Practice before the IRS
- Preparing, filing, or submitting documents, or advising on the preparation, filing, or submission of documents, including tax returns, with the IRS on behalf of a taxpayer
- Corresponding and communicating with the IRS on behalf of a taxpayer regarding the taxpayer’s rights, privileges, or liabilities under laws and regulations administered by the IRS
- Representing a taxpayer at conferences, hearings, or meetings with the IRS
- Providing a client with tax advice on one or more Federal tax matters
Preparing less than substantially all of the tax return, appearing as a witness for a taxpayer before the IRS, or furnishing information at the request of the IRS is not practice before the IRS.
Unlimited practice rights
Enrolled Agents, Attorneys, CPAs have unlimited practice rights before all offices of the IRS. They may represent their clients on any matters including audits, payment/collection issues, and appeals.
Limited representation with AFSP
- A preparer with an AFSP Record of Completion for the specified tax year may represent a taxpayer for a return they prepared and signed, but only before revenue agents, customer service representatives, and similar IRS employees.
- Cannot handle appeals or collections even if they did prepare the return.
- A PTIN holder with no professional credentials or AFSP Record of Completion is only authorized to prepare tax returns. They have no authority to represent clients before the IRS.
Enrolled agent continuing education requirements
Must complete 72 hours of continuing education for entire three-year enrollment cycle
- ## Cannot take less than 16 hours for each respective year.Must have at least 2 hours of ethics or professional conduct education each year.
- Prorated in the first year of enrollment at a rate of 2-hours for each month or part of a month enrolled.
- Keep records of completed CPE for 4 years following the date of renewal of enrollment.
Renewal of enrollment
- Must renew enrollment every 3 years.
- The first renewal may be sooner as the year of renewal depends on the last digit of the tax ID used to enroll, regardless of whether the practitioner was enrolled for all 3 years.
- The IRS processes applications for renewal between November 1 and January 31.
- Renewed enrollments are effective as of April 1 following the period of application.
Confidentiality privilege
- A tax preparer must promptly submit records upon IRS request unless the information is privileged.
- Confidentiality privilege applies only to tax advice given by a federally authorized tax practitioner in noncriminal tax matters before the IRS or in federal court against the US.
- May not invoke confidentiality privilege in any administrative proceeding with an agency other than the IRS.
- Privilege does not apply to information disclosed to a practitioner for the purpose of preparing a return.
Contingent fee
A practitioner may not charge a contingent fee, except for services related to:
- IRS examination or challenge of a return.
- Claim for credit or refund connected to IRS penalties or a determination of statutory interest.
- Judicial proceeding.
Duty to advise of client omissions
- May rely in good faith on information furnished by a client but may not ignore the implications of information furnished and must make reasonable inquiries if it appears to be incorrect or inconsistent.
- Must promptly advise the client of known errors or omissions and consequence if not corrected. If client refuses to correct, the practitioner cannot sign the return.
- A practitioner may not advise a client to take a frivolous position on a return.
Due diligence
- Must exercise due diligence in preparing, approving, and filing tax returns and all other documents.
- Can rely on others but must use reasonable care in engaging, supervising, training, and evaluating the person.
Conflict of interest
Must not represent a client if there is a conflict of interest unless able to provide competent representation and each client agrees in writing.
Cashing refund checks
- Must not cash refund checks or deposit into an account owned or controlled by the practitioner or any entity with whom the practitioner is associated.
- If authorized by the taxpayer, the preparer may affix the taxpayer’s name to a check to deposit the check into the taxpayer’s account.
Requirements for written advice
- Must base written advice on reasonable facts.
- Must use reasonable efforts to identify and consider all relevant facts and relate applicable law and authorities to these facts.
- Must not rely on projections, financial forecasts, or appraisals, including representations of taxpayer or others if reliance would be unreasonable.
- Must not consider the possibility that a tax return will not be audited or that a matter will not be raised on audit.
Tax preparer recordkeeping requirements
- Records of completed CPE – 4 years following the date of renewal of enrollment.
- Written consents due to conflicts of interest – 3 years from the date of the conclusion of the representation of the affected clients.
- E-file advertising – End of calendar year following last transmission or use.
- Other advertising – 3 years from date of last publication or transmission.
- Copy tax return (or a list) – Keep for 3 years after the close of the return period.
Keep copy of tax returns (or a list)
- Keep for 3 years after the close of the return period.
- The list must include the name, taxpayer identification number, type of return, and tax year for each return prepared along with the name of the signing preparer.
- A “return period” is the 12-month period beginning on July 1 of each year and ending on June 30.
Competence
Must possess the necessary competence to engage in practice before the IRS. Competent practice requires the appropriate level of knowledge, skill, thoroughness, and preparation necessary for the matter for which the practitioner is engaged.
Notary
A practitioner who is a notary public and has an interest in a matter before the IRS may not engage in any notary activities related to that matter.
Practice of Law
Practice before the IRS does not authorize those who are not members of the bar to practice law. Enrollment to practice before the IRS does not authorize a practitioner to represent taxpayers in tax court.
Assistance from (or to) disbarred persons
A practitioner may not accept assistance from (or assist) any person who is under disbarment or suspension from practice before the IRS if the assistance relates to a matter constituting practice before the IRS.
Diligence as to accuracy
- A practitioner must exercise due diligence in preparing, approving, and filing tax returns and all other documents, as well as any oral statements relating to IRS or Treasury Department matters.
- There is a presumption of due diligence if the practitioner relies on the work product of another person and the practitioner used reasonable care in engaging, supervising, training, and evaluating the person.
Circular 230 Discipline (what types of punishment?)
- Censure – public reprimand
- Suspension – fixed term or indefinite; must request reinstatement
- Disbarment – minimum 5 years
- Monetary penalties
Principal authority
- Any individual who has principal authority and responsibility for overseeing a firm’s practice must take reasonable steps to ensure that the firm has adequate procedures in effect for all members, associates, and employees for purposes of complying with Circular 230.
- Subject to discipline if (through willfulness, recklessness, or gross incompetence) he does not take reasonable steps to ensure the procedures are followed.
3 Components of a Complaint
- Charges – Includes name and description of issue; signed by Dir of OPR (or representative)
- Specification of Sanction being sought
- Demand for Answer – Answer due date (not less than 30 days). Notice default decision will be made if no answer is received by due date.
Administrative Law Judge (ALJ)
- The ALJ conducts proceedings on complaints for the sanction of a practitioner, employer, firm or other entity, or appraiser.
- Presides over all hearings for the sanction of a practitioner.
