Working Paper No. 14-39:
The Tax Lawyer as Gatekeeper
Date Posted: August 2014
Abstract (below) | Full text (most recent) on SSRN
The modern tax lawyer has many different roles. She serves as advisor, advocate, engineer, endorser, insurer, and, at times, even adversary. In addition, as concerns about tax abuse and an eroding tax base have grown, legislators and the Internal Revenue Service have increasingly relied on tax lawyers to provide various quasi-gatekeeping functions. As constructed, however, this role is neither precise nor consistent. In many respects it muddles the roles of the tax lawyer, causes undue client conflicts, and merely serves as an obstacle to the sound and efficient provision of legal advice while failing to deter significant amounts of wrongdoing. This Article argues that in the prelitigation phase of a tax lawyer’s representation, the tax lawyer is well suited to perform a gatekeeping function and should do so.
The current legal rules governing taxpayers and their advisors comprise a labyrinth of procedures and controls that ineffectively regulate the modern tax system. Although the tax lawyer is certainly vested with a number of quasi-gatekeeper responsibilities, her duties often either over-effect or under-effect an ideal gatekeeper model. Within the proper framework, however, the tax lawyer is well positioned to perform the gatekeeping tasks of guidance, compliance monitoring, and misconduct prevention. These gatekeeping functions are consistent with the long-standing professional responsibilities of a lawyer, and a sound gatekeeping system could also help reconcile the otherwise conflicting duties tax lawyers face.
This Article explores various modifications and refinements that must be made to the legislative and regulatory regime governing the behaviors of tax lawyers and taxpayers in order to fully realize the benefits of the tax lawyer‘s gatekeeping potential. Specifically, the proposed gatekeeping structure seeks to eliminate some of the ineffective and overly adversarial elements of the system, raise the standards for tax legality and penalty protection between tax lawyers and taxpayers, and augment the tax lawyer’s due diligence responsibilities.