R6 - Circular 230 Flashcards
Circular 230 = Governing Practice
Subparts:
A. Authority to practice b4 the IRS
B. Duties and restrictions to practice b4 the IRS
C. Sanctions for violating regs
D. Rules applicable to Disciplinary Procedings
E. General Provisions
Subpart A - Authority to Practice
- Attorneys, CPA, Enrolled (agent, actuary, retirement plant agent), Registered Return Preparers.
Subpart B - Duties & Restrictions: Most conservative answer may not be required under Circ 230
- Information to be furnished to the IRS.
- Knowledge of client omission.
- Due Dilligence.
- Prompt disposition.
- No assistance from suspended or disbarred persons or former IRS employees.
- Practice by former Govmt EEs, their partners, and their associates.
- Fees.
- Return of client’s records.
- Solicitation & Advertising.
- Negotiation of TP check’s.
- Best Practices.
- Competence.
- Information to be furnished to the IRS.
- If IRS request info or records, practitioner may withheld information if he/she believes he is doing so in good faith and on reasonable grounds to be privileged.
- If you don’t have the info the IRS is requesting, but you know who does, then you must inform the IRS who has it. SAPO law.
- Knowledge of client omission.
- Must notify the client (verbal or written) of such omissions.
- Must advise the client about penalties resulting from such omissions.
- Do not need to withdraw from client until they correct error.
- Do not need to notify IRS.
- Due Diligence.
- DD in preparing, approving, and filing documents to IRS including TRs.
- DD in determining all info submitted to clients and IRS (treasury) is correct.
- Prompt disposition.
- Do not cause unreasonable delays.
- No assistance from suspended or disbarred persons or former IRS employees.
Just don’t!!!!
- Practice by former Govmt EEs, their partners, and their associates.
You can’t switch sides!!! It is a conflict of interest, unless you and your firm isolate you from the case.
Potential conflicts of interest for you and your firm are:
a. If you substantially participated in someone’s case while working for the IRS.
b. If you didn’t participate in someone’s case, but within two years of leaving the IRS, supervised someone else who did participate.
c. If, within a year of leaving IRS, substantially participated in the “development of a rule” or if a year prior to leaving the IRS, you supervised someone who participated in the “development of a rule”.
- Fees
- Never charge an unconscionable fee.
- Contingent fees only allowed in 3 scenarios:
a. IRS Audit
b. Claim solely for a refund of interest/penalties.
c. A judicial proceeding under IRC.
- Return of client’s records
- You owe your client Duty of Confidentiality.
- When a client wants their records back, you must return them PERIOD!!!! Not the practitioner’s work, but docs provided to you.
- You can retain copies, but the originals go back to them.
- If state allows, you can retain client’s records while on a fee dispute, but you have to give clients access to review and copy those records.
- Solicitation & Advertising
- No false or misleading info.
- Don’t guarantee your gonna eliminate or reduce taxes.
- Nothing deceptive, or fraudulent.
- If you claim expertise, you must be able to provide credentials.
- If you advertise a written fee, you must honor it for 30 days.
- Fees can be communicated in a number of ways, keep a record of that communication and retain it for 3 yrs.
- Negotiation of TP check’s
- No endorsing EVER!
- You can hold it for safekeeping.
- Best Practices
- Communicate the terms of the engagement, and purpose and use of the advice. i.e ELs.
- Advise and facts must be supported by law. Do DD!!!
- Advise the client of importance of conclusions reached. i.e. We might win, but if we lose: penalty!!!
- Act fairly and with integrity with IRS.
- Have good internal controls.
- Competence
You gotta be competent. Do research, consult with experts, etc. Do not need to have MBA!
