Biographical Information Lynn A. Gandhi, Partner, Honigman, Miller, - - PDF document

28th Annual

Tuesday & Wednesday, January 29‐30, 2019

Hya Regency Columbus, Columbus, Ohio

Workshop BB

Ethics & Professionalism for State Tax Professionals – Top Ten Ethical Dilemmas

Wednesday, January 30, 2019 7 a.m. to 8 a.m.

Biographical Information Lynn A. Gandhi, Partner, Honigman, Miller, Schwartz & Cohn LLP 660 Woodward Ave. Detroit, MI 48226 LGandhi@honigman.com 313.465.7646 Fax 313.465.7647

• Ms. Gandhi is a partner at Honigman Miller Schwartz and Cohn LLP, where she advises

clients nationwide on multistate tax strategies, litigating state tax cases, and assisting with audits from commencement to resolution. Her practice also includes unclaimed property and incentive assistance, due diligence support and risk review. Her areas of concentration include the Michigan Corporate Income Tax (CIT), Michigan Business Tax (MBT), Single Business Tax (SBT), sales and use taxes, motor fuel and highway trust fund taxes (federal and state), unemployment taxes, captive insurance company taxes,

• fficer liability matters, voluntary disclosure agreements (VDA) for state taxes and

legislative initiatives. She is a Certified Public Accountant and a registered lobbyist in the State of Michigan.

• Ms. Gandhi was named in the December 2014 State Tax Notes (a Tax Analysts

publication) as one of the "best in the profession." She also authors a State Tax Notes' monthly column, "Smitten with the Mitten," which discusses Michigan tax issues. She has been named in Best Lawyers in America, Michigan Super Lawyers and has had broad experience practicing law. She is the Chair of the Taxation Section of the State Bar of Michigan and the Chair of the Michigan Chamber Tax Policy Committee. She is also an Adjunct Professor of Law at Wayne State University Law School. She co-authored the Michigan Business Tax BNA Portfolio and regularly contributes to various tax publications. She is a frequent speaker on state and local tax issues, and has spoken before the Tax Executives Institute, Council On State Taxation (where she previously served as a board member), the Institute for Professionals in Taxation, the Hartman State and Local Tax Forum at Vanderbilt University Law School and the Michigan Association of Certified Public Accountants.

• Ms. Gandhi received her B.A. from Kalamazoo College, her J.D. from Wayne State

University Law School and her LL.M in Taxation from New York University School of Law.

Biographical Information Breen M. Schiller, Partner, Horwood Marcus & Berk Chartered 500 West Madison Suite 3700, Chicago IL 60661 312.606.3220 FAX: 312.267.2190 BSchiller@hmblaw.com Breen M. Schiller is a partner with Horwood Marcus and Berk Chartered where she concentrates her practice in state and local tax planning and the resolution of state and local tax controversies for multi-state and multi-national corporations. She advises Fortune 500 companies as well as mid-size and closely-held businesses and start-up companies on issues related to all types of state and local tax, including income tax, sales/use tax, transaction taxes, as well as hospitality and occupancy taxes and gross receipts-based taxes. Breen has represented clients across the country on diverse income tax engagements such as nexus, business/nonbusiness income, apportionment, unitary business principle, combined reporting, federal change reporting and various sales and use tax engagements such as nexus, exemptions, and inclusions and exclusions from the tax base, in addition to e-commerce, sharing economy and cloud- computing issues and hotel occupancy tax related issues. This experience helps Breen assist her clients in developing innovative solutions for multistate tax issues as well as the practical resolution of disputes. Breen is a frequent speaker on state and local tax matters for the Council on State Taxation (COST), the Institute for Professionals in Taxation (IPT), the Paul J. Hartman State Tax Forum, Tax Executives Institute (TEI), Taxpayers' Federation of Illinois (TFI), American Bar Association (ABA), and the Chicago Tax Club. Breen is a co-author of CCH's Annual Guidebook to Illinois Taxes, and she has published articles in The Journal

• f State Taxation, the IPT Insider, State Tax Notes, The Journal of Multistate Taxation

and has contributed to Checkpoint’s Catalyst on the sales taxation of Food & Beverages. Breen currently serves as on the advisory board for the Journal of State Taxation, as well as the chair of the Tax Administration Committee for the Chicago Tax Club.

28th Annua l Ohio T a x Co nfe re nc e , January 30, 2019 E thic s & Pro fe ssio na lism fo r Sta te T a x Pro fe ssio na ls – T

• p T

e n E thic a l Dile mma s

L YNN A. GANDHI , PART NE R, HONI GMAN, L L P, L GANDHI @ HONI GMAN.COM BRE E N M. SCHI L L E R, PART NE R, HORWOOD MARCUS & BE RKCHART E RE D, BSCHI L L E R@ MHBL AW.COM

Disc la ime r

 T

his pre se nta tio n c o nta ins g e ne ra l info rma tio n o nly a nd the re spe c tive spe a ke rs a nd the ir firms a re no t, b y me a ns o f this pre se nta tio n, re nde ring a c c o unting , b usine ss, fina nc ia l, inve stme nt, le g a l, ta x, o r o the r pro fe ssio na l a dvic e o r se rvic e s. T his pre se nta tio n is no t a sub stitute fo r suc h pro fe ssio na l a dvic e o r se rvic e s, no r sho uld it b e use d a s a b a sis fo r a ny de c isio n o r a c tio n tha t ma y a ffe c t yo ur b usine ss. Be fo re ma king a ny de c isio n o r ta king a ny a c tio n tha t ma y a ffe c t yo ur b usine ss, yo u sho uld c o nsult a q ua lifie d pro fe ssio na l a dviso r. T he re spe c tive spe a ke rs a nd the ir firms sha ll no t b e re spo nsib le fo r a ny lo ss susta ine d b y a ny pe rso n who re lie s o n this pre se nta tio n.

E thic a l F ra me wo rk

 Pro fe ssio na l Re q uire me nts

• Sta te Ba r Asso c ia tio ns (Ma nda to ry a nd E

le c tive )

• Sta te Bo a rds o f Ac c o unta nc y

 Pro fe ssio na l Sta nda rds

• ABA Mo de l Rule s
• AI

CPA

• Sta te Sta nda rds o f Co nduc t

 Co mpa ny Po lic ie s a nd Sta nda rds

L e g a l Sta nda rds

 T

re a sury Circ ula r 230

 F

• re ig n Co rrupt Pra c tic e s Ac t (F

CPA)

 Sta te Sta tute s, Re g ula tio ns a nd Rule s  Civil Pe na ltie s  Crimina l Sa nc tio ns

Pe rso na l Co nside ra tio ns

Va ry a c ro ss:

 Cultura l e nviro nme nt  E

c o no mic stra ta

 Re lig io us a ffilia tio ns  F

a mily struc ture

 Co mmunity g ro ups, a nd,  So c ie ta l a c c e pte d no rms

Wha t Are the T

• p T

e n E thic a l Dile mma s? (i.e ., wha t ke e ps yo u up a t nig ht? )

No . 10 – Co nflic ts o f I nte re st - T ruthfulne ss

 Co nflic ts o f inte re st a rise whe n the re is a re a l o r pe rc e ive d

inc o mpa tib ility b e twe e n priva te inte re sts a nd pub lic dutie s.

 Yo u wo rk fo r XYZ Co mpa ny a nd a re in the middle o f a multiple c yc le

inc o me ta x a udit.

 Ca n yo u use b a rg a ining te c hniq ue s to he lp yo u po sitio n the

c o mpa ny in yo ur a udit ne g o tia tio ns, a s lo ng a s yo u do no t misre pre se nt a ny ma te ria l fa c ts o r la w?

ABA Mo de l Rule 4.1 – T ruthfulne ss in Sta te me nts

 I

n the c o urse o f re pre se nting a c lie nt a la wye r sha ll no t kno wing ly: (a ) ma ke a fa lse sta te me nt o f ma te ria l fa c t o r la w to a third pe rso n;

• r

(b ) fa il to disc lo se a ma te ria l fa c t to a third pe rso n whe n disc lo sure is ne c e ssa ry to a vo id a ssisting a c rimina l o r fra udule nt a c t b y a c lie nt, unle ss disc lo sure is pro hib ite d b y Rule 1.6.

No . 9 – Ma nda te d Disc lo sure s

 Yo u a re pre pa ring sta te inc o me ta x re turns fo r yo ur c lie nt/ c o mpa ny.  T

he Co mpa ny is b e ing a udite d b y the De pa rtme nt.

 During the a udit, yo u le a rn the re wa s a n e rro r in the re turns during

the first ye a r o f the a udit c yc le tha t re sulte d in a lo we r ta x lia b ility.

 T

he De pa rtme nt ha s no t ye t disc o ve re d the e rro r.

 Must yo u info rm the a udito r?

AI CPA SST S No . 6 – K no wle dg e o f E rro r – Re turn Pre pa ra tio n

 Yo u sho uld no t info rm the a udito r a b o ut the e rro rs yo u disc o ve re d

until re c e iving pe rmissio n fro m yo ur c lie nt.

 Yo u ha ve a n o b lig a tio n to info rm yo ur c lie nt o f the e rro r a nd o f the

po te ntia l c o nse q ue nc e s, a nd re c o mme nd c o rre c tive me a sure s to b e ta ke n.

No . 8 – Ma nda te d Disc lo sure s (to g o ve rnme nt a g e nc y)

 Yo ur c lie nt file d a pro te st with the T

a x T rib una l o n its o wn b e fo re re ta ining yo u a s c o unse l.

 During yo ur pre pa ra tio n fo r a sta tus he a ring , yo u disc o ve r tha t the

c lie nt ma de a ma te ria l misre pre se nta tio n o f fa c t in its pro te st, whic h will like ly ha ve a n e ffe c t o n the de c isio n.

 Must yo u disc lo sure the misre pre se nta tio n to the T

rib una l?

ABA Mo de l Rule 3.3(a )(3) - Ca ndo r T

• wa rd T

rib una l

 Pro hib its a la wye r fro m o ffe ring ma te ria l e vide nc e kno wn b y the

la wye r to b e fa lse , e ve n if the info rma tio n wa s pla c e d b e fo re the trib una l b y the c lie nt prio r to the la wye r’ s re pre se nta tio n o f the c lie nt.

 I

f a la wye r le a rns tha t a c lie nt ha s o ffe re d fa lse ma te ria l e vide nc e to a trib una l, the la wye r must ta ke “re a so na b le re me dia l me a sure s, inc luding , if ne c e ssa ry, disc lo sure to the trib una l.”

 Yo ur o b lig a tio n to ma ke sure tha t no kno wn fa lse info rma tio n is

pre se nte d to the T rib una l e xc e e ds yo ur o b lig a tio ns to yo ur c lie nt.

No . 7 – Pre se rving Co nfide ntia lity (Sub je c t Ma tte r)

 Yo u wo n a n a ppe a l o f a n a sse ssme nt a nd yo ur c lie nt/ Co mpa ny is

e c sta tic a nd ve ry g ra te ful.

 Yo u de c ide to sha re the vic to ry with a po st o n a sta te ta x fo rum a nd

de sc rib e ho w yo u we re a b le to o b ta in the use o f a n a lte rna tive a ppo rtio nme nt me tho d.

 Sho uld yo u ha ve a ny c o nc e rns?

ABA Mo de l Rule 1.6 – Co nfide ntia lity o f I nfo rma tio n

 A la wye r sha ll no t re ve a l info rma tio n re la ting to

the re pre se nta tio n o f a c lie nt unle ss the c lie nt g ive s info rme d c o nse nt, the disc lo sure is implie dly a utho rize d in o rde r to c a rry o ut the re pre se nta tio n o r the disc lo sure is pe rmitte d b y pa ra g ra ph (b ).

No . 6 – Pre se rving Co nfide ntia lity (fro m disc lo sure )

 Yo u re pre se nt yo ur c lie nt in a n a ppe a l b e fo re

the De pa rtme nt o f Re ve nue a nd re c e ive a le tte r fro m c o unse l fo r the De pa rtme nt sc he duling a c o nfe re nc e . With the le tte r is a me mo fro m the De pa rtme nt’ s c o unse l to the De pa rtme nt, whic h inc lude s a n a na lysis o f the c a se , ma rke d “Atto rne y-Clie nt Privile g e d Co mmunic a tio n.”

 Do yo u ha ve a ny o b lig a tio ns?

ABA Mo de l Rule 4.4 – Rig hts o f T hird Pe rso ns

 Yo u ha ve a duty to disc lo se re c e ipt to the

De pa rtme nt’ s c o unse l.

 A la wye r who re c e ive s a do c ume nt o r

e le c tro nic a lly sto re d info rma tio n re la ting to the re pre se nta tio n o f the la wye r's c lie nt a nd kno ws

• r re a so na b ly sho uld kno w tha t the do c ume nt
• r e le c tro nic a lly sto re d info rma tio n wa s

ina dve rte ntly se nt sha ll pro mptly no tify the se nde r.

 T

he AI CPA do e s no t ha ve a c o mpa ra b le rule .

No . 5 – Pre se rving Co nfide ntia lity (fro m pro se c utio n)

 Yo u a re re pre se nting yo ur c lie nt in the se ll side o f a sto c k

tra nsa c tio n o f o ne o f its sub sidia rie s.

 T

he b usine ss te a m wa nts to g e t the de a l do ne b e fo re mo nth e nd.

 While ne g o tia ting the sa le a g re e me nt with o ppo sing c o unse l, yo u

re a lize tha t c e rta in re pre se nta tio ns a nd wa rra ntie s re la te d to the sub sidia ry’ s sta te ta x lia b ilitie s fa il to disc lo se ma te ria l lia b ility.

 Do yo u ha ve a n o b lig a tio n to a dvise the CE

O prio r to him e xe c uting the sa le a g re e me nt?

ABA Mo de l Rule 4.1

 Ye s, yo u must a dvise the CE

O.

 T

he Rule ma nda te s tha t in the c o urse o f re pre se nting a c lie nt a la wye r sha ll no t kno wing ly:

 ma ke a fa lse sta te me nt o f ma te ria l fa c t o r la w to a third

pa rty; o r

 fa il to disc lo se a ma te ria l fa c t to a third pe rso n whe n

disc lo sure is ne c e ssa ry to a vo id a ssisting a c rimina l o r fra udule nt a c t b y a c lie nt, unle ss disc lo sure is pro hib ite d b y Rule 1.6 (Co nfide ntia lity).

No . 4 – Sta nda rds o f Go o d F a ith (c o nduc t)

 An a c c o unta nt a nd his no n-la wye r c o nsulta nt frie nd e nte r into a

no n-e xc lusive re fe rra l a g re e me nt. Unde r the te rms o f the a g re e me nt, the re fe rring pa rty ha s no re spo nsib ility to pe rfo rm a ny

• f the wo rk fo r the se rvic e s pro vide d b ut re c e ive s a fe e o f 25% o f

the to ta l c o lle c te d fro m the c lie nt.

 I

s this a rra ng e me nt pe rmissib le ?

AI CPA Rule 503(C)

 AI

CPA Rule 503(C) sta te s tha t a ny me mb e r who a c c e pts a re fe rra l fo r re c o mme nding o r re fe rring a ny se rvic e o f a CPA to a ny pe rso n

• r e ntity who pa ys a re fe rra l fe e to o b ta in a c lie nt sha ll disc lo se

suc h a c c e pta nc e o r pa yme nt to the c lie nt.

 T

hus, if the c lie nt wa s info rme d o f the a rra ng e me nt prio r to the re fe rra l b e ing ma de , the a rra ng e me nt is pe rmissib le .

No . 3 – Sta nda rds o f Go o d F a ith – Misle a ding Sta te me nts

 Yo u re pre se nt yo ur c lie nt/ c o mpa ny in se ttle me nt ne g o tia tio ns with

the De pa rtme nt o n a pro po se d ta x a sse ssme nt.

 Yo ur c lie nt ha s a utho rize d yo u to se ttle the c a se fo r up to 50% o f the

pro po se d a sse ssme nt.

 Ca n yo u to re pre se nt to the De pa rtme nt tha t yo ur se ttle me nt

a utho rity is no mo re tha n 25% o f the dispute d a sse ssme nt?

ABA Mo de l Rule 4.1

 Pe rta ins to misre pre se nta tio ns re g a rding sta te me nts o f fa c t.  Whe the r a pa rtic ula r sta te me nt sho uld b e re g a rde d a s o ne o f fa c t

c a n de pe nd o n the c irc umsta nc e s.

 Unde r g e ne ra lly a c c e pte d c o nve ntio ns in ne g o tia tio n, c e rta in type s

• f sta te me nts a re no t g e ne ra lly ta ke n a s sta te me nts o f ma te ria l

fa c t.

 E

xa mple s inc lude e stima te s o f pric e o r va lue , a s we ll a s a pa rty’ s inte ntio ns a s to a n a c c e pta b le se ttle me nt o f a c la im.

No . 2 – Sta nda rds o f Go o d F a ith – F a lse Sta te me nt

 Yo u a re a rg uing a ta x ma tte r b e fo re a he a ring o ffic e r fo r yo ur

c lie nt/ c o mpa ny.

 T

he mo rning o f yo ur a rg ume nt, yo u find o ut a b o ut a de c isio n fro m the Arizo na Supre me Co urt tha t is dire c tly c o ntra ry to o ne o f the po sitio ns yo u inte nd to a rg ue la te r in the da y.

 Do yo u ha ve a duty to a dvise the he a ring o ffic e r o f the c o ntra ry

de c isio n?

ABA Mo de l Rule 3.3

 A la wye r sha ll no t kno wing ly  ma ke a fa lse sta te me nt o f fa c t o r la w to a trib una l, o r fa il

to c o rre c t a fa lse sta te me nt o f ma te ria l fa c t o r la w pre vio usly ma de to the trib una l b y the la wye r; o r

 fa il to disc lo se to the trib una l le g a l a utho rity in the

c o ntro lling jurisdic tio n kno wn to the la wye r to b e dire c tly a dve rse to the po sitio n o f the c lie nt a nd no t disc lo se d b y

• ppo sing c o unse l.

No . 1 – Ha ve I F ully Pa rtic ipa te d Suffic ie ntly to Cla im my E thic s Cre dit?

Summa ry

 Do no t ma ke de c isio ns b a se d o n e thic a l ra mific a tio ns a lo ne .  Do no t ma ke de c isio ns a lo ne , o r in a va c uum, utilize the re so urc e s

a va ila b le within yo ur c o mpa ny a nd yo ur pro fe ssio n.

 I

f in do ub t, e rr o n the side o f c a utio n.

 I

f yo u a re no t sure , the n do no t do it.