Can a lawyer invite tax authorities to a hearing where a claimant will admit not filing tax returns, to gain leverage?

Plain-English summary

In a workers' compensation action, counsel for the statutory employer wanted to notify state and federal taxing authorities of the time and place of a hearing at which a claimant who had not filed a tax return would testify to his earnings, hoping they would send a representative to attend. No witnesses or documents were under subpoena, because no returns had been filed. The question was whether counsel could notify the taxing authorities of the hearing.

The committee concluded he could not. Requesting that a representative of the South Carolina Department of Revenue or the IRS be present at a hearing where the claimant must testify to his earnings to establish damages is a trial tactic amounting to a threat to the claimant solely designed to obtain an advantage in the matter, violating Rule 4.5, which prohibits a lawyer from presenting, participating in presenting, or threatening to present criminal charges solely to obtain an advantage in a civil matter. The committee noted that South Carolina's choice to retain this rule, which the Model Rules do not include, indicates its strict application is favored.

Having a representative of the taxing authorities present amounts to threatening criminal charges for non-filing of tax returns, and the only other reason to contact them would be to coerce a settlement just before the case is called. The threat is compounded by the claimant's not learning of the authorities' presence until he arrives, and the representative would have no evidence to present because no returns were filed. The accident and the non-filing of returns are unrelated matters, which further undercuts any argument that counsel's motives are honorable. The committee added that Rules 3.1, 3.4(e), and 4.4 may also be implicated, but Rule 4.5 would clearly be violated.

Currency note

This opinion was issued in 1999, before the South Carolina Bar's adoption of the 2005 revisions to the Rules of Professional Conduct. 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 Treat this page as historical context, not current guidance.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, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer invite tax authorities to a hearing to pressure a claimant over unfiled returns?

A: The committee concluded no: it is a trial tactic amounting to a threat of criminal charges solely to gain an advantage in the civil matter, violating Rule 4.5.

Q: Why did the committee treat this as a threat rather than legitimate notice?

A: The committee noted the authorities would have no evidence to present (no returns were filed), the tax matter was unrelated to the accident, and the only purpose was to coerce a settlement.

Q: Are other rules implicated?

A: The committee said Rules 3.1, 3.4(e), and 4.4 may also be implicated, but Rule 4.5 would clearly be violated.

Background and rules framework

The opinion interpreted South Carolina RPC 4.5 (a South Carolina rule, not in the Model Rules, barring presenting or threatening criminal charges solely to gain an advantage in a civil matter), and noted RPC 3.1, 3.4(e), and 4.4 (meritorious claims; fairness to opposing party; respect for third persons) may also be implicated.

Citations and references

Rules of Professional Conduct:

• South Carolina RPC 4.5: no presenting or threatening criminal charges solely to gain an advantage in a civil matter (a South Carolina rule with no Model Rule counterpart).
• South Carolina RPC 3.1, 3.4(e), 4.4 / Model Rules 3.1, 3.4, 4.4: possibly also implicated.

See also

• No sibling opinions yet indexed.

Source

• Landing page: https://www.scbar.org/for-lawyers/quicklinks/legal-resources/ethics-advisory-opinions/ethics-advisory-opinion-99-05/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.

Ethics Advisory Opinion 99-05

Facts:
In a workers' compensation action, counsel for the statutory employer would like to notify state and federal taxing authorities of the time and place of the hearing at which a claimant who has not filed a tax return will testify to his earnings. Counsel hopes they will send a representative to attend the hearing. No witnesses or documents are under subpoena, because no returns were filed.

Question:
May counsel for the statutory employer notify the taxing authorities of the time and place of a hearing at which a claimant who has not filed a tax return is scheduled to testify to his earnings and his failure to file income tax returns?

Summary:
A lawyer for a statutory employer may not notify the taxing authorities of the time and place of a hearing at which a claimant who has not filed a tax return is scheduled to testify to his earnings and his failure to file income tax returns.

Opinion:
Requesting that a representative of the South Carolina Department of Revenue or the Internal Revenue Service be present at a hearing in which a claimant who has not filed a tax return must testify to his earnings to establish his damages is a trial tactic amounting to a threat to the claimant solely designed to obtain an advantage in the matter. It violates Rule 4.5, SCACR 407, which prohibits a lawyer from presenting, participating in presenting, or threatening to present criminal charges solely to obtain an advantage in a civil matter. The fact that South Carolina chose to include this rule when it replaced its Code of Professional Responsibility, and when the Model Rules do not include it, indicates its strict application is favored.

Having a representative of the taxing authorities present is a threatening of criminal charges for non-filing of tax returns. The only other reason for counsel to contact such representative is to coerce a settlement right before the case is called. The threat is compounded by the failure of the claimant to learn of the presence of the authorities until he arrives for the hearing. The representative has no evidence to present, because no returns have been filed. The matter of the claimant's on-the-job accident and his non-filing of tax returns are unrelated matters. This further undercuts any argument counsel could make that his motives are honorable. Rules 3.1, 3.4(e) and 4.4, SCACR 407 may also be implicated by this conduct, but Rule 4.5 SCACR 407 would clearly be violated.