Question

r the IRS is to look under Treasury Department Circular No. 230, "Regulations Governing Practice before the Internal Revenue Service". How does this area apply to being a CPA and completing tax returns for clients? How does this apply to our question this week?

Answer 1

Circular 230, Regulations Governing Practice Before the Internal Revenue Service, contains rules governing the recognition of attorneys, certified public accountants, enrolled agents, enrolled retirement plan agents, registered tax return preparers, and other persons representing taxpayers before the Internal Revenue Service. The circular also lists out ethical conduct required from all who appears before IRS and also provides for penalties for violation. The circular essentially trying to protect IRS department and general public from unlawful conduct of various professionals who helps in preparing tax return or carrying out representative services.

Only suitable qualified person does the job hence this circular laid down detail criteria of eligibility and detailed process for scrutinizing the application and appointing the qualified person.

The circular also laid down important duties / action of tax return preparor broadly as under  :

- provide all information and record to IRS on lawful request

- do not interfere or attempt to interfere any records for which lawful request made by IRS

- Bring into notice any omission observed by him during his scrutiny and also explain consequences for the same

- Prompt disposition of the matter requested by IRS

- Try to prepare the return and records with maximum accuracy

- A practitioner may not charge an unconscionable fee in connection with any matter before the Internal Revenue Service

- Contingency fees cant be charged except under given circumstances

- Tax professional engaged under this circular should return all records they obtained from client after their work completed

- Tax professional must first provide copy of tax return or written submission to client for their approval

- All tax return must be signed by tax professional when authorized by their client

- Unrealistic tax position should not be advise or adopted

- Should not represent the client when they have conflicting interests

The CPA should understand all the required precaution and restriction while performing his duties.