R6-M3 Circular 230

Question 1

what is circular 230?

Answer 1

• regulations governing practice before the IRS (tax practitioners)
• the publication address the following:
  + authority
  + duties and restrictions
  + sanctions for violation
  + rules applicable to disciplinary proceedings

Question 2

who have the authority to practice before the IRS?

Answer 2

• attorneys
• CPA
• enrolled agents, actuaries, retirement plan agents
• registered tax return preparers

Question 3

what are duties and restrictions when knowing client’s noncompliance with the federal tax laws?

Answer 3

Must:
- notify client (oral or written)
- advise client as to penalties/consequences under the law

Do not do:
- do not need to withdraw until client correct the error
- do not notify the IRS

Question 4

what are rules when practice by former government employees (section 10.25)?

Answer 4

• conflict of interest when switching sides
• it is possible if isolate the former government employee so he/she cannot assist in IRS presentation
• if individuals had “official responsibility,” they must wait 2 years or more to assist

Question 5

what are rules regarding fees?

Answer 5

• may not charge an unconscionable fee
• contingent fee is allow only if:
  + IRS examination of, challenge to, an original tax return (amended return, claim for refund or credit if filed within 120 days of receiving written notice from IRS)
  + claim solely for a refund of interest and/or penalties
  + a judicial proceeding

Question 6

what are best practices for tax advisors (section 10.33)?

Answer 6

• provide highest-quality representation by adhering to IRS
• communicate with client terms of the engagement to determine client’s purpose and use for the advice
• establish facts and arriving at a conclusion supported by the law and the facts
• advise client about the important of the conclusions reached (ex: whether the client will be able to avoid penalties)
• act fairly and with integrity before the IRS
• take reasonable steps to ensure that all members of the firm follow procedures

Question 7

what is rules of solicitation section 10.30 (advertising)?

Answer 7

a practitioner may not use or participate in the use of any form of public communication or private solicitation containing a false, fraudulent, or coercive statement or claim, or a misleading or deceptive statement or claim