Amended January 30, 2017 Iowa Supreme Court Attorney Disciplinary Board v. Karen A. Taylor ( 2016 )

IN THE SUPREME COURT OF IOWA
No. 16–0130
Filed November 10, 2016
Amended January 30, 2017
IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD,
Complainant,
vs.
KAREN A. TAYLOR,
Respondent.
On review of the report of the Grievance Commission of the
Supreme Court of Iowa.
The Iowa Supreme Court Disciplinary Board brought a complaint
against an attorney alleging she failed to file her federal and state income
tax returns. LICENSE SUSPENDED.
Tara van Brederode and Susan Wendel, Des Moines, for
complainant.
David L. Brown and Alexander E. Wonio of Hansen, McClintock &
Riley, Des Moines, for respondent.
2
WIGGINS, Justice.
The Iowa Supreme Court Attorney Disciplinary Board brought a
complaint against the respondent, Karen A. Taylor, alleging she
committed misconduct and violated the Iowa Rules of Professional
Conduct and the Iowa Code of Professional Responsibility for Lawyers by
failing to file her federal and state income tax returns for tax years 2003
through 2013. Based on the facts stipulated to by the parties, a division
of the Grievance Commission of the Supreme Court of Iowa concluded
Taylor’s conduct violated rules 32:8.4(b) and 32:8.4(c) of the Iowa Rules
of Professional Conduct and recommended she be suspended for no more
than thirty days.
On our de novo review, we conclude the Board established by a
convincing preponderance of the evidence that Taylor violated rules
32:8.4(b) and 32:8.4(c) of the Iowa Rules of Professional Conduct and
disciplinary rules 1–102(A)(3), 1–102(A)(4), and 1–102(A)(6) of the Iowa
Code of Professional Responsibility for Lawyers. Under the
circumstances of this case, we conclude the appropriate sanction is a
suspension of Taylor’s license to practice law for a minimum of six
months.
I. Scope of Review.
We review attorney disciplinary proceedings de novo. Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Haskovec, 869 N.W.2d 554, 557
(Iowa 2015). The Board has the burden to prove an attorney violated a
rule of professional conduct by a convincing preponderance of the
evidence. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Crum, 861 N.W.2d
595, 599 (Iowa 2015). “A convincing preponderance of the evidence is
more than a preponderance of the evidence, but less than proof beyond a
reasonable doubt.” Haskovec, 869 N.W.2d at 557 (quoting Crum, 861
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N.W.2d at 599). Thus, the burden on the Board is higher than the
burden of proof that applies in most civil cases, but less than the burden
that applies in cases requiring a party to establish a proposition by clear
and convincing evidence. Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Hedgecoth, 862 N.W.2d 354, 360 (Iowa 2015). Although we give
respectful consideration to the findings, conclusions, and
recommendations of the grievance commission in attorney disciplinary
proceedings, they do not bind us. Haskovec, 869 N.W.2d at 557; Crum,
861 N.W.2d at 599; Iowa Supreme Ct. Att’y Disciplinary Bd. v. Thomas,
844 N.W.2d 111, 113 (Iowa 2014).
When an attorney admits facts alleged by the Board in an answer
to a complaint, we deem those facts to be established. Haskovec, 869
N.W.2d at 557. Furthermore, when the parties in an attorney
disciplinary proceeding stipulate to facts, those factual stipulations are
binding on the parties. Id. We interpret factual stipulations in light of
the surrounding circumstances, the record as a whole, the subject
matter they address, and the issues involved. Id.
When an attorney stipulates to having violated a rule contained in
the Iowa Rules of Professional Conduct, however, that stipulation is not
binding on this court. Id. at 557, 562. Rather, we will find the attorney
violated the Iowa Rules of Professional Conduct only if the record reveals
a factual basis for concluding a violation of the rules occurred. Id.
II. Prior Proceedings.
On June 30, 2015, the Board filed a formal complaint against
Taylor alleging she violated rules 32:8.4(b) and 32:8.4(c) of the Iowa
Rules of Professional Conduct by willfully failing to file her federal and
state income tax returns for tax years 2002 through 2007. After Taylor
responded to the complaint and provided copies of her tax returns to the
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Board, the Board filed an amended complaint alleging she violated rules
32:8.4(b) and 32:8.4(c) of the Iowa Rules of Professional Conduct by
willfully failing to file her federal and state income tax returns for tax
years 2003 through 2013. The Board subsequently filed a second
amended complaint alleging Taylor violated disciplinary rules 1–
102(A)(3), 1–102(A)(4), and 1–102(A)(6) of the Iowa Code of Professional
Responsibility for Lawyers by failing to file her federal and state income
tax returns for tax years 2003 and 2004 and violated rules 32:8.4(b) and
32:8.4(c) of the Iowa Rules of Professional Conduct by failing to file her
federal and state income tax returns for tax years 2005 through 2013. In
her answer, Taylor admitted every factual allegation the Board made in
the second amended complaint.
Thereafter, the parties filed a joint stipulation, which they
subsequently amended. See Iowa Court Rule 36.16. In the final joint
stipulation, the parties stipulated to the relevant facts and agreed that
Taylor’s failure to file her federal and state income tax returns for tax
years 2003 through 2013 violated rules 32:8.4(b) and 32:8.4(c) of the
Iowa Rules of Professional Conduct. 1 The final joint stipulation also
contained a statement setting forth aggravating and mitigating factors
that might influence a determination of the appropriate sanction under
the circumstances. The parties agreed to submit the case for
determination on the issue of whether any violations occurred based on
the final joint stipulation and to brief only the issue of the appropriate
sanction.
1The final joint stipulation did not address whether Taylor’s failure to file her
federal and state income tax returns for tax years 2003 and 2004 violated disciplinary
rules 1–102(A)(3), 1–102(A)(4), and 1–102(A)(6) of the Iowa Code of Professional
Responsibility for Lawyers.
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After the parties submitted briefs on the question of the
appropriate sanction, a division of the grievance commission held a
hearing to determine what sanction it would recommend to this court.
By the date of the hearing, Taylor had already filed her federal and state
income tax returns for tax years 2003 through 2013.
During the hearing, Taylor testified regarding her work and
personal history, the circumstances that led to her failure to file her
federal and state income tax returns, and the recent efforts she had
made to address her outstanding tax liabilities with federal and state
authorities. Taylor also expressed remorse for her actions, acknowledged
her conduct violated her ethical obligations, and accepted responsibility
for her actions without attempting to offer excuses or shift blame to
others.
The grievance commission subsequently issued its findings of fact,
conclusions of law, and recommendations with respect to the appropriate
sanction. The commission concluded Taylor’s failure to file her federal
and state income tax returns for tax years 2003 through 2013 violated
Iowa Rules of Professional Conduct 32:8.4(b) and 32:8.4(c). After
considering the facts and circumstances and a number of aggravating
and mitigating factors, the commission recommended we suspend
Taylor’s license to practice law in the state for no more than thirty days.
The Board opposed the commission’s recommendation, arguing an
eighteen-month suspension is a more appropriate sanction.
III. Findings of Fact.
Based on the joint stipulation of the parties and our review of the
record, we make the following findings of fact. Taylor graduated from
Drake Law School in 1992, and we admitted her to the Iowa bar in 1995.
Taylor opened a law practice with a partner in 1998, and she has
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maintained a solo practice in Des Moines since 2000. Taylor currently
employs a full-time legal assistant, a part-time bookkeeper, and a part-
time receptionist. Additionally, Taylor usually employs an associate
attorney, though she did not employ an associate at the time of the
hearing before the Board.
Taylor practices primarily family law, assisting clients with
divorces and child custody matters as well as protective orders in cases
involving domestic violence. Additionally, Taylor represents individuals
facing criminal prosecutions and bankruptcy proceedings. Taylor
regularly accepts court appointments to represent indigent defendants in
criminal matters, and most of her clients facing criminal prosecution are
indigent. Taylor makes court appearances nearly every weekday, takes
work home nearly every night, and frequently works every day of the
week. The clients Taylor assists are located throughout central Iowa,
and she regularly appears before the courts in Hardin, Boone, Story,
Dallas, Polk, Madison, Warren, Ringgold, and Decatur counties.
Taylor has a significant client base for a sole practitioner and
currently has approximately two hundred clients with ongoing matters.
Many of Taylor’s clients are individuals of modest means, and she
charges an affordable hourly rate to ensure their access to legal
representation. Taylor performs substantial pro bono legal work on a
regular basis and has done so throughout her career. In addition, Taylor
regularly permits her low-income clients to pay for her services on a
payment plan without interest. For example, one of her clients has been
paying her ten dollars per month for approximately eighteen years.
Because Taylor does not demand prompt payment for her services from
clients who would otherwise have difficulty affording them, she has a
significant accounts receivable balance in excess of $200,000.
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In 1997, Taylor was married. A few years later, in approximately
2002, her husband stopped earning a regular income. In 2004, the
couple believed they did not have the money to pay their income taxes.
Consequently, they procrastinated on filing their federal and state
income tax returns for tax year 2003. Towards the end of her marriage,
finances became a major issue. Taylor and her husband struggled to pay
their bills for the next several years. They consistently failed to file their
federal and state income tax returns.
In 2010, Taylor filed a petition for dissolution of the marriage. It
had been approximately nine years since her husband had earned a
regular income, and the couple had failed to file federal and state income
tax returns for years. The court dissolved the marriage. The decree
entered by the district court upon the dissolution of the marriage ordered
Taylor and her former husband to file their outstanding federal and state
tax returns separately.
Following the entry of the dissolution decree, Taylor and her former
husband shared joint legal custody and joint physical care of their two
minor children, and Taylor paid her former husband $657 per month in
child support. Though Taylor initially began working with an accountant
to file her delinquent tax returns, she ultimately persisted in her failure
to file the returns despite the court ordering her to file them in the
dissolution decree.
In 2014, Taylor became concerned the relationship between her
former husband and his girlfriend had caused his relationship with their
children to deteriorate. In August, Taylor informed her former husband
that she was contemplating filing a petition to modify the joint physical
care award in the dissolution decree. The following day, her former
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husband’s girlfriend filed a complaint with the Board alleging Taylor had
not filed her income tax returns for tax years 2002 through 2007.
Taylor eventually filed a petition seeking modification of the joint
physical care award in the dissolution decree. Following a child custody
modification hearing, a district court awarded Taylor primary physical
care of her minor children. Months later, her former husband began
paying her $752 per month in child support. The court of appeals
subsequently upheld the district court decision awarding Taylor physical
care of the minor children. Thus, at the time of her hearing before the
grievance commission, Taylor resided in a rented house in Waukee with
her two minor children and an adult son who was in college.
Upon learning the complaint alleging she failed to file her tax
returns been filed with the Board, Taylor responded in writing. In the
response, Taylor acknowledged she had failed to keep current on filing
her federal and state income tax returns, indicated she had already hired
an accountant to assist her with preparing the delinquent returns, and
anticipated she would file the delinquent returns within thirty days.
Though Taylor stated she accepted full responsibility for her actions, she
also indicated she believed her former husband’s girlfriend filed a
complaint against her with the Board in an attempt to destroy her law
practice and get even with her for issues related to the custody dispute.
Following its investigation, the Board filed a formal complaint against
Taylor with the grievance commission on June 30, 2015.
During the course of the proceedings before the grievance
commission, Taylor admitted she willfully failed to file her federal and
state income tax returns for tax years 2003 through 2013 within the time
required by law even though she knew she was legally obligated to do so.
For tax years 2003 through 2013 Taylor earned a substantial income.
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She also admitted her conduct was not attributable to any physical,
mental, or emotional illness, condition, or addiction. Prior to her hearing
before the commission, neither federal nor state authorities had charged
Taylor with a crime in connection with her failure to file her income tax
returns.
By the date of the hearing, Taylor had already filed all her
outstanding federal and state income tax returns and entered into
negotiations to establish payment schedules for her delinquent back
taxes with both federal and state officials. She had also provided
documentation to the grievance commission showing she had
consistently made monthly payments of back taxes and quarterly
payments of front taxes to federal and state tax authorities since she filed
her delinquent returns.
We previously disciplined Taylor on two occasions. In 2005, we
publicly reprimanded her for neglect of a client. In 2012, we publicly
reprimanded her for failing to promptly comply with reasonable client
requests for information and misrepresenting the status of a client’s
appeal. Additionally, we briefly suspended Taylor’s license to practice
law in 2010, but we lifted the suspension within hours because it had
resulted from an administrative error.
IV. Ethical Violations.
In its findings of fact, conclusions of law, and recommendation, the
grievance commission acknowledged the parties stipulated that Taylor
had willfully failed to file her federal and state income tax returns for tax
years 2003 through 2013 within the time required by law even though
she knew she was legally obligated to do so. This factual stipulation is
binding on the parties. Haskovec, 869 N.W.2d at 657.
10
The parties also stipulated that Taylor’s conduct violated rules
32:8.4(b) and 32:8.4(c) of the Iowa Rules of Professional Conduct. The
grievance commission agreed, concluding Taylor’s failure to file her
federal and state income tax returns for tax years 2003 through 2013 in
a timely manner violated both rules 32:8.4(b) and 32:8.4(c) of the Iowa
Rules of Professional Conduct.
The Iowa Rules of Professional Conduct replaced the Iowa Code of
Professional Responsibility for Lawyers effective July 1, 2005. Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Barnhill, 847 N.W.2d 466, 473 (Iowa
2014). Therefore, the Iowa Rules of Professional Conduct exclusively
governs attorney disciplinary proceedings with respect to attorney
conduct that occurred after that date. Id. However, the Iowa Code of
Professional Responsibility for Lawyers continues to govern attorney
disciplinary proceedings with respect to attorney conduct that occurred
prior to July 1, 2005. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Nelsen,
807 N.W.2d 259, 260 n.1 (Iowa 2011).
Accordingly, we first address whether Taylor’s failure to file her
federal and state income tax returns for tax years 2003 and 2004
violated disciplinary rules 1–102(A)(3), 1–102(A)(4), and 1–102(A)(6) of the
Iowa Code of Professional Responsibility for Lawyers. See Hedgecoth,
862 N.W.2d at 363 (concluding on our de novo review that an attorney
violated a rule of professional conduct the Board alleged he violated even
though the grievance commission did not specifically address the
allegation in its conclusions of law). 2 We then address whether Taylor’s
2We acknowledge the constitutional guarantee of procedural due process
requires an attorney charged with an ethical violation in an attorney disciplinary
proceeding be given notice of the violation with which he or she is charged sufficient to
afford a meaningful opportunity to respond. In re Ruffalo, 390 U.S. 544, 552, 88 S. Ct.
1222, 1226, 20 L. Ed. 2d 117, 123 (1968); Comm. on Prof’l Ethics & Conduct v. Wenger,
11
failure to file her federal and state income tax returns for tax years 2005
through 2013 violated rules 32:8.4(b) and 32:8.4(c) of the Iowa Rules of
Professional Conduct.
A. Disciplinary Rules 1–102(A)(3), 1–102(A)(4), and 1–102(A)(6)
of the Iowa Code of Professional Responsibility for Lawyers. As we
have previously acknowledged on numerous occasions, when an attorney
whose income was sufficient to trigger the requirement of filing income
tax returns fails to do so, that failure constitutes misrepresentation of
the attorney’s income in violation of DR 1–102(A)(4), a deceitful offense
involving moral turpitude in violation of DR 1–102(A)(3), and conduct
adversely reflecting on his or her fitness to practice law in violation of
DR 1–102(A)(6). Iowa Supreme Ct. Att’y Disciplinary Bd. v. Fields, 790
N.W.2d 791, 797 (Iowa 2010); Iowa Supreme Ct. Bd. of Prof’l Ethics &
Conduct v. Runge, 588 N.W.2d 116, 118 (Iowa 1999). Taylor admits her
income in tax years 2003 and 2004 exceeded the threshold triggering the
requirement that she file federal and state income tax returns, yet she
willfully failed to do so. Therefore, we conclude her failure to file income
tax returns for tax years 2003 and 2004 violated disciplinary rules 1–
102(A)(3), 1–102(A)(4), and 1–102(A)(6) of the Iowa Code of Professional
Responsibility for Lawyers.
___________________________
454 N.W.2d 367, 369 (Iowa 1990). In its second amended complaint, the Board alleged
Taylor violated disciplinary rules 1–102(A)(3), 1–102(A)(4), and 1–102(A)(6) of the Iowa
Code of Professional Responsibility for Lawyers by failing to file her income tax returns
for tax years 2003 and 2004 and violated rules 32:8.4(b) and 32:8.4(c) of the Iowa Rules
of Professional Conduct by failing to file her income tax returns for tax years 2005
through 2013. It is therefore evident the notice Taylor received was adequate to afford
her a meaningful opportunity to respond to the allegation that her conduct violated
both the Iowa Code of Professional Responsibility for Lawyers and the Iowa Rules of
Professional Conduct.
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B. Rule 32:8.4(b) of the Iowa Rules of Professional Conduct.
Rule 32:8.4(b) of the Iowa Rules of Professional Conduct states that it
constitutes professional misconduct for a lawyer to “commit a criminal
act that reflects adversely on the lawyer’s honesty, trustworthiness, or
fitness as a lawyer in other respects.” Iowa R. of Prof’l Conduct 32:8.4(b).
It is the commission of a criminal act reflecting adversely on a lawyer’s
fitness to practice law, not the act of getting caught committing a crime,
which constitutes a violation of this rule. See Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Lustgraaf, 792 N.W.2d 295, 299 (Iowa 2010). Thus,
an attorney who commits a criminal act reflecting adversely on his or her
fitness as a lawyer may be found to have violated rule 32:8.4(b) even if
the authorities never charged the attorney with a crime. Id.
No state or federal criminal charges have been filed against Taylor.
However, the joint stipulation acknowledges that Taylor willfully failed to
file federal and state income tax returns for tax years 2005 through 2013
even though her income during each of those years exceeded the
threshold triggering federal and state filing requirements.
In light of this binding factual stipulation, we agree with the
grievance commission that Taylor violated rule 32:8.4(b). By statute,
Taylor was required to timely file federal and state income tax returns for
tax years 2005 through 2013. See 26 U.S.C. §§ 6012(a)(1)(A), 6017,
6072(a) (2012); Iowa Code §§ 422.5, .13(1), .22(1) (2015). A willful failure
to file an income tax return when one is statutorily required to do so
constitutes a criminal offense under federal and state law. See 26 U.S.C.
§ 7203; Iowa Code § 422.25(5); Iowa Code § 714.8(10). Furthermore, we
have long acknowledged an attorney’s failure to file income tax returns in
violation of the law reflects adversely on his or her fitness as a lawyer.
Lustgraaf, 792 N.W.2d at 299.
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C. Rule 32:8.4(c) of the Iowa Rules of Professional Conduct.
Rule 32:8.4(c) of the Iowa Rules of Professional Conduct indicates that it
constitutes professional misconduct for a lawyer to “engage in conduct
involving dishonesty, fraud, deceit, or misrepresentation.” Iowa R. Prof’l
Conduct 32:8.4(c). An attorney makes a misrepresentation in violation of
rule 32:8.4(c) when he or she willfully fails to file income tax returns
despite having earned adequate income to trigger the filing requirement.
Lustgraaf, 792 N.W.2d at 300. To establish an attorney failed to file his
or her income tax returns with the requisite intent to prove a
misrepresentation in violation of rule 32:8.4(c), the evidence must
indicate the attorney acted willfully, acted with the intent to deceive or
defraud, or made false statements in connection with the asserted
failure. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Cross, 861 N.W.2d
211, 223 (Iowa 2015); Lustgraaf, 792 N.W.2d at 299–300. If an
attorney’s failure to file his or her income tax returns was merely
negligent, that failure does not support the conclusion that the attorney
violated rule 32:8.4(c). See Cross, 861 N.W.2d at 223; Lustgraaf, 792
N.W.2d at 300. To establish a failure to file was willful rather than
negligent, “no evil or wicked motive need be shown.” Comm. on Prof’l
Ethics & Conduct v. Cook, 409 N.W.2d 469, 470 (Iowa 1987). Rather,
willfulness may be proved by establishing the attorney committed a mere
knowing failure to comply with federal or state statutes creating a legal
duty. Cook, 409 N.W.2d at 470; State v. Osborn, 368 N.W.2d 68, 69–70
(Iowa 1985).
The joint stipulation filed by the parties acknowledges Taylor knew
she had a legal duty to file federal and state income tax returns each
year she failed to do so and knew the deadlines by which she was
required to file her tax returns in order to satisfy her legal obligations. It
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further states that Taylor’s conduct in failing to file her tax returns
despite knowing she had a legal duty to do so was voluntary and
intentional, not accidental or inadvertent.
Given this binding factual stipulation, we agree with the grievance
commission that Taylor’s conduct violated rule 32:8.4(c). Taylor
intentionally failed to file her income tax returns when she knew she had
a legal duty to do so. This constitutes making a misrepresentation for
purposes of determining whether she violated rule 32:8.4(c).
V. Sanction.
“The primary goal of attorney discipline is to protect the public, not
to punish the attorney.” Barnhill, 847 N.W.2d at 487. When considering
the appropriate sanction in an attorney disciplinary case, we consider
not only the nature of the unprofessional conduct the attorney engaged
in but also his or her fitness to continue to practice law and the degree to
which the sanction will protect the public, help to uphold public
confidence in the judicial system, serve to deter other members of the bar
from similar conduct, and help to maintain the reputation of the bar as a
whole. Iowa Supreme Ct. Att’y Disciplinary Bd. v. McCarthy, 814 N.W.2d
596, 610 (Iowa 2012). Though there are no standard sanctions for
particular types of misconduct, prior cases may be instructive in crafting
an appropriate sanction. Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Dolezal, 841 N.W.2d 114, 127 (Iowa 2013). Nonetheless, in determining
the appropriate discipline in a particular case, we also endeavor to tailor
the sanction to the facts and circumstances before us. Id.
In prior disciplinary cases involving attorneys who failed to file tax
returns, we have imposed sanctions ranging from a public reprimand to
suspensions ranging from sixty days to three years. Lustgraaf, 792
N.W.2d at 301–02 & n.4. In Lustgraaf, after determining the attorney’s
15
failure to file resulted from negligence rather than willful conduct, we
publicly sanctioned the attorney after considering mitigating
circumstances. Id. In contrast, in cases in which we determined an
attorney’s failure to file was willful, we have imposed suspensions of
varying lengths. Id.
In many of the cases involving particularly lengthy suspensions,
the attorney also engaged in other conduct constituting an independent
violation of our ethical rules. For example, in a case in which we
concluded an attorney willfully failed to file his tax returns for several
years, neglected client matters, made misrepresentations to clients, and
failed to keep clients reasonably informed, we suspended the attorney’s
license for eighteen months, noting his past discipline for similar
violations constituted an aggravating circumstance. Fields, 790 N.W.2d
at 796–98. In another case in which we determined an attorney willfully
failed to file his tax returns for three years, comingled business and
personal funds with trust account funds, failed to deposit unearned fees
and prepaid expenses into a trust account, failed to maintain proper
financial records and provide prompt accountings of trust account
withdrawals, falsely certified on his client security questionnaire that he
had properly handled client funds and trust accounts, knowingly failed
to respond to a demand for information from the board, and failed to file
employee-payroll-withholding-tax declarations, we suspended the
attorney’s license for one year. Cross, 861 N.W.2d at 218–30.
In the past, most disciplinary cases involving an attorney’s failure
to file tax returns also involved the attorney making false certifications
on his or her annual client security questionnaire in response to a
question specifically addressing the filing of tax returns, conduct that
amounted to a clear independent violation of our ethical rules. See
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Comm. on Prof’l Ethics & Conduct v. Belay, 420 N.W.2d 783, 784–85
(Iowa 1988) (per curiam). In part because the client security
questionnaires that attorneys in Iowa must annually file no longer
address the filing of tax returns, the sanctions we have imposed in
attorney disciplinary cases involving failure to file tax returns appear to
have gradually become less severe. This makes sense. An attorney who
has intentionally made a false certification on a client security
questionnaire to conceal his or her failure to file tax returns has a more
culpable state of mind than an attorney who has not. This fact is a
relevant consideration in crafting an appropriate sanction for the
particular case. See Lustgraaf, 792 N.W.2d at 299. 3
As we have acknowledged in the past, when an attorney failed to
file tax returns but did not commit a separate violation of our ethical
rules by making a false certification on a client security questionnaire,
“the sanction imposed should logically be less severe.” Iowa Supreme Ct.
Att’y Disciplinary Bd. v. Iversen, 723 N.W.2d 806, 811 (Iowa 2006)
(quoting Belay, 420 N.W.2d at 785). Similarly, the sanction we impose
when an attorney failed to file tax returns but did not commit any
independent violations of our ethical rules should logically be less severe
than the sanctions we have imposed in similar cases involving other
conduct amounting to an independent violation of our rules.
In the past we have suspended the licenses of attorneys for
considerable periods for persistently failing to file his or her tax returns.
See, e.g., Iversen, 723 N.W.2d at 810, 812 (suspending an attorney’s
license for one year for failing to file tax returns for ten years). However,
3For this reason, we focus our analysis concerning the sanctions we previously
imposed in cases involving similar conduct on cases not involving a false certification
concerning the filing of tax returns on the client security questionnaire.
17
since 2011, we have taken a different approach when it comes to
sanctioning attorneys whose violations include failing to file a tax return.
For this reason, we find three recent cases particularly instructive
in considering the appropriate sanction in this case. In the first, an
attorney failed to file his income tax returns for two years and engaged in
conduct prejudicial to the administration of justice by neglecting an
appeal that we consequently dismissed. Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Knopf, 793 N.W.2d 525, 529–32 (Iowa 2011). We
imposed a sanction of three months in light of various mitigating
circumstances, including the fact that the attorney had never been the
subject of a complaint to the Board. Id. at 532. In the second, an
attorney failed to file income tax returns for three years, altered a written
arraignment and plea-of-not-guilty form intending to effect an
unauthorized waiver of his client’s right to a speedy trial, and made false
representations when signing the form. Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Schall, 814 N.W.2d 210, 213 (Iowa 2012). We
suspended the attorney’s license to practice law for a minimum of six
months. Id. at 215. In the third case, we suspended the license of an
attorney for a minimum of one year for failing to file and pay his payroll,
state, and federal taxes for three years in addition to mismanaging his
trust account and making false statements on his client security
commission form. Cross, 861 N.W.2d at 230.
We now consider the aggravating and mitigating circumstances
relevant to our determination of the appropriate sanction for Taylor. On
the one hand, the grievance commission noted two aggravating
circumstances present in this case. First, Taylor has a prior disciplinary
18
record. 4 However, as the commission noted, the fact that the conduct for
which Taylor was disciplined in the past is unrelated to the conduct for
which she is now being sanctioned somewhat undercuts the significance
of her past disciplinary record. Second, Taylor failed to file her federal
and state income tax returns for eleven years. Our caselaw indicates an
attorney’s failure to file tax returns for an extended period of time
constitutes an aggravating factor counseling in favor of more severe
sanction. Fields, 790 N.W.2d at 799. In a prior case in which we
determined an attorney had violated the Iowa Code of Professional
Responsibility for Lawyers by failing to file his federal and state income
tax returns for nearly ten years, we suspended his license to practice law
for at least one year. Iversen, 723 N.W.2d at 810, 812. In doing so, we
noted an “almost routine failure to file tax returns” constitutes a “pattern
of conduct justifying an increased sanction.” Id. at 810 (first quoting
Cook, 409 N.W.2d at 469). Finally, Taylor had a substantial income over
this time period that would have allowed her to pay her taxes.
On the other hand, we agree with the grievance commission that
numerous mitigating circumstances counsel in favor of a less severe
sanction in this case. First, Taylor acknowledged her misconduct and
did not offer excuses or assign blame to others. When Taylor admitted to
the commission that she did not file her tax returns because she did not
have the money to pay the tax she owed, she fully acknowledged her
financial difficulties and marital problems did not excuse her
unacceptable conduct. And when Taylor acknowledged how her
4Because the temporary suspension of Taylor’s license to practice law in 2010
appears to have resulted from an administrative error, we do not consider it to be an
aggravating circumstance counseling in favor of a more severe sanction. See Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Taylor, 814 N.W.2d 259, 269 (Iowa 2012).
19
misconduct came to light, she did not attempt to assign blame to her
former husband or his girlfriend. The fact that an attorney ultimately
took responsibility for his or her actions and admitted to violating his or
her ethical obligations constitutes a mitigating circumstance counseling
in favor of a less severe sanction. Cross, 861 N.W.2d at 230. Similarly,
the fact that an attorney has acknowledged the nature of his or her
misconduct and has not offered excuses or attempted to assign blame to
others constitutes a mitigating circumstance. Iversen, 723 N.W.2d at
811.
Second, Taylor expressed remorse and embarrassment for her
conduct and demonstrated that she has taken significant steps to pay
her outstanding tax obligations. Upon learning of the complaint against
her, Taylor immediately prepared and filed her outstanding tax returns
and entered into negotiations to establish payment plans that would
allow her to pay the taxes she owes. Taylor also provided documentation
demonstrating she has regularly made monthly payments of back taxes
and quarterly payments of estimated future taxes since her misconduct
came to light. Demonstrating the acceptance of responsibility and
remorse by taking steps to remedy past misconduct constitutes a
mitigating factor in determining the appropriate sanction in an attorney
disciplinary proceeding. Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Cannon, 821 N.W.2d 873, 882 (Iowa 2012).
Importantly, Taylor provides substantial pro bono legal work to
individuals who otherwise could not afford her services and has done so
throughout her entire legal career. Taylor also routinely permits low-
income clients to pay only what they can afford for her services when
they can afford it without charging them interest. An attorney
performing community service, doing volunteer work, or providing
20
pro bono legal services constitutes a mitigating circumstance weighing in
favor of a lesser sanction in an attorney disciplinary proceeding. Iowa
Supreme Ct. Att’y Disciplinary Bd. v. Stoller, 879 N.W.2d 199, 221 (Iowa
2016). Likewise, an attorney regularly providing legal services to an
underserved segment of the community constitutes a significant
mitigating circumstance. Iowa Supreme Ct. Att’y Disciplinary Bd. v. Said,
869 N.W.2d 185, 194 (Iowa 2015).
Finally, we agree with the grievance commission that several
additional mitigating circumstances are present in this case. Taylor was
cooperative throughout the disciplinary process and testified candidly
before the commission. See Schall, 814 N.W.2d at 215. She is a well-
respected attorney who is sincerely devoted to the profession. See
Iversen, 723 N.W.2d at 811. And nothing in the record suggests the
conduct at issue in this case harmed any of her clients. See Cross, 861
N.W.2d at 230.
Given these significant mitigating circumstances, the grievance
commission recommended we suspend Taylor’s license to practice law for
no more than thirty days. The commission indicated that if not for the
fact that Taylor failed to file her tax returns over an extended period, it
would have recommended a public reprimand rather than a suspension.
In contrast, the Board argues a lengthier suspension of eighteen months
is appropriate based primarily on the extended period over which Taylor
failed to file her tax returns.
We agree with the grievance commission and the Board that a
suspension is appropriate in this case because Taylor acted willfully in
failing to file her income tax returns. Lustgraaf, 792 N.W.2d at 301–02.
Because the appropriate sanction in a particular case depends on both
the quality and the quantity of the violations at issue in light of the
21
relevant aggravating and mitigating circumstances, we also acknowledge
the numerous mitigating circumstances before us and the fact that
Taylor engaged in no additional conduct constituting an independent
violation of our ethical rules. Based on these factors, we disagree with
the Board that an eighteen-month suspension of Taylor’s license to
practice law constitutes an appropriate sanction for her conduct.
In determining the appropriate sanction in this case, however, we
also find significant the fact that Taylor persisted in failing to file her tax
returns despite the court ordering her to do so in the dissolution decree.
The act of repeatedly violating a court order demonstrates disrespect for
the law even when it does not constitute an independent violation of the
Iowa Rules of Professional Conduct. See Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Axt, 791 N.W.2d 98, 101 (Iowa 2010); see also Iowa R.
of Prof’l Conduct 32:8.4(d). We therefore conclude the fact that the
misconduct Taylor engaged in involved her repeated disregard of a valid
court order constitutes a significant aggravating circumstance not
considered by the grievance commission.
We conclude the one-month suspension the grievance commission
recommended is an inadequate sanction based on the following
significant aggravating circumstances present in this case. The period
during which Taylor persisted in failing to file her tax returns far exceeds
the period during which the attorney in Schall failed to do so. See Schall,
814 N.W.2d at 214 (suspending attorney’s license for a minimum of six
months). Moreover, though only the attorney in Schall engaged in
additional conduct that clearly constituted an independent violation of
our ethical rules, see id., Taylor repeatedly violated a court order when
she persisted in her failure to file her tax returns after the court issued
the dissolution decree. We also find Taylor’s conduct is not as egregious
22
as the conduct in Cross. Cross involved trust account violations and
misrepresentations on his client security commission form. 861 N.W.2d
at 218–30. In Cross, we suspended Cross’s license for only one year. Id.
at 230.
Were it not for the numerous mitigating circumstances counseling
in favor of a lighter sanction in this case, we would conclude a
suspension longer than that we imposed in Schall to be appropriate. In
light of those mitigating circumstances, however, we conclude a sanction
in line with the one we imposed in Schall to be appropriate. We therefore
conclude suspending Taylor’s license to practice law for at least six
months is the appropriate sanction for her misconduct.
VI. Disposition.
We suspend Taylor’s license to practice law in Iowa indefinitely
with no possibility of reinstatement for six months. This suspension
applies to all facets of the practice of law. See Iowa Ct. R. 34.23(3).
Taylor must also comply with the requirements of Iowa Court Rule 34.24
with respect to the notification of clients and opposing counsel. To
establish her eligibility for reinstatement, Taylor must file an application
for reinstatement meeting all applicable requirements of Iowa Court Rule
34.25. To establish her eligibility for reinstatement, Taylor must also
demonstrate she has made every payment to federal and state tax
authorities required of her under the terms of any payment plans in
effect as of the date she submits her application. We tax the costs of this
action to Taylor pursuant to Iowa Court Rule 36.24(1).
LICENSE SUSPENDED.
All justices concur except Cady, C.J., who concurs specially, and
Waterman and Zager, JJ., who dissent.
23
#16–0130, Iowa Supreme Ct. Att’y Disciplinary Bd. v. Taylor
CADY, Chief Justice (concurring specially).
I concur in the majority opinion. While our prior disciplinary cases
could support a longer period of suspension, the purposes of imposing
sanctions in attorney disciplinary cases can be accomplished with the
suspension period imposed in this case. Before reinstatement is possible
for Taylor, she will be required to maintain her responsibility to pay all
back taxes and to establish that she is fit to return to the practice of law.
24
#16–0130, Iowa Supreme Ct. Att’y Disciplinary Bd. v. Taylor
WATERMAN, Justice (dissenting).
I respectfully dissent because the majority’s six-month suspension
is too lenient in light of our precedent. Attorney Taylor willfully failed to
pay any self-employment taxes or income taxes or file her state and
federal tax returns for eleven years. The majority acknowledges without
elaboration that “Taylor had a substantial income over this time period
that would have allowed her to pay her taxes.” Her actual income, of
course, is relevant to the sanction. This is not a case where the lawyer
failed to realize her income was high enough to require a tax return, or
where the lawyer was incapacitated or financially unable to pay. In fact,
Taylor’s net business income averaged $138,000 annually. She
knowingly failed to pay tens of thousands of dollars owed to our state
and federal governments every one of those years. She candidly admitted
in 2015 that she “managed to increase [her] disposable income by thirty
or forty percent each year by not paying income tax.” Specifically, her
tax accountant belatedly determined that during the years 2003 through
2013, she owed state taxes totaling $83,048 and federal taxes totaling
$385,025, for a combined total of $468,073 exclusive of interest and
penalties.
It is undisputed that Taylor knew throughout that eleven-year
period that she was legally required to file tax returns and pay income
and self-employment taxes annually, but she failed to do so. She had
the ability to pay but chose not to pay anything. She blamed her spouse
for their financial troubles late in their marriage, yet her failure to file tax
returns or pay income taxes continued another three years after the Iowa
district court in the dissolution-of-marriage decree ordered her to file her
own separate tax returns.
25
“We have repeatedly held that ‘[i]t is as wrong for a lawyer to cheat
the government as it is for him to cheat a client.’ ” Iowa Supreme Ct.
Att’y Disciplinary Bd. v. Fields, 790 N.W.2d 791, 799 (Iowa 2010) (quoting
Iowa Supreme Ct. Att’y Disciplinary Bd. v. Iversen, 723 N.W.2d 806, 810
(Iowa 2006)). That admonition is oddly missing from today’s majority
opinion. We would not hesitate to revoke the license of a lawyer who
stole from a client. Taylor, in effect, stole from all Iowans for many years.
And she did not self-report or come clean voluntarily; her disciplinary
charges and negotiations with the tax authorities were triggered by a
complaint from her ex-husband’s new girlfriend. 5 Taylor’s “misconduct
cannot be mitigated by a finding of voluntary disclosure.” Fields, 790
N.W.2d at 799.
The Board requests an eighteen-month suspension. Our precedent
supports a suspension of at least a year. We suspended Fields for
eighteen months based on his failure to file tax returns for ten years and
other violations. Id. at 799–801. We suspended Iversen for one year,
noting that his failure to file state or federal tax returns for nearly a
decade showed a “pattern of conduct justifying an increased sanction.”
Iversen, 723 N.W.2d at 810–11. Iversen was not charged with any other
ethics violations, had no prior disciplinary record, fully cooperated with
the attorney disciplinary board, and made no “attempt to shift the blame
for his actions elsewhere.” Id. at 811. Last year, in Iowa Supreme Court
Attorney Disciplinary Board v. Cross, we imposed a one-year suspension
for trust account violations and failing to file tax returns or employment
tax declarations for three years. 861 N.W.2d 211, 229 (Iowa 2015)
5The motives of the complaining party are irrelevant. Iowa Supreme Ct. Att’y
Disciplinary Bd. v. Santiago, 869 N.W.2d 172, 182–83 (Iowa 2015).
26
(noting these tax “violations reflect adversely on Cross’s fitness to
practice law”).
The majority overstates the significance of the 2003 revision to the
annual client security questionnaire that deleted the requirement for
lawyers to certify they filed tax returns. The purpose of that change was
not to make it easier for tax cheats to evade detection. It is true a false
certification is an independent ethics violation. Thus we have imposed
eighteen-month suspensions in cases involving both a false certification
and the failure to file tax returns for four or more years. See Iowa
Supreme Ct. Bd. of Prof’l Ethics & Conduct v. Doughty, 588 N.W.2d 119,
120 (Iowa 1999); Comm. on Prof'l Ethics & Conduct of Iowa State Bar
Ass’n v. Holmes, 271 N.W.2d 702, 704 (Iowa 1978) (imposing eighteen-
month suspension for false certification and failure to file state tax
returns for five years and stating “the period of suspension otherwise
appropriate is increased in this case because of respondent’s false
questionnaire responses, which in themselves would warrant disciplinary
proceedings . . . , and which we regard as an aggravating factor to be
considered”). Iversen made no false certification and truthfully reported
his failure to file tax returns, yet we still imposed a one-year suspension.
723 N.W.2d at 811. Unlike Iversen who had a previously unblemished
disciplinary record, Taylor has two prior public reprimands. And unlike
Iversen who self-reported, Taylor was turned in by a third party. Most
importantly, Taylor, for three years, ignored a court order to file her tax
returns and pay her back taxes, while Iversen violated no court order.
Why is Taylor’s suspension six months shorter than Iversen’s?
The majority primarily relies on three cases to support its six-
month suspension for Taylor: Iowa Supreme Court Attorney Disciplinary
Board v. Knopf, 793 N.W.2d 525 (Iowa 2011), Iowa Supreme Court
27
Attorney Disciplinary Board v. Schall, 814 N.W.2d 210 (Iowa 2012), and
Cross, 861 N.W.2d at 211. Knopf and Schall are readily distinguishable,
and Cross supports a one-year suspension. In Knopf, we imposed a
three-month suspension when the lawyer neglected one appeal and failed
to file his tax returns for only two years. 793 N.W.2d at 531–32. We
noted in mitigation “health problems surrounding Knopf and his family
. . . affected his ability to cope.” Id. at 531 (noting also he cooperated
with the Board, had no prior ethics complaints, and was winding down
his law practice). Similarly, in Schall, we imposed a six-month
suspension for a lawyer who failed to file his tax returns for three years,
along with several other violations, while noting in mitigation that he
“was coping with his own serious health problems and acting as primary
caretaker for his wife during her lengthy terminal illness.” 814 N.W.2d at
215. Taylor claims no such health problems in mitigation. I see a
significant difference between two- or three-year failures to file tax
returns due to health problems and Taylor’s eleven-year failure without
that excuse.
I disagree with the majority’s assertion that “Taylor’s conduct is
not as egregious as the conduct in Cross.” Cross violated several of our
rules governing trust accounts and misrepresented his compliance with
trust account requirements on his client security commission
questionnaire. We equated these violations to three cases imposing only
two- to three-month suspensions for trust account violations. Cross, 861
N.W.2d at 226–28. 6 We nevertheless suspended Cross for one year
6Incalibrating the sanction, we distinguished trust account cases imposing one-
month suspensions and cited four decisions as “closer parallels” to Cross’s misconduct.
Id. at 227 (citing Iowa Supreme Ct. Att’y Disciplinary Bd. v. Ricklefs, 844 N.W.2d 689,
702 (Iowa 2014) (three-month suspension); Iowa Supreme Ct. Att’y Disciplinary Bd. v.
Powell, 830 N.W.2d 355, 360 (Iowa 2013) (three-month suspension); Iowa Supreme Ct.
28
based on his additional tax law violations, which were clearly less
egregious than Taylor’s. See id. at 228–30. Cross failed to pay taxes or
file returns for three years. Id. at 229. Taylor failed to pay taxes or file
tax returns for eleven years. Cross’s combined “tax debt exceeded
$100,000.” Id. at 215. Taylor’s exceeded $468,000. Cross made no
misrepresentations regarding his taxes on his client security
questionnaire. Id. at 223 & n.4. And most significantly, the majority
correctly finds Taylor’s tax noncompliance was willful and dishonest in
violation of Iowa Rule of Professional Conduct 32:8.4(c). In sharp
contrast, we found no violation of that rule in Cross. Id. at 223 (“[T]he
Board has not alleged or presented any evidence that Cross’s improper
tax practices were willful, done with an intent to defraud, or otherwise
deceitful.”). Taylor presents a decade-long pattern of tax violations not
present in Knopf, Schall, or Cross, and unlike those lawyers, Taylor, for
three years, violated a court order directing her to file her tax returns
and pay her back taxes.
I disagree with the majority’s assertion that “since 2011, we have
taken a different approach when it comes to sanctioning attorneys whose
violations include failing to file a tax return.” 7 To the contrary, we
recently noted that our court previously “increased the sanctions for
___________________________
Att’y Disciplinary Bd. v. Parrish, 801 N.W.2d 580, 590 (Iowa 2011) (sixty-day
suspension)). We also cited a case imposing a six-month suspension for trust account
violations, but that attorney had a prior audit and three prior suspensions. Id. at 226–
27, 228 (citing Iowa Supreme Ct. Att’y Disciplinary Bd. v. Morris, 847 N.W.2d 428, 436–
37 (Iowa 2014)).
7We reiterated that “[i]t is as wrong for a lawyer to cheat the government as it is
to cheat a client.” Knopf, 793 N.W.2d at 531 (quoting Iversen, 723 N.W.2d at 810).
And, we observed that we have “imposed a sanction of license suspension from sixty
days to three years for an attorney’s failure to file income tax returns.” Id. We again
cited Iversen with approval when imposing the one-year suspension in Cross, 861
N.W.2d at 228–29.
29
failure to file income tax returns in order to protect the reputation of the
bar.” Iowa Supreme Ct. Att’y Disciplinary Bd. v. Deremiah, 875 N.W.2d
728, 739 (Iowa 2016) (citing Comm. on Prof’l Ethics & Conduct v. Jones,
368 N.W.2d 157, 157 (Iowa 1985) (“[W]e are determined to continue to
impose sanctions, and if necessary to end tax violations by members of
the profession, to increase the periods of suspension.”)); see also Comm.
on Prof’l Ethics & Conduct v. Belay, 420 N.W.2d 783, 784 (Iowa 1988)
(“We are committed to imposing increasingly severe suspensions if
necessary to end tax violations by members of our profession.”). A
pattern of misconduct as shown by Taylor warrants more severe
sanctions. See Deremiah, 875 N.W.2d at 736 (“Our cases have often
emphasized the pattern of misconduct.”). By escalating sanctions, we
“deter other lawyers from committing similar violations.” Id. at 739
(escalating sanctions for domestic abuse). Those remain good reasons
for suspending Taylor for at least one year.
Taylor presents no other mitigating circumstances that justify
cutting in half the suspension otherwise appropriate for her egregious,
prolonged tax law violations. She made business decisions to lower her
retainer or hourly fee for some clients and allow payment plans. In my
view, that does not equate to the pro bono legal representation or
volunteer community service we typically consider as mitigating ethical
violations. See Iowa Supreme Ct. Att’y Disciplinary Bd. v. Boles, 808
N.W.2d 431, 442 (Iowa 2012). There, we noted that
Boles has performed extensive court-appointed and pro bono
work. He also has compiled an admirable record of public
service volunteering to coach more than twenty youth sports
teams while serving on nonprofit community boards,
mentoring underprivileged children with Waukee schools,
and raising his own family.
30
Id. at 434. Similarly, we reduced Schall’s suspension for failure to file
tax returns in light of “his eight years of service as a school board
member, and his participation in many other significant local and state
civic activities.” Schall, 814 N.W.2d at 215. Taylor cannot claim
equivalent public service in mitigation.
Attorneys are officers of the court sworn to uphold the law. To
restate the obvious:
Obedience to the law symbolizes respect for law. To the
extent those licensed to operate the law’s machinery
knowingly and repeatedly violate essential statutes, there
inexorably follows an intensified loss of lay persons’ respect
for law. This we can neither condone nor tolerate.
Iversen, 723 N.W.2d at 811 (quoting Comm. on Prof'l Ethics & Conduct v.
Bromwell, 221 N.W.2d 777, 778–79 (Iowa 1974)). Maryland’s highest
court recently observed, “[P]reserving the public’s confidence in the legal
profession is particularly pertinent in cases involving the willful failure to
file tax returns.” Att’y Grievance Comm’n of Md. v. Katz, 116 A.3d 999,
1010 (Md. 2015) (disbarring attorney who underpaid taxes and failed to
timely file returns for fifteen years). As that court elaborated,
An attorney’s willful failure to file income tax returns may
seriously impair public confidence in the entire profession.
The need, therefore, to maintain public respect for the bar is
a vital consideration in the imposition of disciplinary
sanctions. The lawyer, after all, is intimately associated with
administration of the law and should rightfully be expected
to set an example in observing the law. By willfully failing to
file his tax returns, a lawyer appears to the public to be
placing himself above that law.
Id. (quoting Att’y Grievance Comm’n of Md. v. Walman, 374 A.2d 354, 361
(Md. 1977)); see also Fla. Bar v. Erlenbach, 138 So. 3d 369, 374 (Fla.
2014) (noting lawyers who fail to file tax returns “fail[] to abide by the
laws that citizens are required to address each year”). “[T]he
responsibility for properly filing one’s tax returns is a responsibility that
31
should never be taken lightly by any citizen, especially one who is
licensed as an officer of the court.” Disciplinary Counsel v. Large, 907
N.E.2d 1162, 1165 (Ohio 2009) (per curiam) (quoting Toledo Bar Ass’n v.
Stichter, 478 N.E.2d 1322 (Ohio 1985) (per curiam)). What we said in
Bromwell remains true: There is “no significant moral distinction
between willfully cheating a client and willfully cheating the government.”
221 N.W.2d at 780; see also Katz, 116 A.3d at 1013 (holding cheating
the government “is equally as reprehensible as cheating a client”).
For these reasons, I would impose a one-year suspension.
Zager, J., joins this dissent.