October 13, 1973
Ethics Opinon 1973-13
SUBJECT: UNAUTHORIZED PRACTICE OF LAW; PREPARATION OF TAX FORMS
Can a person not licensed to practice law prepare inheritance tax forms IT-3 and IT-22 for the general public for a fee?
No. The preparation of inheritance tax forms IT-22 and IT-3 in many areas clearly involves the making of strictly legal decisions and would constitute the unauthorized practice of law by a person not duly licensed to practice law.
OPINIONS AND AUTHORITIES
Research of the opinions of the American Bar Association to the extent available at the San Diego County Law Library reveal no opinions exactly on this point.
A review of the forms in question shows many items which are more than the mere recitation of factual data. On the IT-22 form, Item 4a would involve the legal determination as to whether or not items of property are indeed joint tenancy. Items 6a through d would likewise require determination of legal questions. Item 7e would also require the determination as to whether a previously taxed credit would apply. Item 10f would require legal research of statutes and legal decisions in order to justify an exemption from the inheritance tax.
On the Form IT-3, Item 8c would call for a legal opinion as to the character of property as either separate or community. Item 12 would require a legal opinion as to what would constitute an agreement concerning the status of property and Item 14, the justification paragraph, once again calls for determinations as to whether property is community or separate.
These questions, while not exactly the same as those giving rise to suits in the dissolution situation, do have common questions and problems regarding characterization of property.
A review of the unauthorized practice news published by the American Bar Association reveals many cases which approach the question presented but do not specifically hold on the exact point. However the case of Frazee, et. al v. Citizens Fidelity Bank and Trust Company, et al, decided by the Court of Appeal of the State of Kentucky in June of 1965, holds specifically that the salaried lawyers employed by trust companies are prohibited from preparing or filing inheritance tax returns, the Court having held that even though salaried lawyers for these companies did this type of work, it was the equivalent of the trust company's engaging in the unauthorized practice of law.
In addition to the foregoing, in a great many cases the IT-3 and IT-22 forms are an integral part of a judicial probate proceeding which would clearly make this activity an unauthorized practice of law. Even in those situations which are merely the termination of a joint tenancy without a probate procedure, the Inheritance Tax Referee would, in many cases, require further information, consultation, and possibly a hearing to determine the legal questions presented by these inheritance tax reports. This would clearly seem to be the unauthorized practice of law. It is therefore the writer's opinion that this activity would clearly be the unauthorized practice of law by a person not duly licensed by the State of California to practice law.
This opinion is advisory only. It is not binding upon the State Bar, the Board of Governors, its agents or employees.
EDITOR'S NOTE: Although the opinion addresses the specific issue of preparation of inheritance tax forms by a person not licensed to practice law, the Committee feels that the conclusion that such preparation would be the unauthorized practice of law would be valid as to any tax forms which require more than a mere recitation of factual data. A nonlawyer may fill in factual data on tax forms, but may not give advice as to the legal rights and obligations of the taxpayer.
Disclaimer: This opinion was issued by the Legal Ethics Committee of the San Diego County Bar Association. It is advisory only and is not binding upon any member of the SDCBA, any other member of the State Bar of California, the State Bar of California or its Board of Governors, or any persons or tribunals charged with regulatory responsibilities. The SDCBA, its officers, directors, agents, and the Legal Ethics Committee members assume no responsibility or liability in rendering this opinion.