The Professional Ethics of U.S. Tax Treaty Interpretation

The use of tax treaties to obtain Double Non-Taxation for multinational firms as part of aggressive tax avoidance planning is not always ethical conduct for U.S. tax professionals. Under the guidance of the OECD, international standards of tax treaty practice are trending toward substantive methods of interpretation more typical of U.S. tax treaty drafting and interpretation. In a growing number of cases, the use of formalist planning techniques applying tax treaties without a substantive review may not constitute ethical attorney conduct. The interpretational methods underlying the use of tax treaties to obtain Double Non-Taxation are explained in detail. Although tax treaty interpretation is an art and not a science, thus rendering wide discretion to the tax planner, there are ethical boundaries in using tax treaties to achieve Double Non-Taxation.