Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, December 30, 1993 TAG: 9312300106
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: Associated Press
DATELINE: DETROIT LENGTH: Medium
And it leaves those who paid cash vulnerable to investigation, the lawyers said. That's the point, according to the IRS.
The Internal Revenue Service defends the crackdown, begun this month using its national cash-tracking computers in Detroit, as part of its effort to find drug dealers and other criminals who pay cash to hide illegal activities.
The issue is so contentious that officials of the American Bar Association and the National Association of Criminal Defense Lawyers plan to meet next month with Justice Department officials to air their grievances.
Meanwhile, the IRS says it is only holding lawyers to a 1984 federal law requiring businesses to reveal sources of cash payments over $10,000.
Violators risk fines of $25,000 to $100,000 for each failure to report the cash source.
An IRS survey found that about half the time, lawyers omit the sources, according to Sarah Wreford, an IRS spokeswoman.
The number of lawyers affected seems to be relatively small.
In 1992, the IRS received 142,000 completed Form 8300s that report cash business payments of $10,000 or more. The agency was unable to say how many lawyers filled them out, but the National Bar Journal reported there were 1,242.
"In the past, we've been very lenient about imposing the penalty," Wreford said in an interview.
Before the crackdown, the agency warned lawyers what was coming. "We sent letters to attorneys across the country," she said. "We tried to let them know we were going to come in and be serious about enforcement."
Only criminals need fear the cash-reporting law, she said.
"If the money's not from an illegal source, you have nothing to worry about. I have very little sympathy for attorneys who are worrying about this."
Defense attorneys say they don't mind reporting the payments. What they balk at is possibly jeopardizing the traditional privacy of the lawyer-client relationship, in particular because bring those clients named to the attention of the IRS.
"The IRS is trying to make ethical lawyers into stool pigeons in the employment of the federal government," said John H. Hingson III, a lawyer in Oregon City, Ore., and president of the Washington, D.C.-based National Association of Criminal Defense Lawyers.
He also pointed out that the lawyers' ethic of confidentiality is buttressed by the official codes of many state bar associations, which have the power to disbar unethical members.
"The IRS action places the criminal defense lawyer in a no-win situation - comply with the IRS and face professional discipline or obey the commands of the codes of professional responsibility and face a $25,000 fine," he said.
"It's un-American."
by CNB