Wednesday, November 16, 2011
Michael B. Lang
(Chapman) presents Conflicts about Conflicts: Implications of the Tax Court Canal Corp Decision for Disciplinary and Malpractice Actions
at San Diego today as part of its Tax Law Speaker Series
The presentation will discuss the implications of the holding in Canal Corporation v. Commissioner, 135 T.C. 199 (2010), that the taxpayer could not rely on a tax professional’s opinion to avoid a substantial understatement penalty on reasonable cause, good faith grounds because the tax professional had an “obvious” inherent conflict of interest. The court found the conflict evidenced by both the fee arrangement and the tax professional’s involvement in structuring the transaction. The court’s interpretation, being at odds with how conflicts of interest are otherwise treated, may have serious implications for both professional disciplinary actions and malpractice and related litigation.