Supreme Court Declines to Suspend Attorney for Failure to File Income Tax Returns; Case Leads to Amendment of Administrative Order Controlling Attorney Licensing

In In re Christena Obregon, Esq., 2016 VT 32 (March 11, 2016), the Vermont Supreme Court declined to impose the sanction of suspension as a result of Appellee’s failure to file timely income tax returns and her execution of attorney licensing renewal statements in 2009 and 2011 while returns remained outstanding. Appellee was successfully represented by Langrock attorneys Andrew J. Kestner and Christopher L. Davis.

Issue: Appellee failed to file timely income tax returns for the years 2006, 2008, 2009 and 2010. While certain returns remained outstanding, Appellee averred that she was in “good standing” with respect to all taxes due to the State of Vermont when she renewed her license to practice law in both 2009 and 2011. Appellee’s counsel and the Office of Disciplinary Counsel originally agreed to a joint recommendation of a public reprimand, which was accepted by the professional responsibility hearing panel. The Supreme Court then ordered review of the panel’s decision on its own motion. The Court requested the parties brief the following: “(1) the effect in this case of filing an attorney license renewal form certifying that a licensee is in good standing with respect to the payment of all state taxes; and (2) whether, in this case, a suspension of licensee, as urged by the Office of Disciplinary Counsel, is appropriate. The parties briefed the issues and oral argument followed.

Appellee argued, inter alia, that the definition of “good standing” contained in Administrative Order 41, which governs attorney licensing, is different from the definition of “good standing” found in 32 V.S.A. § 3113(g) which defines the term for purposes of licensure in other commercial contexts. Specifically, for an attorney to be in “good standing” pursuant to Administrative Order 41, the actual filing of an income tax return is not required. Rather, in order to be in good standing under Section 7(a) of A.O. 41 an attorney must only have “paid all taxes due to the State of Vermont.” The parties had previously stipulated that Appellee owned no tax to the State of Vermont for the years in question.

Holding: The Court held that a public reprimand was a sufficient sanction for Appellee’s failure to file timely income tax returns and that no misrepresentations were made by Appellee on her attorney licensing renewal statement. The Court’s holding was based on a review of the plain meaning of the text of Administrative Order 41, and it expressly declined to “read the requirement to timely file tax returns into the good standing definition,” despite being urged to do so by Disciplinary Counsel. With respect to the failure to file returns, the Court gave deference to the professional responsibility hearing panel in affirming its decision that a public reprimand was an appropriate sanction in light of certain mitigating circumstances.

Amendment of Administrative Order: Subsequent to the Obregon decision on April 26, 2016, the Supreme Court promulgated an amendment to Administrative Order No. 41 which adds the requirement that “an attorney has filed all returns” to the definition of “good standing.” Following this amendment, Administrative Order No. 41 is now consistent with the general statutory definition of “good standing” found at 32 V.S.A. § 3113(g).