Must a divorce lawyer report to tax authorities that the opposing spouse understated income on the couple's joint returns?

Plain-English summary

A lawyer representing a wife in a dissolution action learned during discovery that the husband, who controlled the finances and prepared the couple's joint tax returns, had grossly understated their income for several years. The lawyer believed the "innocent spouse" rule would protect his client if disclosure were made to tax authorities, and asked whether he had any duty to disclose the husband's apparent understatement to federal and state tax authorities.

The committee reviewed the Code's disclosure provisions. Former Rule 1-103 (reporting other lawyers' misconduct) did not apply because the husband is not a lawyer. Rules 4-101(c) and (d)(3) (disclosure to prevent death or serious bodily harm, or a client's intended crime) did not apply because the understatement was the husband's conduct, not the client's, and Rule 7-102(b)(1) (client fraud) was inapplicable for the same reason. The only rule that might apply was Rule 7-102(b)(2), requiring a lawyer who receives information clearly establishing that a person other than his client has perpetrated a fraud upon a "tribunal" to reveal it to the tribunal.

The committee concluded the term "tribunal" was not intended to encompass agencies like the Internal Revenue Service, consistent with the dictionary definition of a court or forum of justice with authority to bind disputants. It therefore found the lawyer has no duty under the Code to disclose the husband's apparent understatement to tax authorities. The committee expressly declined to decide whether the innocent-spouse rule would protect the client, or whether the tax laws themselves might impose any disclosure duty.

Currency note

This opinion was issued in May 1988, under the former Illinois Code of Professional Responsibility and before Illinois adopted the 1990 (and later 2010) Rules of Professional Conduct. The ISBA Board of Governors affirmed the opinion in July 2010 as generally consistent with the 2010 Rules (Rules 1.6 and 3.3, and Opinion 90-12), while cautioning that the specific standards referenced may differ from the 2010 Rules. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule or requirement mentioned here.

Common questions

Q: Must a divorce lawyer report the opposing spouse's apparent tax fraud to the IRS?

A: The opinion concluded no; none of the Code's disclosure provisions imposed a duty, because the fraud was the husband's rather than the lawyer's client's.

Q: Why didn't the rule on third-party fraud on a tribunal require disclosure?

A: Per the opinion, former Rule 7-102(b)(2) reaches fraud on a "tribunal," and the committee concluded the IRS is not a tribunal, reading the term as a court or forum of justice with authority to bind disputants.

Q: Did the committee decide whether the client was protected or had its own tax duties?

A: No. The opinion expressly declined to decide whether the innocent-spouse rule would protect the client, or whether the tax laws imposed any separate disclosure duty.

Background and rules framework

The opinion applied former Illinois Code Rules 1-103 (reporting lawyer misconduct), 4-101 (confidences and exceptions), and 7-102(b) (disclosure of client fraud and of a third party's fraud upon a tribunal). The Board's 2010 affirmation maps the analysis to current Illinois Rules of Professional Conduct 1.6 (confidentiality) and 3.3 (candor toward the tribunal), corresponding to ABA Model Rules 1.6 and 3.3.

Citations and references

Rules of Professional Conduct:

• Illinois Code Rules 1-103, 4-101, 7-102 (former Code, applied in the opinion)
• Illinois RPC 1.6, 3.3 (2010 equivalents per the Board's affirmation)
• MR 1.6 (confidentiality), MR 3.3 (candor toward the tribunal)

See also

• ISBA Ethics Op. 88-13: Incriminating Physical Evidence Offered by a Third Party
• ISBA Ethics Op. 88-17: Duty to Report a Disbarred Lawyer's Conduct

Source

• Landing page: https://www.isba.org/ethics/opinions/8715