Circular 230 Best Practices

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circular 230 best practices

Circular 230
Best Practices Do The Right Thing For Your Clients And For You

Office of Professional Responsibility
• Enforcement of Circular 230
– Special Enrollment Examination for Enrolled Agents -Same Day Results

IRC §6694 Preparer Penalties Final Regulations - Treas. Reg. §§1.6694-1, et. seq.
• Income, Estate, Gift, Excise, Employment, Exempt Organization Returns – See Rev.
Proc. 2009-11
• One-Preparer-Per-Position-Per Firm
• Signing and Non-Signing Preparers
• You Can Be a “Preparer” Subject to IRC
§6694 Penalties Even if You Don’t Seethe Return

IRC §6694 - Preparer Penalties Final Regulations - Treas. Reg. §§1.6694-1, et. seq.
• Standards of Conduct to Avoid IRC §6694 Penalty
■ Disclosed - Reasonable Basis Standard
■ Undisclosed – Substantial Authority Standard
■ Tax Shelters – More Likely Than Not Standard
• Adequate Disclosure - Don’t Be Cute
■ Form 8275, Form R, or Rev. Proc. 2008-14
• Reasonable Cause and Good Faith Exception

IRC §7216 - Unlawful Disclosures Return preparers who knowingly or recklessly make unauthorized disclosures or use of information furnished in connection with the preparation of an income tax return are subject to criminal sanctions (i.e., imprisonment) under IRC § 7216

IRC §7216 - Unlawful Disclosures

Preparers” – Engaged in preparing or assisting in preparing tax returns, including those who provide auxiliary services such as developing software to prepare or e-file a return Tax Return Information – Everything received to prepare the return plus computations, worksheets, and printouts created by the Preparer See Revenue Procedure 2008-35 and Treas. Reg.
§301.7216-1, et. seq. for further information and proforma taxpayer consent forms

Duty of the Tax Professional
• Attorneys and accountants should be the pillars of our system of taxation, not the architects of its circumvention
– Former IRS Commissioner Mark Everson, March 18, 2003
• The more we can work with you to help you and your clients get it right, the less time we need to spend dealing with problems after the fact
- IRS Commissioner Doug Shulman, May 9,

Circular 230 Overview
• Cir 230 - Rules governing practice before the IRS apply to
– Attorneys
– Certified Public Accountants
Enrolled Agents
– Enrolled Actuaries
– Appraisers
– Enrolled Retirement Plan Agents

Circular 230 Overview
• The Treasury Department's rules and regulations governing practice before the IRS are aimed at protecting the integrity of a tax system that depends upon voluntary compliance
Sicignano v. United States, 127 F. Supp. d 325, 332 (D. Conn. 2001)

a) - Practice Before the IRS
• Presentations regarding all matters before the IRS regarding laws or regulations administered by the IRS
• Return preparation
Representation of taxpayers
• Providing written advice with respect to any entity, transaction, plan or arrangement having a potential for tax avoidance

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