R6 Circular 230

Question 1

Circular 230

Answer 1

“Regulations governing practice before the IRS”

1) Authority to practice before IRS
2) Duties and Restrictions
3) Sanctions for Violation
4) Rules applicable to disciplinary proceedings

Question 2

1) Authority to practice before IRS

Answer 2

Attorneys
CPAS
Enrolled agents/actuaries/retiement plan agents
Regisgtered tax return prepares

Question 3

2) Duties and Restrictions - part 1

Answer 3

1) Info to be furnished to IRS
- IRS requested information or records

• Practitioner may withhold info, which he believes in good faith to be privileged
• If the practitioner does not possess the info but knows who does, he must so inform the IRS

2. Knowledge of Client Omission
   - Notify Client (Oral or Written) &
   - Advise client as to penalties

• not required to withdraw client until they correct the error
• not required to notify IRS

3. Diligence as to Accuracy
   - must exercise due diligence
   - preparing, approving, filing the tax return and other documents related to IRS
   - determine the correctness or oral or written representations made by the practitioner to clients or the treasury department
4. No unreasonable delays
5. No assistance form Or to Disbarred or Suspended Persons and former IRS employees
6. Practice by former government
   - No member of a Firm where former government employee works can represent a taxpayer where a conflict of interest may exist UNLESS firm isolated the employee
   - individuals while government employee “personally and substantially participated” in a particular matter, they can NEVER represent or assist those parties
   - IF individual was “official responsibility” then can be involved for two years after leaving the government
   - If participated in development of the rule, one year after leaving the gov can be involved in anything regarding the rule

Question 4

2) Duties and Restrictions - part 2

Answer 4

7. Fees
   - Cant charge Unconscionable fee (even when client offers )

• Contingent fee okay only when
• IRS examination of or challenge to ad original tax return
• refund of interest/and or penalties
• judicial proceedings

8. Return of Client’s Record

Clients record = materials prepared by the clients or third part & provided to the practitioner
and
any return, claim or refund

• Duty of confidentiality - exceptions - peer review
• can retain copies but must return any/all clients record on request of the client
• is state law allows the practitioner to retain the records in the case of a fee dispute, must provide clients with reasonable access to review and copy

9. Solicitation
   - no false or misleading info
   - no guarantee eliminate or reduce taxes
   - if you claim expertise, must provide credentials
10. 1 Written schedule fees
    - must honor those published fees for a 30-days period

• communicating fee info: may be communicated in a number of ways - retain communication
• retain it for period of at least 36 months from the day of the last transmission or use

10. Negitiantion of taxpayers checks
    - no endorsing - hold for safekeeping is okay
11. Competence
    - must possess the necessary competence in practice before IRS ,
    - can be competent through various methods

Question 5

Best Practices ** memorize

Answer 5

• highest-quality representation by adhering to best practices:
• communicate terms of engagements to determine the purpose and use for the advice
• facts and arriving at a conclusion supported by the law and the facts - Do your due diligence
• advising the client about the importance of the conclusions reached (e.g whether the client will be able to avoid penalties)
• act fairly and with integrity in practice before the IRS
• taking reasonable steps to ensure that all members, associates, and employees of the firm follow procedures that are consistent with the above

Question 6

Standards with respect to tax returns and documents, affidavits, and other papers

Answer 6

1. Documents, Affidavits, and other papers
   - practitioners can not advice client to take a position Unless the position is not frivolous
   - cant advise to submit any documents that
   :will delay federal law tax
   :is frivolous OR
   :contains or omits info demonstrating an intentional disregard of rule or regulation unless the have a good faith to challenge to the rule or regulation
2. advising clients on potential penalties
   that are reasonably likely
3. Reliance on information furnished by client
   GR: okay unless info appears to incorrect, inconsistent, incomplete

Question 7

Written Advice

Answer 7

• must be reasonable and supported by facts and law
• including electronic communication
• consider all relevant facts and circumstances ( no cherry picking, supporting info only)
• not rely if relaince on them would be unreasonable
• must not take into account that probability if not being audited
• Relainace on other is okay if advice is reasonable (competent, no conflict) and in good faith

**standard of review = reasonable proctitioner standartd* *

Question 8

Compliance

Answer 8

• Firms need to have internal control in place AND followed

- must disseminate, educate and test