This post is a question rather than a statement on divorce lawyers’ duties with regard to tax cheats and tax dodgers in the United States. I am not aware of any affirmative duty that an American divorce lawyer has to report his or her suspicion of tax evasion to the IRS. I know that the divorce lawyer cannot “aid and abet” a client in evading taxes; I know the lawyer cannot conspire with the client to evade taxes. But does the lawyer have a legal duty to report his or her suspicions to the IRS? I don’t know. Do you know? I mean, there is such a thing as the attorney client privilege. But it seems to me that this privilege would slide away if the IRS should bring criminal charges of tax evasion against an individual and then subpoena that person’s divorce lawyer or the divorce lawyer’s records.
The reason I even bring this up is that I was just reading about a UK law, dating back to 2003, that makes it a legal duty for divorce solicitors in the UK to report “suspicions” of tax dodging and tax cheating to the National Criminal Intelligence Service (“NCIS”) pursuant to the Proceeds of Crime Act. This anti money laundering legislation “applied to the transfer of assets from a person to their ex spouse on divorce.” According to an article in the UK Guardian “Divorce Lawyers Must Tell of Tax Dodgers” this act “makes it a crime to be involved in an arrangement which might facilitate ‘the acquisition, retention, use or control of criminal property’ by another person – including an ex spouse.”
The part that raised the hairs on my neck is when the author wrote “many divorce lawyers did not realize that the act made it a criminal offence for them to negotiate a settlement or make a court application without notifying NCIS if they suspected tax evasion.” I found myself wondering if the same law applies here in New York? Because I am totally unaware of it if it exists. And of course, ignorance of law is no excuse. So my hairs stood up.
Is there such a rule for divorce lawyers in the United States? Do they have to report their mere suspicions of tax evasion by a divorce client in America? I am inclined to say “no.” I think, obviously, the American divorce lawyer needs to be careful with these tax issues that come up in different ways, the most obvious is the Affidavit of Networth submitted by his or her client or the other party. But I do not think there is such an affirmative duty as exists in the UK.
I found this one article at this website that reads in part:
Divorce cases are difficult and made more so when criminal tax issues are present. The family lawyer must be alert to the suggestion of criminal tax issues and know when to step cautiously, lest he or she unwittingly kick a hornet’s nest. The divorce can be stung by a criminal tax investigation, or the lawyer may feel the personal sting of a tax conspiracy or an aiding-and-abetting charge.
This was written a couple of years ago and it suggests that, as I said, the attorney has to be careful but certainly has no affirmative duty to report a mere “suspicion.” Of course, if I am wrong about this, I would welcome your thoughts on this.Sign Up! Get Free Giveaways, New Ideas & Latest News Valid email for entry Thanks 🙂