In-house counsel can be subject to various in-company pressures from executives -- especially around tax season. But you should not let the stressors in your office lead you to recommend something only plausibly legal or just plain illegal.
To keep your head in the game and your keister out of federal jail, be mindful of these three potential tax season pitfalls:
1. Counsel Can Go to Federal Prison
It's happened before and it could happen to you: in-house counsel that conspire with their employers to file false tax returns are subject to federal incarceration.
Keep that in the back of your mind when your boss comes to you asking about this new "loophole" he or she just read about on the Internet. It won't just be your company's money and reputation on the line if you give questionable legal advice, it'll be your freedom.
Although Apple and others may revel in exploiting these questionable loopholes -- and we suppose they have incredibly competent counsel -- don't let some memo on "Double Irish" loopholes be your invitation to prison. Apply with care.
2. Avoid Advising Employees
As general counsel for a large company, you may attract questions about individual tax liability from employees or even executives. Remind yourself and others who solicit such advice that the company is your client, not the employee or executive.
In fact, you may be opening yourself up to malpractice suits even if you give an employee the impression that you are his or her attorney.
For both ethical and liability reasons, general counsel may want to keep their individual tax law advice to themselves.
3. Deadlines and Outside Help
Taxes are one of those time-sensitive parts of a healthy business' operation, so if you have any recommendations in line with this years' tax environment, do it well before any major deadlines.
As you know, that most companies will need to send out W-2s and 1099s by January 31 (1099-Bs by February 15) and issue copies to the IRS by the end of February. Don't hold up your employer's accounting by waiting until the 11th hour. Remind your employers why they stay in-house for tax issues and be an essential part of your employer's operational structure.
However, if you're not as confident on some novel tax issues, don't fudge your analysis just to seem self-reliant. Farming out some tax work to outside counsel may be in your client's best interest. You may want to run any major research costs by your boss before you hit him or her with the bill.
Avoiding these pitfalls can help you effectively represent your client during tax season, not to mention keeping you out of federal prison or civil court.
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- Ten Ways Not To Say Goodbye: Avoiding Jailtime For Tax Charges (Forbes)
- GCs Get Ready: 6 Tax Tips for Tax Season (FindLaw's In House)
- How General Counsel Can Avoid Personal Liability (FindLaw's In House)
- Tax Evasion Conviction Requires an Affirmative Act (FindLaw's U.S. 2nd Circuit Blog)