Do Canadian (or Australian etc.) Tax Attorneys Advising Canadian Clients on United States IRS Compliance Typically Comply With The “Professional Code of Conduct” of Their Law Societies?

cross-posted from Isaac Brock Society

In a recent post I mentioned the situation of a “Caroline” who seeks advice from a Canadian tax attorney (let’s say in B.C.) regarding a question of (IRS) tax compliance with a country foreign to Canada.

How should the Canadian tax attorney advise this frightened Canadian citizen– specifically, regarding the disclosure of relevant options she (or any Canadian) should consider before entering, or not entering, into tax compliance with United States Internal Revenue Service?

What information should (must) the attorney disclose to the Canadian to comply with professional standards and ethical obligations of an attorney?

USCitizenAbroad suggests that the Canadian tax attorney needs to disclose two relevant facts:

“It seems to me that the first thing that a Canadian lawyer (I note that the rules of B.C. Professional Conduct are included in this post) might be to say:

1. You are living in Canada. There is NO Canadian law (no matter who you are) that requires you to comply with U.S. tax laws. Canada may [find] it amusing. But Canadian law does not require compliance.

2. The Canada U.S. Tax Treaty means that Canada will not assist the IRS in collection on Canadian citizens”

I could well be wrong but suspect that few if any Canadian (or Australian) tax attorneys (irrespective of whether they are US persons or “enrolled agents”) ever provide this disclosure to their clients — who are just seeking good service.

The question I have is whether, by not making this disclosure, are these Canadian tax attorneys in violation of their law society’s (the governing body) Professional Code of Conduct? For example. the British Columbia Professional Code seems to be pretty clear on disclosure of facts and options:

“A [Canadian] lawyer should obtain sufficient knowledge of the relevant facts and give adequate consideration to the applicable law [This must include Canadian law — correct?] before advising a client, and give an open and undisguised opinion of the merits and probable results of the client’s cause…”

It would also seem that any Canadian tax attorney who is an “enrolled agent” with the IRS must disclose that significant conflict of interest (additional loyalty) to the client. Yes? See:

“A lawyer should disclose to the client all the circumstances of the lawyer’s relations to the parties and interest in or connection with the controversy, if any, that might influence whether the client selects or continues to retain the lawyer. A lawyer must not act where there is a conflict of interests between the lawyer and a client or between clients.”

Do these issues of “reasonable disclosure” need to be brought up with the law societies? Could someone from one of the Canadian provincial law societies please respond and address these questions?

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