## Facts

- Reuben Agran, a certified public accountant admitted to practice before the United States Treasury Department, was hired by Morris Shapiro and others to prepare federal income tax returns for 1947–1950 and to perform related tax work.
- The engagement included preparing refund/adjustment applications and addressing an additional federal tax assessment.
- A major matter involved a forfeited deposit of $43,260.56 connected to a used-car business financing arrangement.
- Agran treated the forfeiture as generating a net operating loss and pursued a carryback adjustment for prior tax years.
- To support the carryback, Agran performed extensive research into federal tax authorities, cited case law, and presented detailed arguments to a Treasury (IRS) agent on the clients’ behalf regarding the proper legal classification of the forfeiture.
- After completing the work, Agran billed $2,000; the clients refused payment, asserting the services amounted to unauthorized practice of law because Agran was not a licensed attorney.
- Agran sued for the fee and obtained a $2,000 judgment in the trial court; the clients appealed.

## Issues

1. Whether a CPA who is not a member of the state bar engages in the unauthorized practice of law by researching and interpreting tax law and presenting legal arguments to government officials on behalf of clients in a contested tax matter.
2. If so, whether the CPA is barred from recovering compensation for those services.
3. Whether federal authorization to practice before the Treasury Department permits conduct that state law treats as the practice of law.

## Decision

- The appellate department reversed the trial court’s judgment for Agran.
- The court held that Agran’s activities, to the extent they involved legal research, interpretation, and advocacy regarding disputed tax law questions, constituted the practice of law.
- Because Agran was not licensed to practice law, he could not recover fees for services that amounted to unauthorized legal practice.
- Federal permission to appear before the Treasury Department did not displace state limits on who may practice law.

## Legal Principles

- Work that goes beyond mechanical tax return preparation and requires interpreting statutes and case law, resolving complex or doubtful legal questions, and advocating legal positions for a client may constitute the practice of law.
- A nonlawyer’s authority to represent taxpayers in a federal administrative setting does not authorize the nonlawyer to perform acts that state law classifies as the practice of law.
- A person who engages in unauthorized practice of law may not recover compensation for the services that are legal in character.

## Conclusion

The court treated the CPA’s tax-loss carryback advocacy—grounded in legal research, case citation, and argument to an IRS decisionmaker—as legal practice reserved to licensed attorneys, and it reversed the fee award because unauthorized legal services are not compensable.


Agran v. Shapiro, 127 Cal. App. 2d Supp. 807, 273 P.2d 619 (App. Dep’t Super. Ct. L.A. Cnty. 1954)