STATE TAX BRIEFING HOW TO COMPLY WITH WE HAVE BEEN ASKED BY CPAS IN PRIVATE PRACTICE IF they can prepare protests to Notices of Proposed Deficiency Determinations issued by the Nebraska Department of Revenue and represent taxpayers in those protests regarding income taxes, sales taxes, and tax incentives. This article details our answer to those inquiring CPAs and taxpayers, and explains why this matter should be of interest to CPAs who work in the area of state tax in Nebraska. What’s the Issue? The questions normally go like this: We’ve been told we can represent taxpayers up until we actively move to a formal hearing. Is this correct? As long as the Nebraska Department of Revenue staff does not object, we’re ok, right? This concerns taxes and CPAs know taxes. That’s the real question, right? A Likely Source of Confusion A likely source of confusion on this question stems from the Nebraska Department of Revenue information guide, “How to Protest a Notice of Deficiency Determination or Proposed Assessment.” The protest of a Notice of Proposed Deficiency may, after the filing of a protest, involve an informal conference, a pre-hearing conference, a formal hearing, and a final order of the tax commissioner. This information guide states: “Once a formal hearing is set for the protest, taxpayers can either appear on their own behalf or be represented by an attorney.” [Emphasis added.] The information guide also states: “If the case proceeds to a formal hearing, briefs, motions, or procedures are typically required. In these cases, taxpayers must either appear on their own behalf or be represented by an attorney.” On their face, these statements may lead one to believe that nonattorneys or CPAs can represent taxpayers during the informal conference stage—before the case actively moves to the formal hearing stage. These sentences, however, do not actually state that a non-attorney or CPA can represent a taxpayer during the informal conference stage. The key is when a formal hearing is “set” for the protest. When read in context with the governing regulation (as the guide must be), a formal hearing is “set” for the protest once a formal hearing is requested in the initial or amended protest (i.e., in the petition). Nebraska Statutes & Nebraska Supreme Court Rules A Nebraska Department of Revenue information guide is simply an advisory guidance document. It does not actually constitute the law. Instead, we must first look to the governing statute and then to case law and regulations. Neb. Rev. Stat. § 7-101 states the following: “[N]o person shall practice as an attorney or counselor at law, or commence, conduct, or defend any action or proceeding to which he is not a party … unless he has been previously admitted to the bar by order of the Supreme Court of this state. … Any person who shall violate any of the provisions of this section shall be guilty of a Class III misdemeanor. …” NEBRASKA SUPREME COURT RULES ON THE UNAUTHORIZED PRACTICE OF LAW IN YOUR STATE TAX PRACTICE BY NICK NIEMANN & MATT OTTEMANN, MCGRATH NORTH LAW FIRM 20 Nebraska CPAs
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