31 October 2009 TAXES—THE TAX MAGAZINE ® Sheldon I. Banoff, P.C., is a Partner in the law firm of Katten Muchin Rosenman LLP, Chicago, specializing in federal income tax matters. From the Thoughtful Tax Advisor By Sheldon I. Banoff The Tax Lawyer As Sumo Wrestler: Sayonara, or See You in 2019? T hirty years ago (February 1979), this writer, who was then a slim, young (age 30) overworked se- nior associate in a young but growing Chicago law firm, brashly commented in this magazine upon the state of the practice of tax law. 1 We likened the modern-day (1979 version) tax practitioner to a sumo wrestler (for reasons described below). Every 10 years since 1979, we have revisited the state of the practice, and have commented on its evolution (as well as its ongoing similarities). 2 This column marks our fourth decade of pontificating on the profession, through the auspices of TAXES—THE TAX MAGAZINE’S Thoughtful Tax Advisor column, and we think the analogy of tax lawyers to sumo wrestlers has never been stronger. With the benefit of nearly 40 years in tax practice 3 (and the sense of perspective, jaundice and cynicism that 40 years will bring you), we continue our tradi- tion, but in a much expanded version (matching our waistline). For the benefit of those practitioners who can’t quote our trilogy from memory (or weren’t even alive in 1979), TAXES’ editors have graciously attached the 1979, 1989 and 1999 columns, which immedi- ately follow as Exhibits A, B and C. 1979: Early Ruminations It was a vastly different tax world in 1979. Marginal individual federal income tax rates on unearned in- come topped out at 70 percent, earned income rates could hit 50 percent, and long-term capital gains were a comparative bargain (28 percent tops!), but al- most double that of today. Reaganomics and 15-year ACRS depreciation for real estate were just two years away. Tax-favored investments were proliferating— the benefits of deferring payment of 50 percent to 70 percent taxes for even five-seven years (while one earned sky-high interest rates on cash not currently needed to pay Uncle Sam) were obvious. Along with an’t live q in uote 19 our t 9) T rilo AXES gy e m m ors mem have ory e gr ( ac ( or w ous ere ly a nt ttac eve che
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October 2009
TAXES—THE TAX MAGAZINE®
Sheldon I. Banoff, P.C., is a Partner in the law fi rm of Katten Muchin Rosenman LLP, Chicago, specializing in federal income tax matters.
From the Thoughtful Tax AdvisorBy Sheldon I. Banoff
The Tax Lawyer As Sumo Wrestler: Sayonara, or See You in 2019?
Thirty years ago (February 1979), this writer, who was then a slim, young (age 30) overworked se-nior associate in a young but growing Chicago
law fi rm, brashly commented in this magazine upon the state of the practice of tax law.1 We likened the modern-day (1979 version) tax practitioner to a sumo wrestler (for reasons described below). Every 10 years since 1979, we have revisited the state of the practice, and have commented on its evolution (as well as its ongoing similarities).2 This column marks our fourth decade of pontifi cating on the profession, through the auspices of TAXES—THE TAX MAGAZINE’S Thoughtful Tax Advisor column, and we think the analogy of tax lawyers to sumo wrestlers has never been stronger. With the benefi t of nearly 40 years in tax practice3 (and the sense of perspective, jaundice and cynicism that 40 years will bring you), we continue our tradi-tion, but in a much expanded version (matching our waistline). For the benefi t of those practitioners who can’t quote our trilogy from memory (or weren’t even alive in 1979), TAXES’ editors have graciously attached the 1979, 1989 and 1999 columns, which immedi-ately follow as Exhibits A, B and C.
1979: Early RuminationsIt was a vastly different tax world in 1979. Marginal individual federal income tax rates on unearned in-come topped out at 70 percent, earned income rates could hit 50 percent, and long-term capital gains were a comparative bargain (28 percent tops!), but al-most double that of today. Reaganomics and 15-year ACRS depreciation for real estate were just two years away. Tax-favored investments were proliferating—the benefi ts of deferring payment of 50 percent to 70 percent taxes for even fi ve-seven years (while one earned sky-high interest rates on cash not currently needed to pay Uncle Sam) were obvious. Along with
tax savings generated from the conversion of ordi-nary income into capital gains, tax planning was a relatively lucrative, a relatively respectable and—for lawyers—a relatively admirable profession.
With all of this as background, we nobly (and naive-ly) compared tax advisors (who in those days carried nothing heavier than a pen, pencil and portable Texas Instruments calculator with paper tape printout) with sumo wrestlers (who could toss 400 pound opponents around like a sack of pota ... , oops, rice). What did tax geeks have in common with gargantuans?
In comparing the requisite training and never-ending preparation of successful tax advisors (who typically were lawyers or accountants in medium- or large-size law or accounting fi rms), we assumed our readers’ familiarity with the training, focus and near religious devotion of sumo wrestlers to their craft. Perhaps some further explanation is warranted, par-ticularly for a generation of young professionals not steeped in the traditions of tax practice or sumo.
What Do YOU Know About Sumo?One learns from Wikipedia, the 21st century internet encyclopedia,4 that “sumo” is a form of wrestling combat which traces its roots back to the Edo Period in Japan. (By comparison, tax lawyers trace their roots back to the Idon’twanna Paynotaxes Period in ancient Mesopotamia.5) The original wrestlers were probably samurai who needed to fi nd an alternative form of income. (The original tax collectors were the samurai’s older male relatives, known then and now as “Uncle Sam.”6)
Sumo wrestlers are promoted or demoted according to their previous performance. Rank is determined by performance in Grand Sumo tournaments, or hon-basho. (I vaguely recall that tax lawyer tournaments fl eetingly appeared on public TV in 1979,7 but the shows failed to catch on with viewers. Based on the ever-popular “Jeopardy” show format, answers like “Batman’s Gordon, Baseball’s Bowie Kuhn or IRS’s Chief Honcho” (for the question: “Who is the Com-missioner?”) for some reason didn’t generate half the excitement of reruns of The Monkees. But I digress.)
A sumo wrestler leads a highly regimented way of life. Breaking the rules can result in fi nes and/or suspension, not only for the offending wrestler, but also for his stablemaster. (A good analogy—tax lawyers who break the rules can incur fi nes, sus-pension, censure, disbarment and/or incarceration for themselves, their supervisors (‘stablemasters’) and their fi rms.)
According to Wikipedia, the negative effects of the sumo lifestyle become dangerously apparent later in life. Sumo wrestlers often develop diabetes, high blood pressure and are prone to heart attacks. Stress on their joints can cause arthritis. (Miserable IRS audits can cause tax practitioners to develop similar maladies. Stress on their joints from lifting immense Code and regulations volumes can cause tendonitis, bursitis and bulging discs.)
Pay scales for sumo wrestlers vary widely. Based on 2006 data, a junyo (lowest level professional above the trainee level) makes 2,820,000 yen (about $9,000) a month, i.e., approximately $108,000 per year. A senior sumo wrestler at the pinnacle of the ranking system (a grand champion, the yokozuna) earns almost $300,000 per year salary from his craft. (We don’t know whether sumo stars earn additional income from endorsements, personal appearances or autograph signings.) Pay scales for tax lawyers also vary widely. Although tax lawyers don’t earn additional income from endorsements or personal appearances, some have earned large amounts of income from autograph signing—on their fi rm’s high-priced tax opinions.
Wikipedia states it has been well known and ac-cepted for many years that sumo stables engage in the systematic hazing and physical punishment of young disciples in order to “toughen them up.” Stablemasters have often been proud to show to the media how they use a shinai (bamboo sword) to beat up on those who make mistakes. Some law fi rms similarly have taken pride in “toughening up” their young tax (and other) disciples by requiring long hours from sleep-deprived associates, but this arguably did not rise to the level of “systematic hazing.” (With the widespread decrease of billable work during the past year, some fi rms—and underutilized associates—may long for the “good old days” of 2,400 billable hour years!) Elder rikishi (sumo wrestlers) are often put in charge of bullying younger ones to keep them in line—for instance, by making them hold heavy objects for a long period of time. (Personally, I’d rather hold the entire 19-volume CCH STANDARD FEDERAL TAX REPORTER set for an hour than read the 409A Regs. for 15 minutes!)
Let’s return to days of yesteryear (specifi cally, 1979). In our fi rst Tax Lawyer As Sumo Wrestler column, we identifi ed several factors that caused us to liken the modern-day tax practitioner to a sumo wrestler. In our 1979 column, while discussing the increasingly diffi -cult, ongoing “training” of tax lawyers, we lamented the veritable explosion of tax legislation of the preceding 10 years. (Some things never change!) Congress—the
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October 2009
same folks who gave us 1974 Pension Reform legisla-tion (ERISA) and the voluminous 1976 Tax Reform Act (76 TRA)8—helped drive tax specialists into the devel-opment of sub-specializations, especially in the larger fi rms or those with substantial tax practices.
Moreover, it was only three years earlier that the Free-dom of Information Act (FOIA), TRA 76 and a slew of court cases ended the long-standing hidden (i.e., unre-leased to the public) letter rulings, technical advice and general counsel memoranda guidance (so-called private laws). But be careful what you ask for—you just might get it. We noted in our 1979 piece that the drive to be a “step ahead” in one’s tax knowledge (or perhaps the fear of falling a step behind) was causing many tax advisors to feel compelled to read the fl ood of newly released (and until then previously unpublished) pre-1976 private rulings, TAMs and GCMs, and all on-going letter rulings and government pronouncements, which at that time ran well in excess of 3,000 releases per year. And this was on top of the 500 or so revenue rulings then being issued annually! That same drive to get a “step ahead” led to a proliferation of quarterly, monthly, weekly and even daily tax-oriented journals, digests and publications that premiered in the 1970s—all in hard copy form. To be fully informed, we must keep abreast of the onslaught of recent developments; and in writing sophisticated tax articles for publication, the increasing complexity of the tax law had us already focusing on the question, “Will the layman tax lawyer be able to understand this?”, much less the layman lawyer, much less the layman!
In this background of this developing complex-ity, we likened the 1979 tax practitioner to a sumo wrestler. Like his wrestling counterpart, the success-ful young tax advisor may have to spend many years in preparation for his profession (college degrees, M.B.A.s in accounting, J.D.s, M.S.T.s and/or LL.M.’s in taxation), and he may have to devote himself reli-giously (fanatically?) to intensive training and study to be an expert at his craft. His “R&D” (reading) time may run as many hours a day as a sumo wrestler’s preparatory combat for his brief main event. We ob-served that unlike the sumo wrestler, however, the tax specialist cannot isolate himself from external events because he must constantly interface nontax developments or objectives with his tax structuring.
We concluded our initial review of the state of the practice of tax law by calling on our colleagues to sponsor a new proposal: no new tax legislation, regu-lations or changes in judicial doctrines for fi ve years, or until every tax advisor can catch up on his backlog of tax-oriented reading—whichever comes later!9
1989—The Tax Lawyer As Info SchitzoTen years later (February 1989), as an overworked and no longer slim tax partner at a medium/large law fi rm (being overworked helps assure job security; eating nervously and frequently helps assure obesity), we concluded in our second Tax Lawyer As Sumo Wrestler column that things had gotten worse, not better. The 1986 Tax Reform Act, “the mother of all Tax Reform,” had been enacted three years earlier, and brought us goodies like passive loss limitations, interest-tracing rules and numer-ous other complex concepts—along with (temporarily) greatly reduced tax rates. Our relatives and friends feared even more for our futures and fi nancial stability. They (and we) wondered, “With ordinary income rates of only 28 percent, who will want to do any tax planning?” We weren’t only concerned about the impact of low tax rates; we found ourselves in Alice’s rabbit hole where ordinary income and long-term capital gains were taxed at the same (28 percent) maximum rate! Certainly no one would care about the transmutation of ordinary income into capital gains anymore—would they?
The pre-1979 onslaught of legislation and regula-tions clearly had not abated during the 1980s, and with the expanding number of publications and increased reliance on on-line tax research (primarily through pay-for-play services such as Westlaw, Lexis and Dia-logue), we reminded ourselves of what the mad hatter told Alice: “We must run faster and faster just to stay in place!” More fuel on the fi re: The number of local and national tax conferences and seminars was increasing dramatically, and government representatives were appearing more frequently to explain what they had wrought upon us (e.g., notices, revenue procedures and announcements; proposed, temporary and fi nal-ized regulations; and worse still, hints of things to come that were currently “under study”).10
All of which led us to observe in 1989 that some tax practitioners were becoming “information schizophren-ic.” One part of us wanted to be an expert tax technician in order to function capably and to avoid potential penalties, sanctions, litigation and disbarment or loss of licenses. Thus, we craved more and more dissemina-tion of tax materials, articles and governmental releases. The other part of us would be thrilled if there were no new developments, guidance or articles until we could catch up on our backlog of tax-oriented reading (some of which was left over from That ’70’s (tax) Show!)
By the same token, it was by no means clear in 1989 as to when we and our clients could rely on each of
these newly released founts of tax “guidance” for tax planning purposes, rendering tax opinions or prepar-ing aggressive but defensible tax return positions. Were TAMs and GCMs valid authority to raise to an IRS fi eld agent on audit? Would they (and other sources) consti-tute good authority for purposes of avoiding penalties? Were the Blue Books valid legislative history or merely the post-enactment back-tracking of the staff from the Joint Committee on Taxation to fi ll in the blanks of the real legislative history? We tried to sort all of this out in a lengthy paper published in TAXES11 three months before our 1989 revisitation of the Tax Lawyer As Sumo Wres-tler. The vitality of this topic was recently re-examined by Don Korb in the August 2009 issue of TAXES.12
Yet in today’s world, courts seem to be more willing to accept unoffi cial sources of authority to assist in reaching the merits of a case, compared to the IRS’s limited acceptance of authority for avoiding penalties or other purposes. Indeed, in Ferguson,13 the Tax Court—apparently for the fi rst time—cited Wikipedia itself in an authoritative manner, to defi ne concepts relating to the taxpayer’s activities; the court did not then cite (and has not yet, to our knowledge cited) Wikipedia as authority on the tax law or use it to determine the outcome in a tax case.14 Hopefully we won’t see that broad a usage of Wikipedia in our professional lifetime!
In 1989 we continued to see ourselves and fellow tax advisors as being basically still sumo wrestlers, but even better than we were before: We had become heftier, more experienced trainees, willingly (if not happily) devoting hours every day to tax-related mat-ters and developments in preparation for the brief main event. Yet, the external world—and its nontax events and developments—continue to impose them-selves in our practices and remain essential to our understanding and work.
1999: MDPs, Tax Lawyers on the Brink and Tax Shelter “Products” on the Rise
Things changed more dramatically by 1999, when your writer, already an overweight but still over-worked partner, refl ected upon our roles in the legal profession and specifi cally in tax practice.
We noted the ongoing evolution of the profession: tax law, like other segments of the law practice, was (by 1999) more than ever a BUSINESS, not a PROFES-SION. At the bottom of the food chain our young tax associates no longer demanded (or seemed interested
in getting) a broad-based professional education, but rather sought a career path niche. We noted that in the 1979–1989 period, the participation of fi ne young tax minds had declined at local, state and national bar as-sociation levels; conversely, the attendees at important tax society groups were graying. Were burdensome billable hours quotas (which have always existed, but to a less emphatic extent) a partial reason? Was the emphasis on development of business causing our best and brightest young tax practitioners to work on deliv-ering (or if you’re the low person on the totem pole, writing) speeches to industry groups targeted by your fi rm’s marketing gurus, rather than working on highly technical and complex bar association or CPA society reports on recently proposed regulations? Was the emphasis in some leading law and accounting fi rms becoming the creation and sale of highly profi table “tax products,” and less on a broad-based tax practice, advising clients on their particular tax needs?
Of course, the tax law profession was merely re-sponding to the competition. We observed that the pre-1989 world of “tax shelters for the masses”—e.g., tax-favored investments in real estate, equipment leasing, motion pictures, oil and gas and those ever-popular jojoba beans—had been replaced by 1999’s “corporate tax shelters for the multi-nationals” and “tax-driven fi nancial products for high net worth in-dividuals.” Double-dip deductions were the fl avor of the month, brought to you by your friendly investment banker, fi nancial advisor or Big Six ... Five ... Four ac-counting fi rm—in many cases, bolstered by lengthy legal opinions from one or more reputable law fi rms. In 1999, we identifi ed that tax law was a business, but we did not foresee what 1999’s drive for business would generate by 2009—a cottage industry in defending challenged tax shelters and ultimately, practitioners who allegedly abused or misused those shelters.
In our 1999 column, we also focused upon the im-pact of multi-disciplinary practice (MDP), which then was either becoming the rage or the Bubonic plague, depending on your point of view. In the tax law context, we asked whether law fi rms specializing in tax or having large tax practice groups can effectively compete with accounting fi rms that were hiring top governmental tax offi cials—many of whom having arrived at the IRS or the Treasury from law fi rms. An all-out war between big accounting and big tax law fi rms was apparently shaping up, on several fronts. Would the American Bar Association’s Section of Taxation soon be dominated by accounting fi rm tax practitioners? Would large and medium-sized accounting fi rms (along with their sup-
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porters) continue to push state bar associations and other regulatory bodies to permit the accounting fi rms to engage in what looked and smelled a lot like the practice of law (notwithstanding professional regulations and state supreme court rules of professional conduct involving the unauthorized practice of law to the con-trary)? We observed that as old traditions die, new turf wars emerge. Will the hard-fought but limited attorney-client tax privilege that accountants won in Congress (through enactment of Code Sec. 7525) create a “more level playing fi eld” for the benefi t of clients, or is it really just a misleading marketing ploy by medium and large accounting fi rms to grab more tax practice market share? To fi nd out, tune in next century, we suggested.
Accountants (before and after 1999) walked the tightrope of providing services interpreting tax law, but contending they were not practicing law (just as other consultants interpret nontax laws, but claim not to provide legal advice). We observed, “Accountants tell us they don’t practice law in the United States; they practice ‘tax.’ (In foreign countries they own law fi rms and practice law; in the U.S., they smoke tax law but they don’t inhale.)”15
For these reasons and more, it appeared to us in our last review of the state of the practice of tax law that the “traditional” tax lawyer at the “traditional” law fi rm was an endangered species. The globaliza-tion of world markets during the decade of the 1990s increased multi-nationals need for centralized legal, tax and related services; the Big Four accounting fi rms have already won that war, we observed.
2009: Not All Is Fine; Is This the End of the Line?In hindsight, our concern about the large accounting fi rms and the unstoppable spread of MDP came to a crashing halt with the legal and public relations deba-cles of the tax shelter wars of the late 1990s and 2000s, focusing largely on then reputable large accounting fi rms, whose participation came to light through popular and trade journals, newspapers, Congressional oversight hearings and, ultimately, litigation, which continues to this day. Alas, that sordid history of overly aggressive tax planning (using the phrase charitably) from the mid-1990s to the fi rst half of this decade has led to a number of criminal indictments, guilty pleas, convictions and seemingly endless investigation and litigation involving many if not all of the parties concerned.
Moreover, those excesses of the 1999 era (give or take a few years) have led to increasingly stifl ing legislation
and regulations involving the preparation and render-ing of advice in connection with the preparation of tax returns and providing tax advice. Compliant law (and accounting) fi rms must devote substantial numbers of man-hours to educate their personnel on the rules of the road, with everything from Circular 230 (practice before the IRS) to signing return preparer penalties and nonsigning return preparer penalties (which are even more likely to apply to tax lawyers) under Code Sec. 6694, to list maintenance requirements for certain so-called abusive (and other) transactions under Code Sec. 6111, to law and accounting fi rm list-maintenance requirements for signing tax return preparers under Code Sec. 6060, ad infi nitum. Tax advisors (and their fi rms) who fail to take reasonable steps to comply with these requirements (which extend beyond the tradi-tional income tax preparation of standard tax forms, and now cover advice on and preparation of numer-ous income, gift, estate and other tax returns) face dire consequences. A philosophy of “we won’t comply now, but we can put all of our records together in hindsight if there is ever an inquiry later” simply will not suffi ce. All of this tax practice maintenance and monitoring is time-consuming, costly and (in general) nonbillable to clients in whole or substantial part. Yet it is necessary law and accounting fi rm risk management for today’s (and tomorrow’s) tax practitioners.
We would be remiss if we did not touch upon a number of other developments that have occurred (for the fi rst time in our four decades of authoring this column) in the post-1999 era. To wit:
What Happened to Those “Two Things Certain”? We all remember the old adage, “there are only two things that are certain in life: death and taxes.” As I never had an appetite or aptitude for any matters medical,16 I chose taxes (not death). Indeed, with cryogenics, only taxes are certain; so like Indiana Jones in THE LAST CRUSADE in selecting the holy grail, I followed the admonishment to “choose wisely.” It never crossed my mind at any time in the 20th century that a good tax lawyer need fear unemployment. Indeed, prior to 2009 it appeared that tax lawyers who “made it” (as technicians, advisors and/or ultimately as rainmakers or revenue generators) had a sense of job security which seemed unshakable.
The current (2008–2009) economic recession has certain adversely impacted the job security of tax ad-visors (as well as many other transactional advisors in the law, accounting, consulting, investment banking and other professions and businesses). Should there
be a fi fth decade of the Tax Lawyer As Sumo Wrestler column, we hope that the recession in general and that affecting tax advisors as well is long gone and our profession will still be able to provide valuable and valued services to our clients.
Tax Research Is Dead! Long Live Google!We lamented the information explosion in our earlier decennial columns. The human mind can absorb only so much. But the speed in which modern business (and tax law advice) is conducted continues to accelerate. “On vacation” and “available 24/7” are no longer mutually exclusive terms; even when you’re on vacation you’re never (completely) out of touch from your clients, your computer fi les, your CCH and other on-line tax services, your www.irs.gov and other invaluable sources.
Nonetheless, we sometimes fi nd our younger col-leagues researching Google for quick hits on articles, commentaries and discussions of tax topics or tax authorities; they look to Wikipedia for legal defi nitions, rather than BLACK’S LAW DICTIONARY. If it’s on-line, it’s free and it’s fast to fi nd, it must be good; alas, it may (or may not) be thorough and accurate. Indeed, we fi nd it ironic that the basic tax laws we are continuing to deal with (under the 1986 Code, which for most practical purposes directly derives from the 1954 Code) trace back 55 years, while even archived on-line articles and commentaries generally go back less than half that period. Research-ers who don’t fi nd their way to hard-copy journals may never fi nd contemporaneous articles interpreting or fl eshing out the intent of Congress, the Treasury and the IRS when the various laws, regulations or guidance were initially enacted or promulgated.17 Then again, in an information-driven world (which certainly includes the tax laws and tax planning), speed and cost effi ciencies provided by free on-line services may be the practical competitive edge that tax lawyers need to keep the playing fi eld level. We remain of the view that when a defi nitive analysis of the tax law is called for, it must encompass review of multiple tax-related sources. Don’t just use Google, use your noodle; there are numerous tax services—on-line and hard copy—that provide guidance to young and old tax practitioners alike.
If Congress Gets It Wrong, Will Congress Fix It? A major, but largely unrecognized, agent for change of the profession and practice of tax law between 1979 and today is the unstated difference in philosophy of Congress and the regulators, with respect to “bad”
legislation spurred on by tax planning abuses or tax administration/audit failures which grab headlines (and spur on Congressional action). Congress has long been known to enact legislation which is overly broad, and often intentionally so (designed to ensure that the “bad” actions and new variants thereof, would never happen again). When we fi rst began these columns, if Congressmen and their staffs were subsequently confronted by reputable bar associations, CPA soci-eties and practitioners as to the over-breadth of their legislation, the Congressmen and their staffs would privately say, “If we screw it up, we can always fi x it with a technical corrections act.” Thanks to Enron and other abuses conducted by some businessmen and their professional and tax advisors, the philosophy now seems to be (with respect to provisions such as Code Sec. 409A), “If the legislation or regulations are overreaching, so be it.” There is no or virtually no self-correction of Congressional over-reaction. The sole exception that comes to mind is the modifi cation to the notoriously over-reaching amendment of Code Sec. 6694 in May 2007, which subjected tax advisors to a higher standard than taxpayers for the accuracy of the taxpayers’ tax returns.
Female Tax Advisors, Where Were You? Our fi nal observation on the state of the tax practice is one we have long waited to make. At meetings of the ABA Tax Section, at tax conferences (and on their planning committees), and in articles we are seeing a marked increase in the number of women taking on meaningful roles and positions. Tax lawyers (even in 1999) were predominantly male, and those in tax pro-fession leadership roles have long commented on the lack of gender diversity, both in the audience and on the dais. Although senior (by age) leadership is still mark-edly male, it is encouraging to see a much greater (but still disproportionately small) number of women—tax lawyers and tax accountants—in visible positions. The trend is also noteworthy in the Treasury and the IRS as well, and we applaud efforts in the tax law profession and in the three branches of government to promote diversity—both of gender and race. We hope that even more signifi cant progress will be made by 2019.
Sign-off and Sayonara (at Least for Now)We look forward to the continuing evolution of the practice of tax law. We foresee ever-increasing gov-ernmental regulation of tax return preparers (perhaps
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TAXES—THE TAX MAGAZINE® 37
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for the better); we fear that the Congress, the Treasury and the IRS will continue to permit relatively few bad apples to make life burdensome, costly and thank-less for the vast majority of good tax practitioners and taxpayers in general. We foresee even more extensive and burdensome information reporting requirements hoisted upon the public and their tax preparers. The recent FBAR reporting mess is not the fi rst or last time we expect the national offi ce of the IRS or the Treasury to demand excessive and burdensome information reporting. The real tragedy is that little of the infor-mation requested is ultimately useful for (or will be used by) fi eld agents, in our estimation. Unnecessary
(or unused) reporting requirements add a real cost to conducting business or making investments that the public can ill afford—even in good economic times.
On a personal note, your author hopes to revisit the state of the practice of tax law for a fi fth decade, in 2019. If circumstances permit (and we still have our health and faculties to do so), we will give a septuage-narian’s doddering view of the most complex element of the legal practice—the tax law (as we then know it). If circumstances do not so permit, we hereby say in advance—to our readers who are tax lawyers and to any who come across this article via Google or its successors who are sumo wrestlers—sayonara!
1 Sheldon I. Banoff, The Tax Lawyer as Sumo Wrestler, 57 TAXES 103 (1979).
2 Sheldon I. Banoff, The Tax Lawyer as Sumo Wrestler—Revisited, 67 TAXES 107 (1989); and Sheldon I. Banoff, The Tax Lawyer as Sumo Wrestler: End of a Tradition? TAXES, Feb. 1999, at 13.
3 We spent our formative (college senior and three law school) years working part-time for (and gaining tax return research and prepara-tion experience with) a small Chicago CPA fi rm, which (soon after we left) “merged into” (i.e., was purchased by) the Chicago offi ce of a mid-sized CPA fi rm, which subsequently dissolved. Such, alas, is not atypical of the fate of professional service fi rms that were around in the 1970s.
4 Internet historians may note that Wikipedia did not exist when we last revisited the state of tax practice (1999). But more on Wikipe-dia below.
5 I couldn’t fi nd any authority for this state-ment. My recollection might be incorrect.
6 See note 5, supra.7 I could be hallucinating on this one, too. (But
that’s what happens after wrestling with the Internal Revenue Code for nigh 40 years!)
8 We well remember our relatives and friends fearing for our job security, upon hearing that Tax Reform at long last had been en-acted in 1976. Their constant and concerned refrain: “With the tax law fi nally having been reformed, who’s gonna need tax lawyers?” Our canned response: “There’s still plenty of tax law left to deal with!” Umpteen tax
“reform” acts later, we still hold that view.9 Supra note 1, at 104.10 Indeed, during the 1980s, the authors and
reviewers of many IRS and Treasury rulings and (proposed, temporary or fi nal) regula-tions were out in private practice shortly after the ink dried on their promulgations, exploiting the free enterprise system in the private sector and pontifi cating on podia on the hidden meaning, scope and gloss of their previous pronouncements. But that is business as usual; the revolving door in D.C. is not confi ned to tax offi cials. Moreover, as the fi rst Director of the IRS’s Offi ce of Professional Responsibility (Jerry Seinfeld) concluded, “Not that there’s anything wrong with that!”
11 Sheldon I. Banoff, Dealing with the ‘Authori-ties’: Determining Valid Legal Authority in Advising Clients, Rendering Opinions, Pre-paring Tax Returns and Avoiding Penalties, 66 TAXES 1072 (1988).
12 Rogovin and Korb, The Four R’s Revisited: Regulations, Rulings, Reliance and Retro-activity in the 21st Century: A View From Within, TAXES, Aug. 2009, at 21.
13 Ferguson, TC Summary Opinion 2007-30.14 See Sheldon I. Banoff, Shop Talk, Is Wikipe-
dia Good Authority in the Tax Court? 106 J. TAX’N 256 (2007).
15 Sheldon I. Banoff, The Tax Lawyer As Sumo Wrestler: End of a Tradition? TAXES, Feb. 1999, at 14.
16 Based on my genetic disposition, this is somewhat unexpected, as I am the son of a
pharmacist and brother of a doctor, yet I have been known to turn pale watching “Marcus Welby, M.D.” reruns and have fainted in the midst of detailed discussions of medical pro-cedures. Anecdotal evidence gathered from my colleagues indicates that many of them also became lawyers because they too could not stand the sight of blood.
17 For example, when valuable guidance on the publicly traded partnership (PTP) legislation (enacted in 1987) was issued in 1988, your author (serving with others on the American Bar Association Section of Taxation Partner-ship Committee’s task force on PTPs) was privileged to gain insight from government offi cials involved with the promulgation of Notice 88-75, 1988-2 CB 386, which fl eshed out the statutory rules. In a contemporane-ous article published in this magazine, we memorialized those informal comments and explanations, which retain some vitality even after the subsequent issuance of regulations on PTPs. See Sheldon I. Banoff, Avoiding Publicly Traded Partnership Status: Living and Dying With Notice 88-75, 66 TAXES 561 (1988). That article pre-dates some on-line sources and is generally only available in hard copy. For an even older chestnut from the 1980s (that is still requested from us today by tax associates and librarians looking on-line unsuccessfully for “that rescission article” that a senior tax advisor vaguely recollected), see Sheldon I. Banoff, Unwinding or Rescind-ing a Transaction: Good Tax Planning or Tax Fraud? 62 TAXES 942 (1984).
ENDNOTES
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