "lack of due diligence" were essentially the same as negligence, Jones has cited no authority for the proposition that OPR cannot, or indeed should not, discipline negligent conduct by a representative.

Jones cites Florida Bar v. Brown, 790 So.2d 1081 (Fla. 2001) for the proposition that mere negligence will not support attorney discipline. The Brown court held that a negligent violation of a state statute regulating contributions to political candidates did not "reflect adversely on Brown's honesty, trustworthiness, or fitness." 790 So.2d 1085. This holding does not support Jones's broad contention that an attorney's negligent acts cannot be the subject of discipline. Moreover, even if Florida, or other states, determined that attorney negligence could not be the subject of discipline, this would not prevent OPR, a federal agency, from disciplining lawyers for a similar conduct when those lawyers appear before the IRS.

When a lawyer appears before federal agencies, the lawyer is subject to the ethical and disciplinary rules of such agencies as well as his state bar. In such cases, the state bar and the federal agency share jurisdiction to discipline attorneys, and their respective disciplinary rules need not be coterminous. See Bender v. Dudas, 2006 WL 89831 (D DC 2006) (p. 8 joint jurisdiction; p 11, violation because of attorney's negligence in failing to notify his clients.)

Moreover, because Jones does not contest the legality or applicability of 31 C.F.R. § 10.22, he appears to make a distinction between negligence and the lack of due diligence. However, he does not explain the distinction nor does he explain how his conduct may be negligent but not lacking in due diligence. In any event, the evidence clearly and convincingly shows that Jones violated the regulations by (1) failing to exercise due diligence in preparing and filing documents with the IRS and in determining the correctness of representations made to the IRS, (2) knowingly giving or participating in the giving of false and misleading information to the IRS in connection with a matter pending before the IRS, (3) knowingly aiding an ineligible person to practice before the IRS, and (4) participating in the use of an internet website that contained false statement or claim. Accordingly, Jones's contention that he may not be disciplined for his negligent conduct is rejected.

Under 31 C.F.R. § 10.51(d), Jones is liable for incompetence and disreputable conduct by participating in any way in the giving of false or misleading information to the IRS "knowing such information to be false or misleading." This regulation requires knowledge or intentional conduct, a mental element that is not required by 31 C.F.R § 10.22. Accordingly, this regulation also does not support Jones's argument that the regulations place an unreasonable and unlawful burden on him.

The question remains whether the evidence satisfies the knowledge or intention element of 31 C.F.R. § 10.51(d). With respect to the Forms 2848 that Jones signed with Employee 3,5 the knowledge or intention element is satisfied because Jones admittedly knew that Employee 3 was not an EA as the forms represented. Moreover, Jones knew, or must have known, that neither Employee 1 nor Employee 2 was an EA pursuant to the definition of that term on the Form 2848. Yet, Jones signed the forms with the knowledge that Employee 3, Employee 1, and Employee 2 had misrepresented their qualifications on the forms.

Accordingly, I find that Jones violated 31 C.F.R. § 10.22(a)(1), (2), and (3) by failing to exercise due diligence in preparing and assisting in the preparation of, approving, and filing Forms 2848 with the IRS in which Employee 1, Employee 2, and Employee 3 were falsely represented as being EAs. I further find that Jones violated 31 C.F.R. § 10.51(d) and (j) by giving false or misleading information and participating in the giving of false or misleading information to the IRS in connection with matters pending before the IRS, knowing such information to be false or misleading; and by knowingly aiding and abetting other persons to practice before the IRS during a period of ineligibility of those persons.

B. False signatures

OPR charges that four of the Forms 2848 that Jones filed with the IRS contain signatures by taxpayers that, in fact, were not signed by the taxpayers, but rather were cut from some other document signed by the taxpayers signed by the taxpayers and pasted onto the Forms 2848. (C Exh. 7, 8, 13, and 14.) The authenticity of the signatures is important because, among other things, the taxpayer's signature authorizes the IRS to talk to the representative about the taxpayer's case, which involves the disclosure of confidential information.
Jones contends that the evidence was insufficient to prove that the taxpayers' signatures had been pasted onto the forms.6 Jones also contends that, if the taxpayer's signatures had been pasted onto the forms, this was done without his knowledge.

The striking aspect of the taxpayers' signatures on the four forms in issue is not only their similarity. The signatures are exact in every respect. They are photocopies, or, as OPR charges, they are "cut and pasted." Moreover, the handwritten dates next to the signatures are exact replicas. Thus, the taxpayers did not actually sign the forms authorizing Jones, Employee 1, Employee 2, and Employee 3 to represent them before the IRS. Accordingly, the forms were false.

Jones claims that even if the taxpayers did not sign the forms, he did not know that their signatures had been pasted onto the forms. This claim is not credible. First, two of the forms are dated the same date for the taxpayers' and Jones's signatures. In these circumstances, it is likely that Jones would know that the taxpayers had not signed the forms. Moreover, the photocopy of the signatures and the pasting of the signatures would have made it clear to Jones that the taxpayers had not signed the forms.

It is possible that the taxpayers authorized Jones to copy their signatures and to paste the signatures onto the forms in question. However, no evidence was presented of such authorization. Indeed, with the evidence of copying and pasting so apparent, Jones could have called the taxpayers to testify about such authorization, if authorization existed. The failure to present any evidence of authorization leads me to conclude that there was none.

Accordingly, I find that Jones violated 31 C.F.R. § 10.22(a)(1), (2) and (3) by failing to exercise due diligence in preparing and assisting in the preparation of, approving, and filing Forms 2848 with the IRS that falsely represented the taxpayers signatures. I further find that Jones violated 31 C.F.R. § 10.51 (d) by giving false or misleading information and participating in the giving of false or misleading information to the IRS in connection with matters pending before the IRS, knowing such information to be false or misleading.

C. Website

Jones maintains a website in which he advertises his legal practice under the heading "American Tax Payers Defense." That website identifies Jones, Employee 1, and Employee 4 as principals in the company. Jones is listed as the president. Employee 1 is listed as the forensic tax accountant, and is described as an "Enrolled IRS Agent." Employee 4 is listed as tax planning management, and is described as an "IRS enrolled agent." As noted above, neither Employee 1 nor Employee 4 is an Enrolled Agent with the IRS.
31 C.F.R. § 10.30(a) prohibits a practitioner from participating in the use of public communication containing a false statement or claim. Jones's website, a public communication contains the false statements and claims that Employee 1 and Employee 4 were EAs before the IRS. Accordingly, Jones has violated 31 C.F.R. § 10.30(a).

III. Penalty

OPR has determined that the appropriate discipline for Jones's conduct is suspension for two years. OPR's penalty determination is committed to the discretion of the agency and is entitled to substantial deference. Bender v. Dudas, 2006 WL 89831, p. 8 (D DC 2006) (substantial deference); Sicignano v. US, 127 F. Supp.2d 325, 331 (D CT 2001) (agency discretion); see Polydoroff v. ICC, 773 F.2d 372, 375 (DC Cir. 1985) (agency discretion). The regulations confirm OPR's discretion in these actions, including the determination of the penalty. 31 C.F.R. § 10.60(a) (the director "may" institute a proceeding for the censure, suspension, or disbarment of a practitioner); see also Beard v. GSA, 801 F.2d 1318 (Fed Cir. 1986) (where an agency proposed to remove an employee, the penalty was committed to the sound discretion of the agency, which was in the best position to judge the impact of the misconduct.) Valdez v. Department of Justice, 65 MSPR 390 (1994).

Before instituting this action, OPR notified Jones of its intention to file charges and afforded him an opportunity to respond. (R Exh. 2.) Jones responded to the proposed charges in a six-page, single-spaced letter. (R Exh. 3.) After receiving Jones's letter, OPR sent Jones's attorney a letter advising that a complaint would be filed and inquiring about the possibility of a settlement. No settlement was reached. However, the correspondence and the testimony of Carolyn Gray, senior advisor to the Director of OPR, show that OPR considered Jones's submission in determining the penalty that the agency seeks in this case.

In mitigation of the proposed penalty, Jones claims he did not know that taxpayers' signatures had been "cut and pasted" on Forms 2848 he filed with the IRS. Jones claims that when he discovered this had been done, he discharged the clerk in his office who had cut and pasted the taxpayers' signatures. Jones presented this mitigating factor to OPR, and OPR considered it in determining the penalty.

Jones asserts that he has never before been disciplined by any bar association. This factor was also considered by OPR in determining the penalty before the present proceeding was instituted.

Jones asserts that the designation of Employee 4 as an EA was an innocent mistake. This claim, insofar as the Forms 2848 are concerned, was also considered by OPR before the present proceeding was instituted. Jones's assertion that he mistakenly designated Employee 4 as an EA on Jones's website is not credible and is rejected. Jones has demonstrated a complete disregard of the agency's definition of "Enrolled Agent" and has steadfastly determined to substitute his own definition for that term in his submissions to the IRS and in his representations to the public. Jones has exhibited a cavalier and presumptuous attitude regarding Employee 1, Employee 2, and Employee 3's qualifications as EAs. Jones's actions regarding Employee 4's false designation as an EA follows that pattern. Jones was no more mistaken about Employee 4's EA status as he was about Employee 1, Employee 2 or Employee 3's status.

Jones asserts that Employee 4 is a CPA and is entitled to represent taxpayers before the IRS. Accordingly, Jones claims, whether or not Employee 4 is an EA is not relevant to Employee 4's ability to represent taxpayers before the IRS, and therefore, no harm was done by the misrepresentation. However, whether Employee 4 is an EA is relevant to the truth, and Jones knowingly participated in falsely claiming that Employee 4 was an EA, both on Forms 2848 and on Jones's website.

Jones's position exhibits a low regard for being honest, at least when, as he presumes, no one is harmed. This position is rejected. Besides, whether anyone has been harmed by the false representations about Employee 4's qualifications (to say nothing about the false representations about Employee 1, Employee 2, and Employee 3's qualifications) is not known, but someone certainly could have been. For example, what if a taxpayer has or had contacted Employee 4 on the basis of Employee 4 being an EA, and on the basis of the taxpayer's not unreasonable belief that EAs are more adept than CPAs at handling tax disputes. Jones and Employee 4's false representation that Employee 4 is an EA would harm such a taxpayer. In conclusion, Jones's knowing participation in falsely designating Employee 1, Employee 2, Employee 3, and Employee 4 as EAs violated the regulations and reflects on his character and qualifications to represent clients before the IRS. These are considerations that OPR could properly take into account in determining the discipline to be imposed.

A troubling aspect of Jones's violations of the regulations pertaining to the representations regarding Employee 1, Employee 2, Employee 3, and Employee 4's status as EAs is his refusal to admit or recognize that his actions were wrongful. Jones contends that the respective associations in which Employee 1 and Employee 2 were members allowed Employee 1 and Employee 2 to call themselves enrolled agents. Jones states that he believes these authorizations from these private associations entitle Employee 1 and Employee 2 to attest to the IRS that they are Enrolled Agents on a form that contains a completely separate and different definition of enrolled agent. Jones's persistence in maintaining and espousing this contention, in which his personal definition of enrolled agent is different from and paramount to the definition in the regulations and the instructions on the Form 2848, is indicative of a person who is likely to repeat his offense. It is a factor that supports the discipline in this case.

Jones contends that his conduct in this case was, at worst, negligent, and that this conduct warrants the lesser penalty of a public censure rather than suspension. This argument is misplaced because Jones's conduct was more than negligent. He knew that Employee 1, Employee 2, Employee 3 and Employee 4 were not accurately and truthfully listed as EAs on the Forms 2848 he filed with the IRS. He knew that his clients' signatures had been copied and pasted onto the Forms 2848 he filed with the IRS because their pasted signatures were on the forms when he signed them. He knew that Employee 1 and Employee 4 were not EAs, but he allowed them to claim this status on his website.

Jones's violations were not necessarily committed with evil motivation, such as fraud. However, the violations bespeak a lackadaisical, almost contemptuous attitude toward the rules and regulations that govern a representative's conduct before the IRS. He would rather approve, if not direct, his office manager to misrepresent her status to the IRS than suffer the inconvenience of speaking to the IRS himself when arranging a conference or hearing for a client. He would rather have signatures of clients cut and pasted onto forms rather than suffer the inconvenience of having the clients come to Jones's office to sign the forms or mailing the forms to the clients for their signatures. He would rather deceive the IRS into believing that Employee 1, Employee 2, and Employee 3 were EAs, rather than suffer the inconvenience of requiring those persons to follow the regulations and be appointed EAs by the IRS. And, he would rather deceive the public into believing that Employee 4 was an EA rather than require Employee 4 to follow the regulations and be appointed an EA by the IRS.

Jones's protestations that he believe Employee 1 and Employee 2 could designate themselves as EAs because their respective private associations allowed them to use that term is incredible and is not worthy of Jones's intelligence nor his many years in the Bar and his many years of practice before the IRS. Moreover, and without regard to Employee 1 and Employee 2, Jones admittedly knew that Employee 4 and Employee 3 were not members of any association that permitted them to designate themselves as EAs. Thus, Jones admits that he knowingly participated in the misrepresentations regarding Employee 4 and Employee 3's status as EAs.

After considering Jones's defenses and mitigating contentions, OPR determined that the appropriate discipline in this case is a suspension of two years. The evidence does not show that OPR abused it discretion in making this determination. Moreover, the penalty is reasonable under the circumstances of this case. Accordingly, I conclude that Robert Alan Jones should be suspended from practice before the Internal Revenue Service for a period of two years.

Date: 1/16/07

Joseph Gontram
Administrative Law Judge

FOOTNOTES

1 The powers of attorney in evidence, other than the ones received for the purpose of showing the cutting and pasting of taxpayer's signatures, demonstrated that the following portions of the complaint are proven; subparagraphs III. (A) to (G) and (I) to (X). Subparagraphs (H) and (T) were withdrawn by the Complainant.

2 The Respondent's exhibits are designated R Exh., the Complainant's exhibits as C. Exh., and references to the transcript of the hearing are designated as Tr.

3 These two forms are C Exh. 4, in which Jones signed the Form 2848 concurrent with Employee 2, but before Employee 1, and C Exh. 10, in which Jones signed the form concurrent with Employee 3, but before Employee 1.

4 The following discussion deals with Employee 1 and Employee 2, not Employee 3, because Jones does not contend that Employee 3 was in any way entitled or qualified to refer to herself as an EA. Indeed, as noted above, Jones denies that Employee 3 signed the Forms 2848 with the intent to act as a representative for the respective taxpayers. Rather, Jones contends that Employee 3 signed the Forms 2848 solely as a convenience to Jones and to enable Employee 3 to schedule Jones's appointments with the IRS.

5 C Exhs. 1, 2, 6, 9, 10, 11, and 12.

6 This contention is effectively negated by Jones's defense in mitigation of the penalty that he discharged his clerk who had cut and pasted the signatures.

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Re: OPR - Robert Alan Jones Sanctioned

Postby jcolvin2 » Tue Oct 07, 2008 8:19 pm

Oct. 12, 2007

United States Department of Treasury

DIRECTOR, OFFICE OF PROFESSIONAL RESPONSIBILITY COMPLAINANT,
Appellee
v.
ROBERT ALAN JONES,
Respondent-Appellant

Complaint No. 2005-13

Initial Decision on Appeal

Under the authority of General Counsel Order No. 9 (January 19, 2001) and the authority vested in him as Assistant General Counsel of the Treasury who was the Chief Counsel of the Internal Revenue Service on August 9, 2007, Donald L. Korb delegated to the undersigned the authority to decide disciplinary appeals to the Secretary of the Treasury filed under Part 10 of Title 31, Code of Federal Regulations (Rev. 7-2002) ("Practice Before the Internal Revenue Service"), sometimes known and hereafter referred to as "Treasury Circular 230." This is such an appeal filed by Robert Alan Jones, an attorney authorized to practice law by the States of State 3 and State 2, and by State 4, who has for many years been authorized to practice before, and has in fact practiced before, the Internal Revenue Service.

1. Background

These proceedings began when, on July 5, 2005, Cono R. Namorato, then the Director, Office of Professional Responsibility, filed his Complaint in this matter alleging various violations of Treasury Circular 230 by Respondent-Appellant. The issues were joined when Respondent-Appellant filed his Answer on August 3, 2005. On August 12, 2005, this case was assigned to Administrative Law Judge Joseph Gontram of the National Labor Relations Board (the "ALJ" and "NLRB," respectively), sitting by designation under an interagency agreement between the NLRB and the Department of the Treasury. On September 6, 2005, Complainant-Appellee filed a Motion to Amend his Complaint, withdrawing certain charges and making minor, non-substantive amendments to other charges. After several delays to accommodate conflicts in the schedules of both parties, the hearing in this matter was held in Las Vegas, NV on September 11th and 12th, 2006. During the first day of the hearing, Respondent-Appellant's counsel noted that Respondent-Appellant did not object to the proposed amendments to the Complaint, and the ALJ granted the Motion to Amend. The parties filed their proposed findings of fact and conclusions of law in this matter on November 13, 2006.

On January 16, 2007, the ALJ issued his Decision in this matter, which was served on the parties on January, 19, 2007.1 On February 15, 2007, Respondent-Appellant timely filed his Appeal in this matter. On March 26, 2007, Complainant-Appellee timely filed by his Reply to Respondent-Appellant's Appeal.

As noted in the ALJ's Decision, the Director, Office of Professional Responsibility, charged, and the ALJ found, that Respondent-Appellant had violated Sections 10.22(a)(1), 10.22(a)(2), 10.22 (a)(3), 10.30(a), 10.51, 10.51(d) and 10.51(j) of Treasury Circular 230 (Rev. 7-2002), all such charges relating to: (i) Forms 2848 submitted to the Internal Revenue Service by Respondent-Appellant's principal business office and containing Respondent-Appellant's signature and the signatures of one or more of the following individuals, each of whom purported to be but was not an "Enrolled Agent:" Employee 4, Employee 1, Employee 2, and Employee 3; (ii) Forms 2848 prepared by Jones' office staff which Jones signed containing "cuttings and pastings" of taxpayers' signatures rather than the original taxpayers' signatures; and (iii) claims that some or all of the same individuals were "Enrolled Agents" contained in a website established by Respondent-Appellant or individuals under his direction and control. The pertinent specific provisions of Treasury Circular 230 that the Director, Office Professional Responsibility charged, and that the ALJ found, Respondent-Appellant to have violated are set forth at pages 1, 2 and 3 of the ALJ's Decision (Attachment A).

1. Appellate Review of the ALJ's Decision Below

In reviewing the ALJ's Decisions, I have three responsibilities. First, given that the Complainant-Appellant seeks to suspend Respondent-Appellant from practice before the Internal Revenue Service for a period of 24 months, has Complainant-Appellee met each of the elements of his burdens of proof by "clear and convincing evidence," as required by Sections 10.76(a) of Treasury Circular 230 (Rev. 7-2002). Second, has Complainant-Appellant met this burden of proof with respect to each element of each specific charge? Third, has Complainant-Appellant met his burden of proof that Respondent-Appellant willfully violated any of the regulations contained in Treasury Circular 230, as required by Section 10.52(a) of Treasury Circular 230.2

In performing these functions, I do so keeping in mind the limited functions I perform as the Appellate Authority in these proceedings. Under Section 10.78 of Treasury Circular 230, I review all findings and conclusions of the ALJ under a "clearly erroneous" standard of review unless the issue is exclusively a matter of law. I review matters that are exclusively matters of law to the ALJ if I find that there are unresolved issues raised by the record as to which I feel the ALJ might elicit additional testimony or evidence. I find that remand authority to extend to giving the ALJ the chance to reconsider matters already in the record under applicable legal authorities not previously considered by the ALJ.

In performing my functions under the standards of review described above, having carefully reviewed the entire record, I find that, with the exceptions noted below where I either disagree with the ALJ or where I agree with the ALJ but as to which I there is a need for further explanation, there is ample evidence in the record to support the ALJ's determinations that Respondent-Appellant violated each of the provisions of Treasury Circular 230 (Rev. 7-2002) he was charged with having violated, and that the ALJ correctly determined that Complainant-Appellant has carried that burden with respect to each element of proof required to sustain each of the charges.

With regard to the charges pertaining to Respondent's purported violations of Section 10.51(j) of Treasury Circular 230 (Rev. 7-2002), I AFFIRM the ALJ's findings and determinations as they relate to Employee 1, Employee 2, and, for the reasons noted below, Employee 3, but REVERSE the charges, if any, that relate to Employee 4.

As to Employee 3, the ALJ noted that in statements made to Jones's clients, that was among those who would represent Jones's clients before the Internal Revenue Service. In light of those statements, the ALJ did not find credible Employee 3's testimony that her activities were limited to scheduling meetings and hearings. The ALJ further found that, even if Employee 3's activities were so limited, that still would constitute "practice before the Internal Revenue Service" as defined in Treasury Circular 230. Under my standards of review, I am not permitted to substitute my own judgment for that of the trier of fact on issues involving a witness' credibility when there is evidence in the record to support the determination of the ALJ. I find that such evidence exists in the record. Further, I agree with the ALJ that even such limited activities constitute "practice before the Internal Revenue Service" as defined by Treasury Circular 230. However inconvenient this may have proved for Respondent-Appellant and the members of his staff, there is a reason for this definition. The mere existence of an enforcement proceeding involving a taxpayer is within the ambit of the statutory protections established by Section 6103 of the Internal Revenue Code of 1986, as amended and in effect during the times in issue. Unauthorized disclosures of such information can subject Internal Revenue Service employees to potential civil and criminal penalties. In enacting Section 6103 and the sanctions applicable to IRS employees, it is Congress and the President, not the Internal Revenue Service, that can be said to have been "sticklers" when it came to the protection of taxpayer's privacy. For these reasons, I AFFIRM the ALJ's findings with respect to the Section 10.51(j) charges relating to Employee 3.

With respect to any Section 10.51(j) charges that relate to Employee 4, I REVERSE. Complainant-Appellant conceded during the hearing that Employee 4 was a C.P.A. and as such was authorized to practice before the Internal Revenue Service. Accordingly, Respondent-Appellee's conduct with respect to Employee 4 could not form the basis of a charge under Section 10.5(j).3

As the ALJ noted in his Decision (Attachment A), with the exception of the charges underlying the alleged violations of Sections 10.22(a)(1), 10.22(a)(2), 10.22(a)(3) and 10.30(a), each of the violations of Treasury Circular 230 with which Respondent-Appellant was charged required Complainant to prove by clear and convincing evidence that Respondent-Appellant's conduct was "knowing." In addition, under Section 10.52(a) of Treasury Circular 230, Complainant-Appellee must also prove by clear and convincing evidence that Respondent-Appellant's violations were willful. The ALJ did not address the latter issue in his Decision. These matters are discussed below.

3. Were Respondent's Violations "Knowing" and Willful?"

Treasury Circular 230 (Rev. 7-2002) provided no regulatory definition for the terms "knowing"4 and "willful." Absent regulatory definitions for those terms, the strictest meanings one could ascribe to the terms are those developed by our Federal courts in interpreting like terms under Sections 7201 through 7207 of the Internal Revenue Code of 1986, as amended and in effect at the times in issue.5 In the Decision on Appeal in Banister (Attachment B), I examined at length the relevant criminal tax and other Federal criminal precedents addressing the term "willful."
Perhaps the most frequently cited definition of "willful" appears in the Supreme Court's decision in Pomponio, which clarified for the lower courts what it intended in its earlier Bishop decisions. The Supreme Court noted that the term "willful" simply means "a voluntary, intentional violation of a known legal duty."

In most recent controlling precedent on this subject, in Cheek, the Supreme Court noted that the term "willful" required the Government to prove that: (i) the law imposed a duty on the defendant, (ii) the defendant knew of this duty, and (iii) the defendant voluntarily and intentionally violated that duty. The issue before the Court in Cheek examined issue (ii) in light of a jury instruction. The trial court had instructed the jury that "[a]n honest but unreasonable belief is not a defense and does not negate willfulness." The Supreme Court found that the instruction was incorrect insofar as a matter of interpretation of the Internal Revenue Code was concerned. Justice White, speaking for the Court, found that when it added the term "willful" to the criminal provisions of the Internal Revenue Code, Congress meant to overturn an irrebuttable common law presumption under which defendants were presumed to have knowledge of the law. Justice White noted, however, that the same did not hold true in determining whether the application of a statute to a defendant was constitutional. As to those matters, the common law presumption of knowledge of the law continued in effect. Justice White also noted that the question of a position's reasonableness could also affect a jury's view of whether a taxpayer's view of the Internal Revenue Code in fact was honestly held, as the taxpayer in Cheek (an airline pilot) found out when he was convicted on a different set of instructions on remand.

Here, Complainant-Appellee's charges against Respondent-Appellant do not involve interpretations of the Internal Revenue Code. The provisions Respondent-Appellant is charged with violating do not require knowledge of the detailed provisions of the Internal Revenue Code to sort out.7 Moreover, the very Forms 2848 Respondent-Appellant signed reminded him of the "law" he is charged with violating. Moreover, as another court has noted, to the extent either "reasonableness" or the "honesty" of a belief remains an issue, both must relate to what the law is, not what the defendant believes the law should be.8

Given the ALJ's findings that Respondent-Appellant's conduct was "knowing," I have little doubt that he will also find Respondent-Appellant's conduct "willful" under these standards, and consequently under Section 10.52(a) of Treasury Circular 230 (Rev 7-2002). However, he has not yet done so, and it is not my function to make initial findings of fact or conclusions of law in these proceedings. Rather, it is my function to review the ALJ's findings of fact and conclusions of law under the standards of review set forth in Section 10.78 of Treasury Circular 230 (Rev. 7-2002). Accordingly, I VACATE AND REMAND each of the ALJ's findings and conclusions to the ALJ to permit him to enter findings with respect to the WILLFULNESS of Respondent-Appellant's conduct under each charge

4. Respondent's Additional Objections and Exceptions on Appeal

I find each of Respondent's additional objections and exceptions to be without Merit.
With respect to the first such objections or exception, I note that the Internal Revenue Service is not required to engage in a rulemaking proceeding every time it wishes to change the contents of a form, particularly in instances when the new form merely clarifies the requirement of a longstanding regulation.

I have been a tax lawyer or tax consultant for more than 36 years. Of that 36 years, more than 26 years have been spent in the private sector and more than 9 years have been spent in Federal service [in either my present position (from October 2002 to date) or as Assistant to the Commissioner of Internal Revenue (from November of 1977 through January of 1981)]. From 1971 until very recently, a person was authorized to generally represent taxpayers before the Internal Revenue Service only if the person was: (i) an attorney authorized to practice as such under the law of some state or the District of Columbia; (ii) a Certified Public Accountant, similarly authorized to practice as such under the laws of a State or the District of Columbia; (iii) Enrolled Agent; or (iv) within their area of special expertise, an Enrolled Actuary. Moreover a person could become an Enrolled Agent in only one of two ways, First, a person could become an Enrolled Agent by taking and passing an examination administered by the Office of Professional Responsibility. Second, a Person could become an Enrolled Agent by applying to the Office of Professional Responsibility for status as an Enrolled Agent on the basis of his or her experience gained during prior employment by the Internal Revenue Service. Public accountants were not admitted on the basis of their status as such under State law or because they were members of professional societies. The Office of Professional Responsibility (or its predecessor office, the Office of the Director of Practice) found the tests administered by the States or professional societies to Public Accountants to be of uneven quality and not a reliable basis for determining competency. More recently, having reviewed the qualification procedures for Public Accountants in some States, the Office of Professional Responsibility has found the qualification procedures in those states to be adequate to ensure the competency of practitioners, and has allowed Public Accountants in those states to practice as Enrolled Agents without taking and passing the examination administered by the Office of Professional Responsibility. During the years here in issue, neither State 2 not State 1 were among the States whose Public Accountants competency procedures had been accepted for these purposes. The Office of Professional Responsibility (and before, the Director of Practice) has never accepted membership in a professional society as a basis for according Public Accountants Enrolled Agent status. This objection or exception is without merit.

As to Respondent-Appellant's second additional objection or exception, that issue has been addressed above (in the context of the Section 10.51(j) charges). This objection or exception is without merit.

As to the Respondent-Appellant's third additional objection or exception, I find the objection/exception to be irrelevant and without merit.

WHEREFORE, I VACATE AND REMAND, to the ALJ his Decision to permit him to enter findings of fact and conclusions of law with respect to the WILLFULNESS of Respondent-Appellant's conduct.

This Initial Decision of Appeal DOES NOT CONSTITUTE FINAL AGENCY ACTION in this mater.

David F.P. O'Connor
Special Counsel to the Senior
Counsel
Office of Chief Counsel
Internal Revenue Service
(As Authorized Delegate of Henry
Paulson, Secretary of the Treasury)

October 12, 2007

FOOTNOTES

1 The ALJ's decision in this matter appears as Attachment A and is incorporated herein in its entirety. Also attached as Attachment B is the Decision on Director, Office of Professional Responsibility c. Joseph R. Banister, Complaint No. 200302, a proceeding made public by mutual agreement of the parties. To the extent relevant to this matter, that Decision is also incorporated herein by reference.

2 Only violations of Sections 10.33 and 10.34 (Neither of which are here in issue) can be established by the lesser standard of proof of reckless or grossly incompetent conduct. See Section 10.52(b) of Treasury Circular 230. The additional requirements of proof established by Section 10.52(a) are "sanction specific." If Complainant-Appellee had only sought to place a letter of reprimand in Respondent-Appellant's OPR file, he would not have to prove that Respondent-Appellant's conduct was "willful." However, in the case of public censures, suspensions and disbarments, Complainant-Appellee must also prove that a practitioner's conduct was "willful." With respect to conduct before July 26, 2002, Complainant-Appellee's burden to prove that charged conduct was willful" applied only in cases where the Director, Office Professional Responsibility sought to suspend or disbar a practitioner. See Section 10.52(a) of Treasury Circular 230 (Rev. 1994).

3 For the same reason, Respondent-Appellant's conduct with respect to Employee 4 insofar as it is based upon purported unauthorized disclosures of tax return information to Employee 4, similarly could not form the basis for a charge under Section 10.51. The Section 10.51 charge was not addressed by the ALJ. Consequently, I need not REVERSE on this point. The other charges pertaining to Employee 4 are not similarly defective.

4 I note that the ALJ did not rise to the bait and adopt a "know, or have reason to know" standard, as he was urged to by Complainant-Appellee. That is not the standard set forth in Treasury Circular 230.

5 I adopted these standards as the "law of the case" in this Appeal, though for the reasons stated in the Decision on Appeal In Banister Attachment B), there are reasons to believe that those standards may not be required to be met in this proceeding.

7 Even if they did, a person with the work experience of Respondent-Applicant would stand on a very different footing than the taxpayer in Cheek.

8 See the discussion of the Willie case in Banister (Attachment B).

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Re: OPR - Robert Alan Jones Sanctioned

Postby jcolvin2 » Tue Oct 07, 2008 8:21 pm

Jan. 31, 2008

THE DEPARTMENT OF THE TREASURY
OFFICE OF PROFESSIONAL RESPONSIBILITY
INTERNAL REVENUE SERVICE
WASHINGTON, D. C.

DIRECTOR, OFFICE OF PROFESSIONAL
RESPONSIBILITY
Complainant

v.

ROBERT ALAN JONES
Respondent

Complaint No. 2005-13

SUPPLEMENTAL DECISION ON REMAND

Robert A. Giannasi, Administrative Law Judge. On October 12, 2007, Special Counsel David F. P. O'Connor, on behalf of the Secretary of the Treasury, issued his decision on appeal, affirming in part, reversing in part and remanding in part the decision of the trial judge in this case, Administrative Law Judge Joseph Gontram. In July 2007, after he issued his decision, but before the Special Counsel's decision on appeal, Judge Gontram died. Because of Judge Gontram's death, I have assigned the remand to myself, in accordance with the agreement between the Internal Revenue Service (IRS) and the National Labor Relations Board, which provides that the Board will provide administrative law judges to hear the type of cases involved herein.

The Special Counsel's decision affirmed most of Judge Gontram's findings underlying his conclusion that Respondent had violated certain sections of Treasury Circular 230 (Rev. 7-2002) (also identified in Judge Gontram's decision and in this decision as various sections of 31 C.F.R.) by signing and filing with the IRS powers of attorney forms (Form 2848), which falsely identified three cosigners as Enrolled Agents (EAs); by signing and filing with the IRS powers of attorney forms that certain named taxpayers had not signed, but whose signatures had been "cut and pasted" onto the forms; and by falsely stating on his website that persons associated with Respondent were EAs when they were not. The Special Counsel noted that Judge Gontram found that Respondent "knowingly" engaged in such conduct, but that he had not made required findings on the "willfulness" of such conduct, thus necessitating the remand.1

I have reviewed supplemental briefs from the parties addressing the remand issue. Based on my review of those briefs, and a consideration of the entire record in this case, including the testimony at the hearing before Judge Gontram, the transcript of the hearing and the exhibits submitted by the parties, as well as the decisions of the Special Counsel and Judge Gontram, I make the following additional findings and conclusions.2

Misrepresentations regarding the status of Employee 1, Employee 2, and Employee 3

On this aspect of the case, Judge Gontram found that Respondent "violated 31 C.F.R Section 10.22(a) (1), (2) and (3) by failing to exercise due diligence in preparing and assisting in the preparation of, approving, and filing Forms 2848 with the IRS" in which his employees or associates, Employee 1, Employee 2, and Employee 3 "were falsely represented as being EAs." He further found that Respondent "violated 31 C.F.R. Section 10.51(d) and (j) by giving false or misleading information and participating in the giving of false or misleading information to the IRS in connection with matters pending before the IRS, knowing such information to be false or misleading; and by knowingly aiding and abetting other persons to practice before the IRS during a period of ineligibility of those persons." He specifically found that, with respect to the Section 10.51 violations, the knowledge and intent requirements of those violations were satisfied because Respondent "admittedly knew" that Employee 3 was not an EA and he "knew or must have known" that neither Employee 1 or Employee 2 met the IRS definition of an EA on the form he signed. Judge Gontram's decision at p. 10.

In the course of his discussion of the underlying issues, Judge Gontram made subsidiary findings that Respondent "knew Employee 1 and Employee 2 were not Enrolled Agents under [the applicable] definition. . . ." Judge Gontram's decision at p. 5. Judge Gontram rejected as incredible Respondent's contentions that the forms he signed did not contain false information and that he was not responsible for providing the false information; the judge also rejected Respondent's contention that he could escape culpability because his definition of an EA was different than that of the IRS. Judge Gontram's decision at p. 5. Referring to Respondent's "evasive techniques," Judge Gontram also concluded that Respondent's reliance on discredited testimony that IRS agents had told Employee 1 and Employee 2 to falsify their qualifications showed a "reckless disregard" of their qualifications to practice before the IRS and for the accuracy of the forms he signed. Judge Gontram's decision at p. 7.

As to Employee 3, the Special Counsel upheld Judge Gontram's findings insofar as they supported the notion that her conduct amounted to practice before the IRS, whether or not her activities "were limited to scheduling meetings and hearings." Special Counsel's decision at p. 4. Judge Gontram had found that Respondent "admittedly knew Employee 3 was not an EA, yet he signed Forms 2848 in which she claimed to be an EA." Judge Gontram found Respondent's actions in this respect amounted to "intentional misconduct." Judge Gontram's decision at p. 9.

False signatures

On this aspect of the case, Judge Gontram found that the taxpayers' signatures affixed to the Forms 2848 signed by Respondent were not original, but were in fact "cut and pasted" from some other document and affixed onto the forms. Judge Gontram found that Respondent's claim that he did not know that taxpayers' signatures had been pasted onto the forms he signed and submitted to the IRS was "not credible." He analyzed the forms, noting the exactness of the signatures and the dates next to the signatures and the fact that the signatures were photocopies, and found that it was clear that the taxpayers had not signed the forms. Nor were any of the taxpayers whose signatures appeared on the forms called as witnesses to show that they authorized Respondent to copy their signatures and paste them onto the forms (See Judge Gontram's decision at pp. 10-11 and note 6). Accordingly, Judge Gontram found that Respondent violated Section 10.22(a)(1), (2), and (3) of 31 C.F.R. by "failing to exercise due diligence in preparing and assisting in the preparation of, approving, and filing Forms 2848 with the IRS that falsely represented the taxpayers' signatures." He also found that Respondent violated Section 10.51(d) "by giving false or misleading information and participating in the giving of false or misleading information to the IRS in connection with matters pending before the IRS, knowing such information to be false or misleading." Judge Gontram's decision at p. 11.

Website Misrepresentations

Judge Gontram found that Respondent's website lists himself, Employee 1 and Employee 4 as principals in his operation. Employee 1 is listed as a forensic tax accountant and described as an "Enrolled IRS Agent." Employee 1 was not an EA, as Judge Gontram had previously found. Employee 4 was likewise listed as an EA, even though, as the judge found, he was not, notwithstanding that he was a CPA authorized to represent taxpayers before the IRS. Judge Gontram rejected a separate claim by Respondent that he mistakenly designated Employee 4 as an EA, based on the judge's determination that the claim was not credible. Thus, according to Judge Gontram, Respondent's false designation of Employee 4's status on the website followed the same pattern as his "cavalier and presumptuous" determination to substitute his definition of EA for that of the IRS as he had exhibited in similarly falsely representing Employee 1, Employee 2 and Employee 3 as EAs. Judge Gontram's decision at p. 12. Accordingly, Judge Gontram found that, by publicizing false representations of the status of Employee 1 and Employee 4 on his website, Respondent violated Section 10.30(a) of 31 C.F.R.

Willfulness

As the Special Counsel stated in his decision at p. 4, under Section 10.52(a) of 31 C.F.R., Complainant is required to prove that the Respondent's violations in this case were "willful." The term "willful," in the context of this case, simply means "a voluntary, intentional violation of a known legal duty." More precisely, the Complainant must prove that the law imposed a duty on Respondent; the Respondent knew of his duty; and the Respondent voluntarily and intentionally violated that duty. Special Counsel's decision at p. 5, citing and discussing applicable authorities. The term, even in a criminal context, does not include a requirement to show "evil motive" or lack of good faith. U.S. v. Pomponio, 429 U.S. 10, 11-12 (1976). Indeed, where willfulness is a statutory requirement for civil liability, the Supreme Court has recently confirmed that the term covers "not only knowing violations of a standard, but reckless ones as well." Safeco Ins. Co. v. Burr, ___ U.S. ___,127 S. Ct. 2201, 2208-2209 (2007).

As the Special Counsel pointed out, the provisions Respondent is charged with violating do not involve detailed knowledge of the intricacies of tax law; the very forms Respondent, an experienced tax lawyer, signed reminded him of his duties. Moreover, to the extent that "reasonableness" or the "honesty" of a belief is an issue, "both must relate to what the law is, not what the [Respondent] believes the law should be." Special Counsel's decision at pp. 5-6, citing additional authorities.3

Applying the above principles to the factual findings in this case, I find and conclude that there is clear and convincing evidence on this record that the Respondent's violations in this case were willful.

As shown above, Judge Gontram, based in part on his credibility determinations, found that Respondent knew that Employee 2 and Employee 1 were not EAs and admittedly knew that Employee 3 was not an EA. Yet Respondent listed them as such on Form 2848 that he signed and submitted to the IRS; Judge Gontram also found that such conduct was intentional. In addition, Judge Gontram found that Respondent misrepresented the status of Employee 1 and Employee 4 on his website. He found that Respondent's representation of Employee 4 as an EA was part of a pattern of a complete disregard of the IRS's definition of an EA and a determination to substitute his definition of the term for that of the IRS. These findings go a long way to establishing the willfulness of such violations. It is well settled that a trier of fact may make a credibility determination that not only rejects a witness's story, but finds that the truth is the opposite of that story. NLRB v. Walton Mfg. Co., 369 U.S. 404, 408 (1962), quoting from Dyer v. MacDougall, 201 F.2d 265, 269 (2nd Cir. 1952).

Respondent had the duty, known to him, to accurately represent the EA status of his subordinates. The duty was stated on the very form he signed. Respondent failed in that known duty by making misrepresentations concerning the status of his subordinates, not because of inadvertence, but because he had a different view of the definition of an EA. His conduct in signing the forms and publishing his website, which contained the known misrepresentations, was deliberate, voluntary and intentional; there is no evidence to support a finding that such conduct was inadvertent, unintentional or involuntary. Respondent's view of what the law should be cannot trump what the law actually is: The IRS's definition of an EA is what governs. At the very least, the misrepresentations of Respondent's subordinates' EA status were made with a reckless disregard of his duty to provide accurate representations of their status. Thus, Respondent, who was an experienced lawyer and practitioner before the IRS, intentionally and voluntarily made the misrepresentations that led to the violations. I therefore find that the violations were willful within the meaning of Section 10.52(a).

As to the violations that involved the cutting and pasting of signatures on Forms 2848, Judge Gontram also found Respondent knew that the taxpayer signatures were artificially appended to the forms he signed and submitted. Judge Gontram rejected Respondent's testimony that he did not know the signatures were pasted on the forms as "not credible." Judge Gontram analyzed the forms, the signatures and the dates, which were photocopies, and determined that the pasting and cutting of the signatures was obvious to the naked eye. Nor was there any evidence that the taxpayers authorized Respondent to copy their signatures in the manner it was done. These findings amply support the inference that Respondent's violations on this aspect of the case were willful. Again, Respondent had a known duty to accurately obtain taxpayers' signatures on the forms and he failed in that duty. The circumstances militate against inadvertence and fully support a finding that the Respondent's actions were deliberate, voluntary and intentional. Indeed, there is no evidence to the contrary. Accordingly, Respondent's violations were willful within the meaning of Section 10.52(a).4

Respondent's Contentions on Remand

The Respondent's brief on remand does not directly address the willfulness issue. It makes two basic contentions: (1) The entire case must be retried de novo because a new judge cannot make the demeanor-based credibility determinations allegedly required in the remand; and (2) The Treasury Department must be disqualified from performing any appellate role in this case because of a statement made in the Special Counsel's decision remanding the case. Neither contention has merit.

The Respondent has not shown that the remand in this case requires a trial judge's observation of witness demeanor. Although Judge Gontram made credibility determinations in support of his findings that the Respondent knowingly committed the violations he documented, the Respondent has not shown what is so different about willfulness findings that would require additional credibility determinations, including those assessing a witness's demeanor. Indeed, none of Judge Gontram's credibility determinations were based solely on demeanor evidence. For example, at page 7 of his decision, Judge Gontram rejected the testimony of Employee 1 and Employee 2 that they were told at different times and by different IRS agents to falsify their qualifications on applicable Forms 2848. Although he based his finding in part on witness demeanor, he also found their testimony uncorroborated and implausible. Judge Gontram therefore found the Respondent's conduct in signing the form was done in "reckless disregard" of the accuracy required in the forms. Judge Gontram's other findings of knowing violations were not based exclusively on an assessment of witness demeanor, but rather on his evaluation of objective facts in the record and the plausibility of Respondent's positions. His findings with regard to the cutting and pasting of taxpayers' signatures, for example, were objectively based. In any event, all of the trial judge's findings may be reviewed by an appellate agency independently of the judge's observation of a witness's demeanor. Although the judge's credibility determinations, including those based on demeanor, are entitled to deference, the agency may reverse those determinations if it finds that they are contrary to the weight of the evidence. See FCC v. Allentown Broadcasting Corp., 349 U.S. 358, 363-364 (1955).

As stated above, Judge Gontram's findings with respect to the violations he discussed are sufficient to support inferences that Respondent's knowing violations were also willful violations. Respondent has not shown how observation of witness demeanor would bear on the willfulness issue or how it would bear on that issue in any way different from the findings already made by Judge Gontram about the knowing violations he fully discussed in his decision. He did, after all, hear and see the witnesses in the trial before him. Accordingly, I can see no useful purpose in retrying this case de novo.

The Respondent also alleges that the Treasury Department should be disqualified from performing its appellate role in this case because the Special Counsel made allegedly prejudicial statements in the decision remanding the matter. In his decision, the Special Counsel noted that Judge Gontram found that the Respondent committed knowing violations, but did not also make a finding as to whether those violations were willful. He also noted that, because the trial judge made the finding that the violations were knowing violations, the judge would have "no difficulty," on remand, in finding them willful.

I am not sure that I have jurisdiction to pass on Respondent's allegation that the Treasury Department should be disqualified from performing its appellate role, which essentially accuses the Special Counsel of bias. I can only state that I have not been influenced by the Special Counsel's "no difficulty" statement. I have independently made my findings of willfulness based on my assessment of the record and Judge Gontram's findings. The appropriate reviewing body will determine whether my findings are correct. In any event, in my view, Respondent's accusation of bias is without merit. It is clear that a judicial opinion "formed on the basis of facts introduced or events occurring in the course of the current proceedings, or of prior proceedings, do not constitute a basis for a bias or partiality motion unless they display a deep-seated favoritism or antagonism that would make fair judgment impossible." Liteky v. U.S., 510 U.S. 540, 555 (1994). I find it highly unlikely that the "no difficulty" statement, standing alone, would satisfy the "deep seated favoritism or antagonism" requirement set forth in Liteky. In addition, the Respondent's accusation is highly unusual because most reported cases, including Liteky and those cited by Respondent in support of its position, essentially deal with appellate courts passing on the disqualification of trial judges. This is not the situation here. In short, I do not have the authority to decide who reviews my findings or whether any such reviewing body is biased, but, in my view, the alleged disqualifying statement in this case is nothing like the disqualifying conduct in the cases cited by Respondent.

Conclusions

I adopt all of Judge Gontram's findings, except those reversed by the Special Counsel, and I further find that the violations found by Judge Gontram were shown by clear and convincing evidence to be willful. I also adopt Judge Gontram's findings and conclusion on penalty, essentially the penalty requested by the Complainant, although I personally think it is somewhat on the lenient side of the scale. Finally, I reject the Respondent's request that I retry the case de novo because of the death of Judge Gontram.

Dated, Washington, D.C., January 31, 2008.

Robert A. Giannasi
Administrative Law Judge

FOOTNOTES

1 The Special Counsel reversed Judge Gontram "[w]ith respect to any Section 10.51(j) charges that relate to Employee 4," because he was a certified public accountant (CPA) and thus authorized to practice before the IRS. But the Special Counsel found that other charges pertaining to Employee 4 "are not similarly defective." Special Counsel's decision at p. 4 and n. 3.
2 My decision incorporates the findings and conclusions of the Special Counsel and Judge Gontram, but discusses only those pertinent to the issue of "willfulness." I note that the Special Counsel did not direct the taking of additional evidence (Special Counsel's decision at p. 3). I also note that Judge Gontram made specific credibility determinations (Judge Gontram's decision at pp. 5, 7, 8, 11), with respect to Respondent's knowledge of the facts and the legal requirements of the conduct at issue.

3 In these circumstances, Respondent's assertions before Judge Gontram that he believed Employee 2 and Employee 1 fit his definition of enrolled agents and that Employee 3 did not actually represent taxpayers are insufficient to support a finding that he acted reasonably or honestly and thus that his conduct was not willful.

4 As the Complainant points out in his brief on remand at pp. 20-22, Judge Gontram not only found, contrary to Respondent's contention, that the misrepresentations were "more than negligent," but he also found that they amounted to a pattern of misconduct. Evidence of a pattern of misconduct supports a finding of willfulness. See Holland v. U.S., 348 U.S. 121, 139 (1954).

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Re: OPR - Robert Alan Jones Sanctioned

Postby jcolvin2 » Tue Oct 07, 2008 8:21 pm

Feb. 12, 2008

UNITED STATES
DEPARTMENT OF THE TREASURY

Director, Office of Professional Responsibility,
Complainant-Appellee,
v.
Robert A. Jones,
Respondent-Appellant.

COMPLAINT NO. 2005-13

Decision on Appeal

Under the authority of General Counsel Order No. 9 (January 9, 2001) and the authority vested in him as Assistant General Counsel of the Treasury who is the Chief Counsel of the Internal Revenue Service, through a series of Delegation Orders (most recently, an Order dated January 15, 2008) Donald L. Korb delegated to the undersigned 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," sometimes known and hereafter referred to as "Treasury Circular 230").

The initial Decision in these proceedings was entered by Administrative Law Judge Joseph Gontram (the "Initial ALJ") on January 16, 2007.1 In his well-reasoned opinion, the Initial ALJ found that Complainant-Appellee had proved by clear and convincing evidence that Respondent had violated various provisions of Treasury Circular 230 and that those violations justified the TWO YEAR SUSPENSION from practice before the Internal Revenue Service that Complainant-Appellee sought to impose. Respondent-Appellant filed a timely Appeal challenging the Initial ALJ's findings, conclusions and sanction determination. In my Initial Decision on Appeal, entered on October 12, 2007, I VACATED AND REMANDED the Initial ALJ's Decision, having found that, while the Initial ALJ had found each of Respondent-Appellant's violations to have been "knowing," the initial ALJ had made no specific finding that Respondent-Appellant's conduct had been "willful" within the meaning of §10.52(a) of Treasury Circular 230.2 The Initial ALJ died before he could consider the case on Remand. Robert J. Giannasi, the Chief Administrative Law Judge who assumed the ALJ functions on this case (the "Successor ALJ"), assigned this case to himself, addressed the points made in my Initial Decision on Appeal, and found the a TWO YEAR SUSPENSION from practice before the Internal Revenue Service was fully justified by the violations affirmed in my Initial Decision on Appeal. The Successor ALJ also found that each of Respondent-Appellant's violations were "willful" within the meaning of §10.52(a) of Treasury Circular 230.3

Among the issues raised by Respondent-Appellant on Remand was a statement I made in my Initial Decision on Appeal that he believed to have been "prejudicial." The offending statement was my statement that the Initial ALJ would have had no difficulty finding each of Respondent-Appellant's violations to be "willful" given that the Initial ALJ had already found Respondent's conduct to be "knowing." I had already sustained, under my standards of review,4 the Initial ALJ's findings of fact and conclusions of law to the effect that Complainant-Appellee had proved by clear and convincing evidence that Respondent's conduct was "knowing." My only intent in making the statement was to advise the Initial ALJ that, as a matter of law, given the nature of these violations, the terms "knowing" and "willful" were synonymous. My statement was not intended as a comment on the evidence in the record beyond the conclusion I had already reached in upholding the Initial ALJ's determination that Respondent-Appellant's conduct was "knowing."

Accordingly, I AFFIRM the Successor ALJ's Supplemental Decision on Remand and SUSPEND Respondent-Appellant from practice before the Internal Revenue Service for a period of two years, commencing with the date of entry of this Decision on Appeal. This Decision on Appeal constitutes FINAL AGENCY ACTION in these proceedings.

David F. P. O'Connor
Special Counsel to the Senior Counsel
Office of Chief Counsel
Internal Revenue Service
(As Authorized Delegate
of Henry M. Paulson,
Secretary of the Treasury)

February 12, 2008
Washington, D.C.

FOOTNOTES

1 The Initial ALJ's Decision Appears as Attachment A to this Decision on Appeal.

2 A copy of my Initial Decision on Appeal in these proceedings appears as Attachment B to this Decision on Appeal.

3 A copy of the Successor ALJ's Supplemental Decision on Remand appears as Attachment C to this Decision on Appeal.

4 Each of the violations in issue involves mixed questions of fact and law, and are accordingly reviewed by me under a "clearly erroneous" standard.


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