Texas CPA License Defense Attorney Representing Clients in IRS and DOJ Matters
While the Internal Revenue Service (IRS) ultimately holds taxpayers accountable for the contents of their returns, the IRS also targets certified public accountants (CPAs) who assist their clients with submitting false information. In some cases, the U.S. Department of Justice (DOJ) gets involved as well. As IRS and DOJ investigations can present substantial risks—including the risk of criminal prosecution in some cases—it is critical that accountants who are facing scrutiny engage an experienced Texas CPA license defense attorney promptly.
We represent CPAs in high-stakes IRS and DOJ matters. This includes IRS and DOJ investigations as well as matters involving the IRS’s Office of Professional Responsibility (IRS OPR). If you need help protecting your CPA license (and avoiding other serious consequences), we can help, but it is important that you contact us as soon as possible.
IRS and DOJ Investigations Targeting CPAs
IRS and DOJ investigations targeting CPAs can involve a wide range of allegations. If you are being targeted, it is imperative that you know what you need to defend against. When you engage a Texas CPA license defense attorney at Brown, PC to represent you, your attorney will promptly engage with the investigating agency to discern why you are being targeted and determine what we need to do to protect you.
Taking an “Unreasonable Position” on a Tax Return
A common allegation against CPAs in federal cases is taking an “unreasonable position” on a taxpayer’s return. Under Section 6694 of the Internal Revenue Code (IRC), it is illegal for a CPA to “prepare[] any return or claim of refund with respect to which any part of an understatement of liability is due to a[n unreasonable] position,” if the CPA “knew (or reasonably should have known) of the position.” A position taken on a taxpayer’s return is considered unreasonable if:
- There is no “substantial authority” to support the position taken;
- The position lacks a “reasonable basis;” or,
- The position is with respect to a tax shelter (as defined in Section 6662(d)) and it is not “reasonable to believe that the position would more likely than not be sustained on its merits.”
In most cases, taking an unreasonable position carries a penalty equal to 50 percent of the CPA’s income earned from preparing the return. However, this can be increased to 75 percent in cases involving willful or reckless conduct. As discussed below, if taking an unreasonable position amounts to aiding and abetting tax evasion or tax fraud, criminal penalties could also be on the table.
Aiding and Abetting Tax Evasion or Tax Fraud
One of the most serious allegations CPAs can face during IRS and DOJ investigations is allegations of aiding and abetting. While aiding and abetting tax evasion or tax fraud can trigger civil penalties under the IRC, CPAs can also face criminal accusations in many cases. Some common examples of accusations underlying aiding and abetting charges include:
- Claiming fraudulent credits or deductions
- Understating income or employment tax liability
- Concealing offshore accounts or other foreign financial assets
- Fraudulently obtaining a Paycheck Protection Program (PPP) loan or PPP loan forgiveness
- Fraudulently claiming the Employee Retention Credit (ERC)
Under Section 6701 of the IRC, aiding and abetting a taxpayer’s understatement of tax liability carries up to a $10,000 fine. However, in serious cases, the DOJ can also pursue criminal charges for aiding and abetting under 18 U.S.C. Section 2 or for conspiracy under 18 U.S.C. Section 1349. Federal aiding and abetting and conspiracy charges carry the same penalties as the underlying offense, which can potentially include hundreds of thousands (if not millions) of dollars in fines and years or decades of federal imprisonment.
Other Potential Allegations Against CPAs
Along with taking an “unrealistic position” on a tax return and aiding or abetting a taxpayer’s understatement of tax liability, IRS and DOJ investigations targeting CPAs can lead to various other charges as well. For example, in addition to defending CPAs against the charges discussed above, we also provide defense representation for CPAs in Texas facing allegations of:
- Failure to sign returns when required (fines of up to $25,000 per tax year under Section 6695(b) of the IRC)
- Failure to furnish a taxpayer identification number when required (fines of up to $25,000 per tax year under Section 6695(c) of the IRC)
- Failure to maintain copies of taxpayers’ returns (fines of up to $25,000 per tax year under Section 6695(d) of the IRC)
- Failure to file correct information returns (fines of up to $25,000 per tax year under Section 6695(e) of the IRC)
- Improperly using a taxpayer’s identity or information (fines of up to $50,000 per tax year under Section 6713(b) of the IRC)
Again, these are just examples. Certified public accountants targeted by the IRS and DOJ can face various other charges as well, and it is not unusual for wide-ranging investigations to lead to multiple counts of multiple charges involving allegations over a period of several years. As a result, CPAs can face substantial financial exposure—in addition to the risk of losing their professional license.
IRS Office of Professional Responsibility (OPR) Matters
In addition to representing CPAs in IRS and DOJ investigations, we also provide representation for IRS Office of Professional Responsibility (OPR) matters. If you have been contacted by the IRS OPR, your license could be in jeopardy, and it is important that you seek advice from a Texas CPA license defense attorney as soon as possible.
The IRS OPR has disciplinary authority over CPAs, including (but not limited to) enrolled agents, who assist with the preparation of federal returns or practice before the IRS. The IRS OPR can take disciplinary action against enrolled agents and other CPAs based on all of the offenses listed above, among others, and IRS OPR inquiries can arise out of:
- Automatic referrals following imposition of civil penalties (including when CPAs voluntarily pay fines rather than disputing the allegations against them);
- A history of accuracy-related penalties or other failures (i.e., failure to sign tax returns or keep copies of clients’ returns); and/or,
- The IRS’s detection of a pattern of frivolous tax returns prepared by an individual CPA or accounting firm.
In IRS OPR matters, CPAs can face censure, suspension or disbarment, as well as monetary penalties. While these monetary penalties can be substantial, the costs of losing your ability to practice can be far greater. Each Texas CPA license defense attorney at Brown, PC has extensive experience representing accountants in IRS, DOJ and IRS OPR matters, and we can use our experience to help protect you by all means available.
Working with a Texas CPA License Defense Attorney at Brown, PC
At Brown, PC, we focus our practice on representing licensed professionals and taxpayers in high-stakes federal matters. Our client list includes licensed professionals who are leaders in their respective industries as well as professional artists, athletes, investors and billionaires. We are selective about the clients we represent, and we provide a level of representation and client service that are unique among firms of our size.
With this in mind, here is what you can expect if you engage a Texas CPA license defense attorney at Brown, PC:
Immediate Engagement with the Investigating Authority
Once you engage us, we will promptly make contact with the investigating authority. We will work quickly to gather as much information about the inquiry as possible, and we will work to ensure that you are not imminently at risk.
In-Depth and Attorney-Client Privileged Assessment of Your Case
We will conduct an in-depth assessment of the facts of your case. To defend you effectively, it is imperative that we have as much information as possible—and, ideally, that we have this information before it comes into the possession of the IRS, DOJ or IRS OPR. Once we have a clear and unbiased understanding of the facts, then we can determine your next steps.
Formulation of a Comprehensive and Cohesive Defense Strategy Focused on the Circumstances of Your Case
We will formulate a comprehensive and cohesive defense strategy that is custom-tailored to the facts of your case. We will assess all viable strategies for defending you, and then we will consult with you extensively so that you can make an informed decision about how best to approach your defense.
Personalized and Forward-Thinking Legal Advice and Representation
Throughout our engagement, we will provide personalized and forward-thinking legal advice and representation. We understand what you have at stake; and, if we take your case, we will be committed to doing what is necessary to help you protect your license and minimize the costs of the investigation to the fullest extent possible.
Proactive Representation Focused on Avoiding Unnecessary Consequences and Publicity
As your defense counsel, we will work proactively to help you avoid both unnecessary consequences and unnecessary publicity. Unfortunately, in today’s world, simply facing publicized allegations of wrongdoing can have significant negative ramifications regardless of whether the allegations have been proven (or even are capable of being proven). Along with our defense representation, we also provide strategic communication services focused on protecting our clients’ reputations when necessary.
FAQs: Protecting Your CPA License When Facing Scrutiny from the IRS or DOJ
What should I do as a CPA if I am facing scrutiny from the IRS or DOJ?
If you are a CPA and you are facing scrutiny from the IRS or DOJ, it is imperative that you engage experienced defense counsel promptly. IRS and DOJ investigations can present substantial risks for CPAs, including not only the risk of suspension or disbarment, but also the risk of civil or criminal penalties. At Brown, PC, we have extensive experience representing CPAs in IRS and DOJ matters, and we can use our experience to protect you.
What is the IRS OPR, and what enforcement authority does it have over CPAs?
The IRS OPR is an office within the IRS that enforces the standards for ethical practice in federal taxation matters. It has enforcement authority over CPAs who prepare federal returns and who practice before the IRS as enrolled agents. In furtherance of its enforcement authority, the IRS OPR has substantial investigative authority as well, and executing a proactive defense during an IRS OPR investigation can be critical for mitigating the risks involved.
How important is it to engage defense counsel if I have been contacted by the IRS OPR?
If you have been contacted by the IRS OPR, we strongly recommend that you engage experienced defense counsel right away. IRS OPR investigations present substantial risks for CPAs, including (but not limited to) enrolled agents. At Brown, PC, our attorneys can deal with the IRS OPR on your behalf and work to resolve the Office’s investigation without unnecessary consequences.
What are the potential consequences of facing federal aiding and abetting allegations as a CPA?
Facing federal aiding and abetting allegations as a CPA can have serious consequences. The IRS can impose civil monetary penalties for aiding and abetting, and the DOJ will pursue criminal charges (carrying the potential for both fines and prison time) when warranted. Federal aiding and abetting allegations can also lead to disciplinary action by the IRS OPR—up to and including permanent license revocation (or disbarment).
When can enrolled agents and other CPAs lose their license to practice before the IRS?
CPAs can lose their license to practice before the IRS in IRS OPR cases involving an extremely wide range of allegations. As a result, if you are a CPA facing any form of scrutiny from the IRS or IRS OPR, it is strongly in your best interests to seek experienced legal representation as soon as possible.
Request an Appointment with a Texas CPA License Defense Attorney
If you are a CPA and you need defense counsel for an IRS, DOJ, or IRS OPR investigation, we encourage you to contact us for more information. Please call 888-870-0025 or contact us online to request a confidential consultation with a Texas CPA license defense attorney at Brown, PC.