The California State Bar recently adopted new Rules of Court and State Bar Rules that reserves the right to suspend an attorney’s license to practice law in the State of California if the attorney owes a large delinquent tax liability. The rule only applies to attorneys who are on the list of 500 largest tax delinquents who owe more than $100,000 in back taxes.
AB 1424 (Stats. 2011, Chapter 455) is a comprehensive bill directed at the largest state tax delinquents. AB 1424 enacted new Business and Professions Code section 494.5, effective July 1, 2012. Section 494.5 provides for denying a license to or suspending the professional, occupational or driver’s license of a taxpayer who is among the 500 largest state tax delinquencies. Section 494.5 contains notice and timeline provisions; conditions for reinstatement and re-suspension; and a process by which a tax payer may submit a challenge to the Franchise Tax Board or State Board of Equalization if the taxpayer contests being named on the lists. The State Bar, its members and applicants for admission are covered by AB 1424.
The California State Bar plans to serve notice of suspension as soon as the Board of Equalization (BOE) or the Franchise Tax Board (FTB) releases the list of names. The FTB releases a list of the 500 largest tax delinquents two times per year, in April and October.
The Bar will give attorneys a 90-day grace period. The attorneys will be able to make arrangements for current cases or settle with state taxing entities before their license suspension will go into affect. Suspension may also apply to other occupational licenses and drivers licenses.
The Bar issued a proposed rule change for public comment on April 26, 2012, with a deadline of June 14, 2012. It received no public comment.