TAX PROFESSIONALS – IRS Provides Online Information on Circular 230
The Internal Revenue Service Office of Professional Responsibility ensures that tax professionals who practice before the IRS are aware of the regulations contained in Circular 230 and follow those rules. Tax professionals who represent taxpayers before the IRS should be aware that there were significant revisions made to Circular 230 on June 12, 2014.
Practice before the IRS includes all matters connected with a presentation to the IRS relating to a taxpayer’s rights, privileges or liabilities under laws or regulations administered by the IRS. Practice includes, but is not limited to, preparing or filing documents, corresponding and communicating with the IRS, rendering written tax advice and representing a client at conferences, hearings and meetings. Tax return preparation is not “practice” as currently defined by case law.
Key Circular 230 Provisions
The most important Circular 230 provisions for tax professionals to review are either new or are areas where professionals are most likely to make errors including:
- Diligence as to Accuracy (10.22)
- Due Diligence Standards for Signing and Advising – Returns/Docs (10.34)
- Negotiation of Taxpayer Checks (10.31)
- Giving False or Misleading Info (10.51(a)(4))
- Willfully Assisting, Counseling or Encouraging a Client to Evade Taxes or Payment Thereof (10.51(a)(7))
- Conflicting Interests (10.29)
- Due Diligence for Written Advice (10.37)
- Competence (10.35)
- Expedited Suspension (10.82)
Circular 230 and the Authority and Responsibility of the Office of Professional Responsibility (OPR)
Under regulation section10.1(a)(1), OPR has exclusive authority for disciplinary proceedings and sanctions. The section was revised as of June 2014, to provide that exclusive authority for disciplinary procedures and sanctions rests with OPR.
OPR makes independent determinations about whether a practitioner has behaved in a way that reflects on their fitness to continue to practice before the IRS. OPR can propose and negotiate discipline or can commence a proceeding before an administrative law judge to impose discipline.
Procedures to Ensure Compliance Under Circular 230 Section 10.36
The person with principal authority and responsibility for overseeing a firm’s practice has to take reasonable steps to ensure that the firm has adequate procedures in place to ensure everyone adheres to the duties and responsibilities under Circular 230.
Administrative Hearings, Appeals and Discipline
OPR receives referrals regarding practitioner misconduct. OPR evaluates for jurisdiction; 230 violations and willful, grossly incompetent or reckless conduct; considers alternative discipline options; issues pre-allegation letters; investigates; issues allegation letters; settles disciplinary matters; and commences proceedings for discipline.
A decision becomes a Final Agency Decision either 30 days after the administrative law judge’s initial decision and order has been issued and no appeal is filed with the appellate authority; or immediately after the appellate authority issues a decision in the case. After a Final Agency Decision, a practitioner may file a complaint against OPR to challenge the decision in Federal District Court.
OPR is committed to rendering fair and independent determinations regarding conduct alleged to be in violation of Circular 230.
Discipline options include:
- Reprimand (private)
- Monetary sanction (individuals and firms)
History of the Statute and Circular 230
Congress enacted 31 U.S.C., Section 330, in 1884. The statute authorizes the Secretary of the Treasury to regulate the practice of representatives of persons before the Treasury Department.
The statute identifies fitness to practice as:
- Good character,
- Good reputation,
- Necessary qualifications to provide valuable service to the client and
- Competency to advise and assist persons in presenting their cases.
The Treasure Department issued guidance under Section 330 in the form of regulations. Treasury reissued the regulations in publication format as Treasury Department Circular 230 in 1921.
OPR Contact Information
Tax professionals who need to write to the Office of Professional Responsibility may address correspondence to:
Internal Revenue Service
Office of Professional Responsibility
SE:OPR, Room 7238/IR
1111 Constitution Avenue NW
Washington, DC 20224