Amendments & Penalties to Circular 230: What You Need to Know LIVE Webcast

Joseph M. Persinger, Of Counsel, 
Milbank, Tweed, Hadley & McCloy LLP

** Speaker Talking Points to be added soon.. ** 

Annette Nellen, JD, CPA, Professor, Graduate Tax Program,
San José State University

• Categories of practitioners and preparers after the amendments
  • comparison chart
  • what is a Registered Tax Return Preparer and how and why to become one?
  • rights and obligations of RTRPs versus attorneys, CPAs and Enrolled Agents

• Tips for complying with Circular 230 and other rules of conduct and avoiding client and preparer penalties
  • how to create and adopt firm policies to better ensure compliance with rules
  • other key rules and penalties

• Policy Considerations
  • why IRS made changes for tax compliance
  • challenges for the IRS
  • relevance for compliance and administration

Linda Galler, JD, LLM, Professor, 
Maurice A. Deane School of Law at Hofstra University

• PTINS – final rules adopted
  • New office (RPO) separate from OPR
  • Waiver of continuing education requirements for lawyers, CPAs and enrolled agents

• Circular 230 amendments re return preparers
  • Any individual who is paid to prepare all or substantially all of a document regarding a taxpayer’s liabilities for submission to the IRS is engaged in practice and subject to the provisions of Circular 230.
  • The section allows OPR to look at the business practices of companies offering tax debt services.
  • Because return preparation now constitutes practice before the IRS, suspended or disbarred preparers will be prohibited from preparing returns for compensation.

Circular 230 amendments re return preparation standards

• Circular 230 § 10.34(a). A practitioner may not “willfully, recklessly, or through gross incompetence” advise a client to take a position on a tax return or claim for refund that:
  • lacks a “reasonable basis”,
  • is an unreasonable position as described in IRC § 6694(a)(2), or
  • is a (i) willful attempt by the practitioner to understate the tax liability or (ii) reckless or intentional disregard of rules or regulations as described in IRC § 6694(b)(2).

• A violation of IRC § 6694 will not result in a mandatory violation of Circular 230 § 10.34(a).

• A pattern of conduct is a factor that will be taken into account in determining whether a practitioner acted “willfully, recklessly, or through gross incompetence.”

Broad language in Circular 230 amendments giving the Commissioner (rather than OPR) the authority to initiate disciplinary proceedings 5. (Circular 230 related) Statute of limitations for bringing disciplinary proceedings is five years under 28 U.S.C. § 2462. Begins to run on due date for filing returns (including extensions) or payment of tax, as the case may be.

• Director, OPR v. Hernandez, 2011 TNT 116-22 (May 2011)
• Director, OPR v. Coston, 2011 TNT 205-67 (Oct. 2011)
• Director, OPR v. Craft, 2011 TNT 203-14 (Oct. 2011)

(Circular 230 related) Guidance on Restrictions During Suspension or Disbarment from Practice Before the Internal Revenue Service (Aug. 2011)

• Prohibited acts: prepare or file documents (including tax returns) or other correspondence with the IRS; render written advice with respect to any entity, transaction, plan or arrangement, or other plan or arrangement having a potential for tax avoidance or evasion; represent a client at conferences, hearings, and meetings; execute waivers, consents, or closing agreements; receive a taxpayer’s refund check; sign a tax return on behalf of a taxpayer; file powers of attorney with the IRS; accept assistance from another person (or request assistance) or assist another person (or offer assistance) if the assistance relates to a matter constituting practice before the IRS, or enlist another person for the purpose of aiding and abetting practice before the IRS; state or imply that he or she is eligible to practice before the IRS.
• Permitted acts: represent himself or herself; appear before the IRS as a trustee, receiver, guardian, administrator, executor, or other fiduciary if duly qualified/authorized under the law of the relevant jurisdiction;appear as a witness for the taxpayer;furnish information at the request of the IRS or any of its officers or employees; receive information concerning a taxpayer from the IRS pursuant to a valid tax information authorization.