I believe it especially fitting and proper to commemorate the Golden Anniversary of The Matter of New York County Lawyers Association v. Bernard Bercu and to celebrate our accomplishments over this half century.
On July 19, 1949, the New York State Court of Appeals affirmed the judgment of the Appellate Division wherein Bernard Bercu, a CPA, was "adjudged in contempt and fined $50" and "enjoined from the unauthorized practice of law." What was Bercu's egregious conduct that incurred the wrath of New York State's highest court? Bercu gave good, true, lawful tax advice to the Croft Company that permitted the company to avoid very substantial taxes, whereupon he billed the company $500 at the rate of $50 an hour. So where's the beef and what's to commemorate? Simply put, Bercu was not an attorney and Croft was not otherwise his client; this led to the interpositioning of the New York County Lawyers Association to pursue Bercu for his alleged unauthorized practice of law.
In discussing the case, Presiding Appellate Justice Peck indicated that the decision was not an easy one because of the overlapping of accounting and law. A tax accountant must have knowledge of the law and a tax lawyer must have knowledge of accounting. He went on to say that some line must be drawn, however, and that a majority of the court felt it clear that Bercu's services were "well into the field of the law and outside of the field of accounting. To hold otherwise would be tantamount to saying that an accountant may practice tax law."
Bercu's brief in the case took the position that it is in the public interest to permit accountants to act as advisors in the income tax field. In response, Justice Peck, in essence, said that using accountants to prepare tax returns is fine, but when an issue becomes so involved and difficult that the taxpayer must go "beyond its regular accountant and seek outside tax law advice, the considerations of convenience and economy in favor of letting its accountant handle the matter no longer apply." It is here that the court would draw the line.
I wonder what Justice Peck would say to the December 14, 1998 report that CPA firms were giving advice to corporations wishing to exploit the exotica of modern corporate finance and indulge in extravagant tax-dodging schemes. Where would the line be drawn today?
In commemorating our profession's "great leap forward" over the past half-century, it is hard to envisage how it will match those accomplishments into the next. Nonetheless, with my unmitigated faith and confidence in the leadership of our profession, I have no doubt that the pace will be accelerated in its "race for the bottom," and an even deeper pit will be dug. *
Abraham J. Briloff, PhD, CPA
Emanuel Saxe Distinguished Professor Emeritus, Baruch College
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