Washington (July 14, 2004) -- The Treasury Department has denied the appeal of a San Jose CPA who was disbarred from practice before the Internal Revenue Service for giving bad advice to taxpayers.


Joseph R. Banister, a former IRS criminal investigation agent, had appealed a decision by Judge William B. Moran that he be disbarred from practice before the IRS. Judge Moran, acting on a complaint from the IRS Office of Professional Responsibility, found that Banister provided erroneous advice to taxpayers, including improperly advising them that returns weren't required because Sections 861 through 865 of the Internal Revenue Code define “source of income” in a manner that excluded the income of U.S. citizens residing in the U.S. from U.S. tax. Banister also advised clients that they weren't required to file because the 16th Amendment to the Constitution wasn't properly ratified.


On appeal, David F.P. O’Connor affirmed the decision regarding erroneous advice to taxpayers. While O’Connor found that the OPR hadn't met its burden of proof with respect to the charge that Banister had failed to file his own returns, he agreed with Judge Moran that the erroneous advice charges alone warranted disbarment.


In rejecting Banister’s claim that his advice to clients was protected speech, and that sanctions under Circular 230 shouldn't restrain zealous advocacy on behalf of taxpayers, O’Connor said, “Zealous advocacy does not constitute license for the assertion of frivolous positions.” O’Connor noted a number of court decisions in which Banister’s positions on Section 861 and the 16th Amendment have been rejected. He agreed with the spirit of Judge Moran’s statement that “the 861 argument and the non-ratified 16th Amendment argument share a related lunacy in that, for differently concocted reasons, neither accomplishes the presumed goal of creating a federal income tax on U.S. citizens.”


-- WebCPA staff

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