Page 21 - Pierce County Lawyer - January February 2024

IRS can charge late fees, penalties, and interest. And there is no statute of limitation on a year a tax return is not filed. We talked payment plan, but I let him know that the IRS normally requires that you file returns for the current year and past six years in order to be considered compliant. Right now, with the transcript noting that 2017 was not filed, he is not compliant and will be unable to negotiate a payment plan. I suggested he should call his local IRS office and set up an appointment to meet with an IRS agent and discuss his options.
About a month went by, and sure enough, he met with an IRS agent and owed a small amount for 2017, plus non-filer fees, penalties, and interest. Another problem was to have a long- term payment plan, he needed to owe the IRS under $50,000. In the end, he borrowed $27,000 to get the balance owing under the $50,000 mark (he owed about $1,500 for 2017). To do the plan, there was a $31 set-up fee, plus he needed to pay a monthly amount, and until paid in full, penalties and interest would continue to accrue. We have said to each other since then, "No word on the audit? No news must be good news, right?"
Here are some takeaways if you ever get audited. IRS agents have told me that if they think an attorney is committing fraud, they will report the attorney to the State Bar. James and
I discussed what to do if that were to happen (he never told
me if it did happen). We agreed he should let the Bar know he did sign the IRS tax return under penalty. However, he does not understand the tax system. He had a tax specialist (CPA) prepare his taxes and relied on their professional judgment that it was done correctly according to the IRS rules, and he was working with the IRS to correct the problem. If necessary, he would provide a letter to inform the Bar that he is working on being in compliance with the IRS.
Another thing an attorney can do is Google for 'Publication 5602.' A search will show a publication entitled 'Attorneys Audit Technique Guide' and by clicking on the PDF
link, it should appear on the computer monitor. This is a comprehensive ‘playbook’ used by the IRS when auditing an attorney. It provides detailed information for the auditing agent to look at not only income, but also the attorney’s trust account and even make sure the expenses are ordinary and necessary for a law office. The 54-page IRS publication goes into more detail to assist the agent. If an attorney does their own taxes, it’s worth reading.
Correction Regarding My Last Article
In my last article, under the section titled Statute of Limitations, I wrote, “It is important to get the date of
the occurrence first before you listen to a potential client discussing their UDAP case. ‘How long ago did this happen?’ ‘Oh, about 15 years ago,’ is a bad answer.” It has since been brought to my attention that the Discovery Rule applies to Consumer Protection Act claims in Washington. Pickett v. Holland Am. Line–Westours, Inc.,101 Wash.App. 901, 913, 6
P.3d 63 (2000), rev’d on other grounds by 145 Wash.2d 178, 35 P.3d 351. The Discovery Rule in Washington State is an exception to the general rule of accrual and has been applied by Washington courts to claims where 'injured parties do
not, or cannot, know they have been injured.' In re Estates
of Hibbard, 118 Wash.2d 737, 744–45, 826 P.2d 690 (1992). “The decision to extend the discovery rule to a cause of action is essentially a matter of judicial policy.” Denny’s Rests., Inc.
v. Sec. Union Title Ins. Co., 71 Wash.App. 194, 216, 859 P.2d 619 (1993). Where the Discovery Rule applies, 'a cause of action accrues when the plaintiff, through the exercise of due diligence, knew or should have known the basis for the cause of action.' Green v. Am. Pharm. Co., 86 Wash.App. 63, 66, 935 P.2d 652 (1997), aff ’d, 136 Wash.2d 87, 960 P.2d 912 (1998).
Therefore, it would seem to me that the correct question to ask the potential client is, “How long ago did this happen?” “Oh, about 15 years ago.” Then ask, “OK, about when did you discover this?” “‘Oh, about 15 years ago.” Is a bad answer.
Practice Tip
Q. Exhibits - Does it matter if you give your trial exhibits to the judge’s JA, versus
if you file your trial
exhibits with the clerk
of the court?
A. Yes, especially
if the exhibit is an original and you want it back as an original.
I have been unable to
find a written rule in
the Washington Court
Rules or the Pierce
County Local Rules spelling it out as I do here. Some court rules read as follows, “After being marked for identification, all exhibits, except weapons, drugs, or other sensitive materials, shall be placed in the custody of the clerk during the duration of the trial, unless otherwise ordered by the court. Any weapons or other sensitive exhibits shall be held in the custody of the counsel offering the exhibits during the trial. Upon completion of the trial, all exhibits shall be returned to counsel offering them.” And, “Unless otherwise ordered by the Court, exhibits of a documentary nature admitted into evidence shall be placed in the custody of the Clerk of Court.”
While all documents filed in a court file remain for a lengthy period of time, exhibits are not 'filed' with the court unless they are handed by the party to the clerk. The Pierce County Clerk will hang onto your exhibits provided to them from the JA, and file a form entitled Exhibits Received in Vault. Exhibits
Continued on next page.
January/February 2024 | PIERCE COUNTY LAWYER 21