6.3 - Circular 230 Flashcards
The IRS publication entitled “regulations governing practice before the Internal Revenue Service” that addresses the practice before the IRS regarding authority to practice before the IRS, duties and restrictions, sanctions and violations, and rules applicable to disciplinary proceedings:
Treasury department circular 230
What are the subparts that Circular 230 is divided into?
Subpart A: rules governing authority to practice
Subpart B: duties and restrictions to practice before the IRS
Subpart C: sanctions for violating the regulations
Subpart D: rules applicable to disciplinary proceedings
Subpart E: general provisions
Who do the rules governing practice before the IRS apply to?
Attorneys
CPAs
Enrolled agents, actuaries, and retirement plan agents
Registered tax return preparers
What should a practitioner who knows of a clients noncompliance do?
Notify the client of the noncompliance and advise the client about any consequences of the noncompliance
A practitioner must exercise due diligence in:
Preparing, approving, and filing tax returns and determining the correctness of oral or written representation
No member of a firm which a former government employee works can represent a taxpayer where a conflict of interest may exist unless:
The firm isolates the former government employee in such a way to ensure that the former government employee cannot assist in the representation
If an individual, while a government employee, “personally and substantially participated” in a particular matter involving specific parties:
That individual can NEVER represent or assist those parties with respect to that matter
If an individual, while a government employee, had “official responsibility” for a particular matter involving specific parties:
That individual within 2 years after leaving the government cannot represent those parties with respect to that particular matter
If an individual at any time “participated in the development” of the rule while a government employee:
That individual cannot appear before the IRS to influence any US treasury department employee regarding any rule within one year after leaving the government position
A contingent fee is allowable only if one of the following 3 situations occur:
- IRS examination, or challenge to, an original tax return
- Claim solely for a refund of interest and/or penalties
- A judicial proceeding
Regarding solicitations (advertising) of services, what must a practitioner not do?
Not guarantee to eliminate or reduce taxes
Practitioners publishing a written fee schedule must honor those fees for:
30 days following the last date that the fees were published
Copies of communicating fee information must be retained by the practitioner for:
At least 36 months (3 years)
A practitioner may not do what regarding a clients refund check?
Endorse or negotiate
*can hold onto the check for them if they are out of town, etc.
Best practices for tax advisors include:
- Communicating w the client the terms of the engagement to determine the clients purpose and use for the advice
- Establishing the facts and arriving at a conclusion supported by the laws and facts
- Advising the client about the importance of the conclusions reached
- Acting fairly and with integrity
- Take responsibility to ensure all members, associates, and employees of the firm follow the above listed procedures
The practitioner cannot advise a client to submit any document that:
Will delay or impede the administration of federal tax law
Is frivolous
Contains or omits information demonstrating an intentional disregard of a rule or regulation
The practitioner must inform the client of any penalties that are:
Reasonably likely
A practitioner may rely on information furnished by the client unless:
Information appears incorrect, inconsistent, or incomplete
In evaluating whether a practitioner giving written advice concerning one or more federal tax patters completed with the written advice requirements, what will the commissioner or delegate apply?
A reasonable practitioner standard
Th secretary of the treasury, after notice and opportunity for a proceeding, may publicly reprimand, suspend, or disbar any practitioner from practice before the IRS if the practitioner:
Shows to be incompetent or disreputable
Fails to comply with any regulations in Circular 230
Willfully and knowingly misleads or threatens a client or prospective client with intent to defraud
When may a practitioner who was disbarred or suspended petition for reinstatement before the IRS?
5 years after the disbarment/suspension took place
