Tax advice is serious business. A married coupled learned this the hard way when they retained their dentist as their tax adviser. Based on their dentist’s “advice”, and on their own “research”, they concluded, to their chagrin, that the Internal Revenue Code did not impose any liability on them. The IRS and the U.S. Court of Appeals had a different view. See United States v. Allen, 1st Cir., No 10-2160, 1/6/2012 at http://op.bna.com/dt.nsf/r?Open=vmar-8qcvjw.
The facts of the case present what can be described as a “unique” situation. For a number of years, like most law abiding citizens, the Allens filed annual federal income tax returns. The Allens worked in a number of fields including nutrition, vitamin supplement sales, and health care. On the advice of their dentist, and based on their own personal interpretation of the Internal Revenue Code, they concluded that no provision of the Internal Revenue Code imposed “liability” on them for taxes. When defending their position, they did not dispute any of the IRS’s findings; rather, they argued that their own research and the advice of their dentist provided them with the basis to form a “good faith belief” that they did not owe any taxes. A jury of their peers found this claim of a “good faith” belief to be unconvincing.
There is more to this case than meets the eye, but merely scratching the surface provides us with an important pearl of wisdom: when it comes to taxes, do not trust your dentist, and when it comes to a dental hygiene, do not trust your tax attorney.
For more information, contact Jean-Pierre Lavielle at (212) 599-3322 or firstname.lastname@example.org, not your dentist.