Tax Controversy Corner -- This Will Keep You Up at Night : Firm and Partner Liability for Other Professionals' Noncompliance

This article discusses Callister Nebeker & McCullough v. United States, as well as other areas in which a law firm or accounting firm, or the partners of a firm, can be liable for the non-compliance of partners and employees. Specifically, this article discusses firm liability for list maintenance and reportable transaction penalties under Code Secs. 6707 and 6708, sanctions against firms and persons with principal authority under Circular 230 and Code Sec. 6694, and firm liability for promoter penalties under Code Secs. 6700 and 6701. This article concludes with some suggestions for law firm procedures, both to keep problems from occurring in the first place, and to demonstrate reasonable cause if a partner or employee commits a violation