1.1 REGULATIONS GOVERNING PRACTICE BEFORE THE IRS

Question 1

WHAT IS THE TREASURY DEPARTMENT CIRCULAR 230?

Answer 1

A SET OF REGULATIONS GOVERNING PRACTICE BEFORE THE IRS.

THE REGULATIONS AFFECTS TAX PRACTITIONERS, ATTORNEY’S, CPA’S, AND ENROLLED AGENTS AND ANY OTHERS WHO PREPARE TAX RETURNS, PROVIDE ADVICE, OR REPRESENT TAXPAYERS BEFORE THE IRS E.G., ACTUARY.

TO PRACTICE BEFORE THE IRS THE CPA MUST BE IN GOOD STANDING AND THE CPA MUST FILE A DECLARATION WITH THE IRS INDICATING THE CPA IS QUALIFIED AND AUTHORIZED TO REPRESENT THE PARTY.

Question 2

WHAT IS A PTIN?

Answer 2

A PTIN IS A PREPARER TAX IDENTIFICATION NUMBER,

ANYONE WHO QUALIFIES AS A TAX RETURN PREPARER MUST OBTAIN A PTIN.

IT IS A 9 DIGIT NUMBER THAT MUST BE USED ON ALL THE TAX RETURNS AND CLAIMS FOR REFUND PREPARED BY THE CPA

Question 3

WHAT ARE THE IMPLICATIONS OF CIRCULAR 230 WITH REGARDS TO CONTINGENT FEES?

Answer 3

THEY ARE PROHIBITED EXCEPT IN LIMITED CIRCUMSTANCES

1) REFUND CLAIMS, AND ORIGINAL AND AMENDED RETURNS THAT HAVE BEEN CHALLENGED BY THE IRS
2) CLAIMS FOR REFUND OR CREDIT FILED TO REDUCE INTEREST AND PENALTIES CHARGED BY THE IRS
3) JUDICIAL PROCEEDINGS UNDER THE IRS (PRIVATE LETTER RULING)

Question 4

WHAT ARE THE IMPLICATIONS OF CIRCULAR 230 WITH REGARDS TO RELYING ON INFORMATION FROM THE CLIENT WITHOUT VERIFICATION?

Answer 4

THE CPA CAN ACCEPT THE CLIENT AND START PREPARING THE TAX RETURN BASED ON THE CLIENT’S REPRESENTATIONS, HOWEVER, THE CPA MUST USE PROFESSIONAL KNOWLEDGE AND JUDGMENT TO DETERMINE IF THE CLIENT’S INFORMATION APPEARS UNREASONABLE OR INCORRECT.

Question 5

WHAT ARE THE REQUIREMENTS FOR A TAX PRACTICITIONER TO RETURN CLIENT RECORDS?

Answer 5