Opinion ID: 2181246
Heading Depth: 2
Heading Rank: 1

Heading: Bar Counsel's Exceptions and Mininsohn's Exceptions Relating to Tax Obligations

Text: Bar Counsel filed exceptions challenging the hearing judge's conclusion that Mininsohn did not violate Rules 8.4(b) and 8.4(c) based on his failure to withhold State income tax from his employees' wages and to hold such funds in trust for the State and to pay the income tax over to the State Comptroller as required by law. Bar Counsel disagrees with the hearing judge's conclusion that, while Mininsohn literally violated Rules 8.4(b) and (c), his conduct was not dishonest and thus he did not violate Rules 8.4(b) and (c). We agree with Bar Counsel. Mininsohn, on the other hand, asserts that he did not willfully fail to withhold and pay income tax because the attorney he had hired handled his tax obligations incorrectly. He also claims that he relied heavily on an employee who had worked for him for 11 years to prepare the proper tax forms. When this employee left Mininsohn's employment, Mininsohn says he was not familiar with some of the specifics of the procedures involved and, thus, failed to handle his tax obligations properly. We overrule Mininsohn's exception. Mininsohn willfully and regularly failed to comply with his obligation as an employer for the last several years, by failing to withhold State income tax from the wages of his employees, and to hold such funds in trust for the State. Such failures, Judge Tisdale concluded, violated Rule 8.4(a) and (d) as conduct prejudicial to the administration of justice, Sections 13-1007(b) and (c) and Sections 10-906(a) and (b) of the Tax-General Article, and Rule 1.15(b) as a failure to maintain required documentation. Judge Tisdale's findings were supported by clear and convincing evidence and, thus, are not clearly erroneous so that Mininsohn's exceptions are without merit. We agree with Bar Counsel that, in addition to the violations Judge Tisdale found, Mininsohn also violated Rules 8.4(b) and (c). We disagree with Judge Tisdale's finding that, while Mininsohn literally violated rules 8.4(b) and (c), ... [his] conduct clearly and convincingly [was not] in violation of those rules in light of [ Attorney Grievance Comm'n] v. Post, [350 Md. 85, 710 A.2d 935 (1998)]. Mininsohn had maintained a withholding tax account with the State of Maryland since 1995. Tax liens were filed against him in September 1995 and October 1996 for delinquent payment of income tax reported as being withheld from his employees' wages. By means of a bank garnishment, the two liens were satisfied in October 1998. Mininsohn also did not file the required periodic reports after January 1999. From January 1, 1999 to January 31, 2003, Mininsohn remitted withholding taxes only once when he remitted withholding taxes for $248.31 in January 1999. Further, in that forty-nine month period, Mininsohn failed to file the reports in thirty-seven of the months, even though his year end reports for 1999-2000 prepared by an accounting service showed that he had employees during those years from whom he had withheld taxes. On November 6, 2000, the Comptroller filed a lien against Mininsohn for unpaid withholding tax for 1999 for a total of $2,492.25, including interest and penalties. On February 25, 2003, the Comptroller filed another lien against Mininsohn for a total of $7,684.40 for 1999 through 2001. When testimony and argument concluded before Judge Tisdale regarding this matter, Mininsohn had not entered into any payment plan with the Comptroller. We agree with Judge Tisdale that Mininsohn willfully failed to comply with his tax obligations. [W]illfulness may be established merely by proving a voluntary, intentional violation of a known legal duty. Attorney Grievance Comm'n v. Boyd, 333 Md. 298, 309, 635 A.2d 382, 387 (1994). [T]he duty of an employer to file withholding returns and pay withheld taxes is a known legal duty.... Id. We also have concluded that, when an attorney neglects statutory tax obligations, it ordinarily reflects adversely on his or her honesty or fitness to practice law. Attorney Grievance Comm'n v. O'Toole, 379 Md. 595, 843 A.2d 50 (2004); Attorney Grievance Comm'n v. Angst, 369 Md. 404, 419-20, 800 A.2d 747, 756-57 (2002); Attorney Grievance Comm'n v. Atkinson, 357 Md. 646, 655-66, 745 A.2d 1086, 1091 (2000). Judge Tisdale, however, relies on Attorney Grievance Comm'n v. Post, 350 Md. 85, 710 A.2d 935 (1998) to exempt Mininsohn from this general rule and to conclude that he did not violate 8.4(b) and (c). We believe Post is distinguishable because Mininsohn's circumstances differ significantly from Post's. In Post, we observed that Rule 8.4(b) contemplates that the criminal act reflect adversely on the character traits or fitness as a lawyer, [and that] it follows that what the Rule contemplates is that the criminal act evidence another character trait, which, like honesty and trustworthiness, is relevant or critical to the practice of law. Id. at 97, 710 A.2d at 941. We then concluded that, under the circumstances of [Post's] case, his conduct did not reflect adversely on his fitness as a lawyer because his problems were due to his lack of organizational skills, this was his first encounter with the lawyer discipline system, he was a man of good character, and he maintained, as required by Section 10-906(c) of the Tax-General Article, separate employee accounts. Id. at 99-100, 710 A.2d at 942. Mininsohn's conduct, on the other hand, reflects adversely on his fitness as a lawyer. Unlike Post, Mininsohn did not maintain separate ledger accounts indicating clearly the amount of income tax withheld and that the income tax was the property of the state; he has refused to take responsibility for his failure to comply with his tax obligations, blaming, instead, his tax lawyer and his former administrative assistant; he has been reprimanded on a prior occasion; and he has several complaints against him. Moreover, Mininsohn acknowledges that he did not respond to the Comptroller's efforts to communicate with him in a diligent manner. State tax liens were filed in 1995 and 1996 against Mininsohn. In 2000, the Comptroller filed another lien for failure to withhold taxes in 1999. In 2003, the Comptroller filed a cumulative lien against Mininsohn for the years 1999 through 2001. In short, the Comptroller has had to file four Notices of Lien of Judgment against Mininsohn, evidencing a pattern of delinquency and callous neglect exceeding that which we found in Post and which is more comparable to the conduct we found in Atkinson, 357 Md. at 654, 745 A.2d at 1090. In Atkinson, we distinguished Post and found that the attorney had violated 8.4(b) because Atkinson had purposefully avoided almost all contact with both the state and federal income taxing authorities and at no point exhibited, over a period of eleven years, any real intention to fulfill her duties of filing the required returns and paying the taxes due, until the authorities discovered her delinquency and contacted her. Id. Mininsohn's repeated avoidance of his tax obligations and his lack of response to the Comptroller indicates that he, like Atkinson, lacked any real intention of fulfilling his duties. Such conduct reflects adversely on Mininsohn's character and demonstrates a lack of fitness to practice law. We, thus, sustain Bar Counsel's exception and find that Mininsohn violated 8.4(b). For similar reasons, we also agree with Bar Counsel that Mininsohn violated 8.4(c). In Angst, 369 Md. at 419-20, 800 A.2d at 756-57, we concluded that the attorney's dishonest and evasive conduct clearly evidence his lack of fitness to continue in the practice of law, and found that he violated, in addition to other rules, Rule 8.4(c) and (d). We noted that the attorney had engaged in a repeated pattern of delinquency... by failing to make the appropriate employee withholding tax payments. Id. at 419, 800 A.2d at 756. We also observed that the attorney treated the delinquency notices and other inquiries from the Comptroller with neglect, forcing the Comptroller to resort to filing a Notice of Lien of Judgment. Id. at 420, 800 A.2d at 756. Such conduct, we found, exemplifies respondent's lack of honesty and proclivity for engaging in conduct prejudicial to the administration of justice. Id. As we have pointed out supra, Mininsohn repeatedly failed to make the appropriate employee withholding tax payments and treated the Comptroller's efforts to communicate his delinquencies to him with neglect. We, therefore, sustain Bar Counsel's exceptions, overrule Mininsohn's exceptions, and find that Mininsohn violated Rule 8.4(c) in addition to Rule 8.4(b).